This disconnect could significantly impact consumer spending, especially on high-end discretionary items like luxury watches.
One key factor to watch will be how brands adapt their strategies to this shift in market conditions.
Swiss watchmakers may need to reevaluate their retail network, potentially closing some underperforming boutiques and relying more on direct engagement with loyal customers.
Selective discounting or promotional offers could also help broaden their customer base beyond the most affluent collectors.
The middle-class watch buyers, who make up a significant portion of the market, may become increasingly cautious in their purchasing decisions.
They may adopt a wait-and-see approach, holding off on purchases until they perceive prices starting to rise again. Brands will need to carefully monitor this segment and find ways to reignite their interest without devaluing their products.
The role of supply and demand will be crucial in determining the timing and trajectory of the market's recovery. If brands can strike the right balance - not overproducing, but making sought-after models readily available - they may be able to rekindle consumer enthusiasm.
However, attempts at a "hunger sales" strategy could backfire if handled poorly.
Beyond the global dynamics, the specific challenges facing the Hong Kong market are noteworthy.
As a former top destination for Swiss watch exports, Hong Kong has seen a significant decline in luxury buyers, particularly mainland Chinese tourists. This has led to store closures in prime shopping areas, further exacerbating the industry's challenges in the region.
The South Africa Rolex office had been running for 76 years are closed.
Ultimately, the watch industry's path to regaining momentum by Summer 2025 will depend on its ability to navigate these complex and interrelated factors.
Brands that can effectively adapt their strategies, engage with customers, and manage supply and demand may be better positioned to weather the current storm and emerge stronger in the years to come.
HK Snob
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