The 2024 Swiss Watch Market: An Analysis of Trends and Strategies

Introduction:

Against the backdrop of the esteemed Watches and Wonders 2024 event, concerns arise regarding the decline in Swiss watch exports in March. The value of exports fell by 16.1% compared to March 2023, amounting to a total of 2.0 billion francs. This decline was primarily driven by reduced demand from China and Hong Kong, major trading hubs for watches in Asia. Overall, the first quarter experienced a 6.3% decrease compared to the previous year. 

Sales Performance by Price Segments: 

The decline in exports was observed across all price segments. Watches priced at over 3,000 francs experienced a decline of 9.9%. The drop was more significant for products priced under 500 francs, with a decrease of 18.8%. The 500-3,000 francs category witnessed a decline of 38.2%. 

Market Performance by Region: 

Most markets experienced weakened demand in March. Notably, the United States (-6.5%), Japan (-3.5%), and the United Arab Emirates (-3.6%) were less affected compared to the average decline. Conversely, China suffered a significant decline of 41.5%, reaching a level below that of March 2020 when the industry faced a halt due to the COVID-19 pandemic. Hong Kong (-44.2%), Singapore (-14.8%), the United Kingdom (-13.2%), Germany (-13.1%), and France (-11.9%) were closer to the global average. 

Historical Perspective: Swiss Watchmaking Over the Past 50 Years:

The Swiss watchmaking industry has undergone significant transformations over the past five decades. One pivotal event was the Quartz watch crisis of 1970. Exports reached their peak in 1974 at 84.4 million watches and movements but plummeted to just 31.3 million within a decade. This crisis led to a divergence in the industry, with the emergence of everyday watches like Swatch and the luxury segment.

Brand Identity and Market Share:

Swiss watches are categorized into super luxury, luxury, hi-end, and mid-range streams. Brand identity plays a crucial role in building brand value. Top players such as Richard Mille, with watches worth CHF 200,000, manufacture only a few thousand pieces annually. In contrast, Swatch produces millions of watches each year. As of 2023, Rolex dominates the market with a 30.3% market share, followed by Cartier 7.5%, Omega 7.5%, Patek Philippe 5.6%, and Audemars Piguet, among others.

Market Growth and Strategies:

The Swiss watch market has experienced both growth and contraction simultaneously. While volumes have decreased by almost 45% since 2015, the value of high-end watches priced over CHF 3,000 has surged by 15.6% in the past year. This trend signifies a shift towards higher-priced luxury timepieces. The industry's focus on producing fewer watches at higher prices reflects a protectionist approach aimed at boosting demand.

 Future Outlook:

The market's trajectory for the next decade will be shaped by distinct strategies related to brand identity, average selling price (ASP), value proposition, and sales approaches. While hunger sales may be utilized to stimulate demand, it is crucial to note that watches are not considered investment assets. The luxury watch industry is adapting to the digital age, with younger generations showing greater interest in wearable technology rather than traditional mechanical timepieces. However, the market remains strong, with major players reporting impressive growth.

 Conclusion:

In conclusion, the Swiss watch market is undergoing dynamic changes. The industry has transitioned towards producing fewer watches of higher value, focusing on rarity, exclusivity, and storytelling. Younger consumers are gravitating towards digital wearables, while the 30-50 age group still appreciates Swiss mechanical watches as indicators of social status. Vintage watch enthusiasts continue to cherish the craftsmanship of fine mechanical timepieces. It is essential for watch enthusiasts to buy and enjoy timepieces they personally appreciate, while recognizing the unique stories and value associated with rare and special watches.

HK Snob

Watch Business update in Hong Kong

Watch Business Update - May 2024 

In recent times, the gold price has reached a historical high, standing at HK$26,500 per tael. During my visit to Chow Tai Fok yesterday to purchase gifts for Mother's Day, I was struck by the soaring price of gold. Such high gold prices indicate a lack of trust in traditional currencies, leading individuals to invest in precious metals, with gold being the top choice. 

The ongoing conflicts in the Middle East and Ukraine show no signs of resolution. Consequently, we anticipate that people will exercise caution when it comes to investing in luxury goods. Despite the fact that the wealthiest 1% of US citizens possess 30% of the country's wealth, it is uncertain whether this group will entirely divert their funds towards the watch business. Middle-class individuals, including managers, executives, investment bankers, IT professionals, businessmen, hotel managers, pilots, lawyers, and more, comprise the genuine supporters of the watch industry. Although not part of the super-rich class, Hong Kong residents are increasingly crossing the border to Shenzhen for weekend getaways, indicating a decrease in their willingness to invest as heavily as they did two years ago.

Comparing the current prices to those of May 2022, Rolex has experienced an average drop of 30%, Patek Philippe has dropped by 25% on average, and Audemars Piguet has experienced a 40% decrease. Vacheron Constantin is now offering its VIP customers the opportunity to purchase the new 222 model at the manufacturer's suggested retail price (MSRP), which was not possible in 2023. However, there have been few actual transactions for used Rolex watches among the 500 dealers in Hong Kong. It remains unclear whether prices have reached their lowest point, but it is expected that they will fluctuate in a U-shaped pattern before potentially rising again, particularly towards the end of the year following the replacement of US President Biden with Trump. 

Considering the current market conditions, it is advisable to invest in gold watches rather than stainless steel models, as the former holds greater value. Personally, I have ceased purchasing steel watches and shifted my focus towards high-quality gold timepieces. 

It is worth noting that the attached picture depicts TST 1881, where luxury shops such as JLC, Roger Dubuis, IWC, Cartier, Vacheron Constantin, and Panerai were present two years ago. However, at present, these establishments remain closed.

Thank you for reading. 

HK Snob