GfK & WATCHPRO EXCLUSIVE: How the luxury market is warping British watch retail statistics

Luxury watch sales are booming in the UK, particularly to affluent visitors to the country. / AFP PHOTO / Fabrice COFFRINI        (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)Luxury watch sales are booming in the UK, particularly to affluent visitors to the country. / AFP PHOTO / Fabrice COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)

2016 was a golden year for luxury watch retailers in 2016, and there are no signs so far this year that the top end of the market is running out of steam. This is all the more remarkable since almost every other major market in the world has experienced a slow down in sales over the past three years. Retail analyst GfK has been tracking the phenomenon since 2010, and senior account manager – watches, Gilly Netherwood, shares her thoughts on how this luxury trend has emerged.

The luxury watch market has been booming in Great Britain, says Gilly Netherwood, and so far in 2017 this trend has continued. When comparing January to March 2017 with the same period in 2016, the value of watches over £1k was up 25%, and for watches over £10k value growth was even higher, up 47% over the same period.

The London area has continued to outperform the rest of GB with sales value of watches over £1k up 35% from Jan-Dec 2016 vs Jan-Dec 2015; this is compared to a rise of 12% for the rest of the country.

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London’s growth means it now has an even bigger value share of the GB watch market. Looking back to 2010 London’s value share of the total GB watch market was 29%; by 2016 this had risen to 48%. However over that time the total volume of watches sold in the London area fell by 55%, this was a much greater fall than the rest of the country which saw a decline of just 20%. London’s falling volume and rising value has come from a rise in average transaction value, boosted by increased demand for luxury watches over £1k: volume for watches over £1k in London increased by 83% between 2010 and 2016.

share of sales value by price

In contrast, although the rest of the country saw demand for watches over £1k increase over the same period, it was at a much lower rate of 34%. Taking the watch market over £10k it is a similar picture but with even higher growth rates; in London sales value of watches over £10k grew 343% between 2010 and 2016, in the rest of the country the rise was 113% over the same period. This meant in 2016 London accounted for 70% of the value of the watch market over £10k, up from 53% in 2010.

  • “The share of the top three luxury brands in Great Britain is up from 29.6% of total value in 2010 to 40% in 2016, according to GfK”

There are many factors that have contributed to London’s continued growth but Brexit has been key; Brexit still has not yet had the effect of suppressing consumer spending that many feared. The GfK consumer confidence poll taken immediately following the Brexit result showed consumer confidence in the south east of England barely fall, and for those earning over £50k it actually went up, in addition, the London watch market had a major boost from tourism from the middle of last year thanks to the favourable exchange rate.

year on year growth by price point

Undoubtedly at current growth rates London will continue to dominate luxury watch retailing, however outside London demand for watches over £1k is still growing: volume was up 11% in the 12 months to March 2017 vs the previous 12 months. This indicates that there is still a strong market for watches over £1k across GB.

Recent growth for luxury brands has continued despite many brands deciding to increase prices by around 10%. The value share taken by the top 3 watch brands ranked by value has continued to grow, their combined value share of the total GB watch market in 2016 was 40%, this is up from 2010 when the top 3 brands at that time had a combined share of 29.6%.

share of sales by price point

Luxury brands that retail online are also contributing to the growth of this channel. Back in 2010 just 8% of the value of watches over £1k came from online transactions; by 2016 this had doubled to 16%. It is a similar trend for watches over £5k which had virtually no online sales in 2010, but by 2016 over 2% of this market was online. Considering the transactional values involved, this represents a small but significant step forward in online retailing, and confirms that the customer purchase journey is evolving. Consumers who are parting with thousands of pounds in one transaction online will demand a sophisticated online experience. As long as consumers have the means and desire to buy luxury watches, this route to market is likely to continue to grow.

Gilly Netherwood, Account Manager – Watches, gilly.netherwood@gfk.com / +44 207 890 9264, www.gfk.com/uk / www.twitter.com/gfk_en

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