For an industry that loves to talk about its centuries of history, the Swiss watch industry sure has a short memory.
Cast your minds back to the financial crisis of the late noughties or the cliff edge drop in Chinese demand when authorities turned against ostentatious displays of questionably amassed wealth a few years later.
In each instance, watch manufacturers kept pumping out watches into distribution and retail with supply running well ahead of demand.
Publicly traded groups have quarterly targets to hit and investors ready to run down their stock if they are not met.
So, once watches have been sold and exported, the revenue is banked and the bankers satisfied, whether a retailer can find a customer for them or not.
When they cannot, the retailers panic and offload watches onto the grey market at sharp discounts. This often happens in parts of the world with little scrutiny, but it impacts authorised dealers everywhere.
If brand new watches are up for sale at 50% off in one country, it is nanoseconds before the rest of the world finds out about it, and this kills full price demand at more scrupulous authorised dealers and sales crater.
The last time this happened, Richemont spent about half a billion dollars buying back watches from retailers to stop them flooding the grey market.
During the past five years I have been consistently told this will not happen again.
The big groups, they tell me, target their sales teams on sell-out (a sale only counts when it is to an end consumer, not a business to business transaction), and they have far better visibility on what is selling and where because of better information technology systems.
The problem is that this is only partially true. For sure many brands get instant feedback from most of their retailers. But this is not the case for all brands and all retailers.
The latest figures from the Federation of the Swiss Watch Industry show exports up around 10% year on year (volume is up 6%, value is up 12% due to rising average prices).
Around 1.2 million watches were exported in February, all looking for a wrist.
If you are Rolex, Patek Philippe, Audemars Piguet or Richard Mille, four of the top six watchmakers by turnover, you probably have little to worry about.
But outside that big four, demand is weakening as economic headwinds bite.
China might save some as it emerges from covid restrictions and its population starts traveling and spending again, but the economic outlook in the Republic is uncertain.
The reality is that manufacturers have to be cautious this year, or they will make more watches than the world is ready to buy.
And, as we have seen on so many occasions before, once supply gets ahead of demand, it crushes demand even more and then takes years to recover.
Let’s hope the Swiss remember that lesson from the past. I doubt they will.
