There was unbridled optimism at Watches & Wonders in Geneva earlier this year as the watch world celebrated the end of onerous covid restrictions and got back on with the business of selling the dream of owning luxury timepieces.
Positivity was in no shorter supply in Las Vegas last week when the American watch and jewellery industry gathered for Couture, JCK and Antique Jewelry & Watch fairs.
America led the world for growth last year, riding on the benefits of a tsunami of fiscal stimuli, and retailers were jubilant.
The watch business, particularly at the luxury end, would sail through any economic turmoil, such is the demand right now, several retailers told me.
I hope they are right, but the latest research from British retail analyst GfK gives pause for thought.
Year-on-year comparisons should be treated with a degree of caution, because conditions were so different this time in 2021, but there is a very clear slow down evident in recent months.
In May, the total value of sales fell in Great Britain by 6.7%, a negative figure that has felt inevitable with wages not keeping pace with the rising cost of living.
It should be said that May 2021 was a particularly hot month as the UK emerged from a second major lock down, so year-on-year growth comparisons are distorted.
However, growth has been slowing for many months now from 52% and 42% in January and February to -6.7% in May.
For the 12 months to May, growth was still a robust 21.3%, thanks to the average selling price for each watch rising by over 25%.
Comparing the month of May to this annual growth rate is a more illuminating exercise.
The super luxury end of the watch market — price points of £10,000 and upwards — has held up best, with a dip of just 1.9% in May and annual growth to May of 24.5%.
Once you get into the five-figure price category, things get more difficult.
Sales in May of watches priced £3,000 to £5,000 were down 10.9% while the £5,000 to £10,000 bracket contracted by 10.5%.
Results in London and the rest of Great Britain are similar, with sales dropping by 6.4% and 8.2% respectively in May.
Time will tell whether May’s negative growth is a blip or part of a long term trend, but one this is for certain, the tailwinds enjoyed by wealthy Western countries in 2021 have mostly flipped around as household budgets are squeezed.
The UK has an additional problem in comparison to European competitors, which is the way our Brexit agreement ended the right of foreign tourists to claim back VAT on luxury items like watches.
Tourism will not be fully restored to pre-pandemic levels this summer, and retailers have been hugely successful at switching to domestic customers, but giving retailers in France a 20% price advantage over those in the UK is another headwind we could do without.
