How sustainable is the rampant demand the luxury watch industry has been enjoying in the years since covid restrictions eased?
It feels like we are about to find out.
Taking the temperature at Watches and Wonders at the end of March, I did not meet a single CEO who wasn’t crowing about record sales in 2022.
The Swiss watchmaking industry as a whole had its best ever year, with exports worth CHF 25 billion.
But several of the same CEOs were admitting that the market was cooling and the macro economic situation would dampen demand.
In a roundup by Bloomberg, Patek Philippe CEO Thierry Stern said: “I see in the past two months, the market is a little bit slower than before. I don’t say that it’s very bad — not at all. But I just see that it’s slowing down.“
Oris CEO Rolf Studer also sounded a cautionary note. “The sell out has been continuously good but then stocking has been a little bit softer,” he said in April.
Yesterday, Watches of Switzerland revealed that it expects sales to dip in the first quarter of its financial year (May to July), before recovering in the second half of the year and ending with turnover up 8-11% at constant currency.
To be fair, maintaining the sort of growth that the group enjoyed in the United States last year would be a tall order, but growth in its core market of the UK was slower, particularly in the pre-Christmas period and into the new year.
New data from retail analyst GfK shows sales up from January to April in Great Britain by 14.4% across all watch price points, but the volume of units sold over that period was down by 5.6%.
The value of sales priced between £1000 and £3,000 fell by 28% in the first four months of the year, and the next price point up, from £3,000 to £5,000 was flat. No wonder Oris is concerned, but this price range also spans the bestselling collections for other massive brands: Rolex, Omega, Cartier, TAG Heuer, Breitling, Longines, to name a few.
Rolex will be fine, as will the priciest brands like Richard Mille and Patek Philippe because all the action right now is at the top end of the market.
GfK’s data for the single month of April shows sales of watches priced at £10,000 or more rising by 87%. This has driven the average selling price across the British watch sector up by 41%.
Evidence suggests that the wealthy, less impacted by rising cost of living than the rest of us, are still shopping. They may even be investing in top end timepieces as some sort of hedge against inflation.
But the rest of the market is weaker today than in any of the past three years.
We can only hope that Mr Duffy’s prediction of business picking up at the back end of this year proves to be correct.
