For the second month in a row, imports of Swiss watches into the UK are rising while store sales are falling.
Using data from the Federation of Swiss Watch Industry (FHS), which provides export figures, with retail sales performance from GfK, it is clear that the supply of watches is rising in the UK.
Retail sales across Great Britain fell by 14.1% in June, an acceleration on the 6.7% year on year drop in May.
Over the same May and June period, Swiss watch exports to the UK rose by 37% and 29%.
FHS data shows evidence that Swiss watches are being diverted from Far Eastern markets, particularly China and Hong Kong, to the hottest Western markets like the United States and UK.
For the first six months of 2022, Swiss watch exports to China and Hong Kong dropped by 26.3% and 11.5% respectively while exports to the US and UK were up by 31.4% and 31.8%.
On the British retail sales front, warning lights are flashing amber on the GfK dashboard.
Unit sales dropped by 6% in June and the average transaction value also fell by 8.7%.
A sudden drop in sales for the most expensive watches, priced at over £10,000, appears to be a major contributor.
This price point has been incredibly strong over the past year, up 12.7%, but in June, alone, sales of £10,000+ watches dropped by 20.5%.
This could be an early sign that changes to VAT rules as part of the Brexit agreement are starting to bite.
Watches bought by visitors from outside the EU used to be able to instantly claim back the 20% VAT they pay on goods bought in this country.
This is no longer the case so customers from, for example, the Middle East, pay 20% more in the UK than they do in EU countries unless they have the watches delivered to their home country addresses.
British retailers have successfully increased sales to domestic customers to compensate for any shortfall from tourists, so evidence that the VAT change is impacting sales is not clear.
Retail sales in London, the biggest tourist market, dropped by 10.1% in June while the fall in the rest of Great Britain was steeper at 19.5%.
