Swatch Group is working to increase activity with strong retailers, executives said today at its annual media conference.
Increasing direct to consumer ecommerce and opening its own boutiques has not cannibalised sales through retail partners, group CEO Nick Hayek told reporters, it has stimulated demand across the wider market.
Dr Peter Stieger, a member of Swatch Group’s management board and head of its United States business, went further; reporting that brands are expanding distribution.
Without naming brands such as Audemars Piguet, which are aiming to shift entirely to direct to consumer sales, Dr Stieger describes: “The future looks good because competitors are reducing distribution. They are exiting retail and selling direct. We are not doing that. Brands need strong retailers. We are jumping in to fill space where other brands are leaving.”
Around three quarters of watches for Swatch Group’s biggest brand, Omega, are sold through wholesale, according to Morgan Stanley, a proportion that has barely changed in recent years. The estimate for 2021 was 72% wholesale.
Dr Steiger says turnover has more than doubled in the United States over the past two years, with growth exceeding the wider market based on Swiss watch export data.
Growth has been broad across segments ranging from Swatch at the lower price end of the market, through Tissot in the mid-price and up to Omega, Blancpain and Breguet.
Much was made in the Swatch Group presentation about the breadth of its brand portfolio, which insulates it from fluctuations in different parts of the market.
In Russia, for example, Swatch Group’s biggest brand by turnover is Tissot; not the likes of Blancpain and Breguet that people assume are the timekeepers of choice for oligarchs.
Asked about the war in Ukraine, Mr Hayek focused on his hope for a peaceful resolution. “Let us hope they find a solution. War is not a solution. Negotiators need to find a settlement so that everybody saves face,” he suggests.
On China, and the rising number of cities in lock down because of omicron’s spread, Mr Hayek is pragmatic. Cities have been in lock down a number of times over the past two years. Stores have to close, but not usually for long, and business always bounces back.
Despite the war in Europe and rise of covid in its largest markets, Hong Kong and mainland China, Mr Hayek is comfortable sticking with current forecasts for this year. “We will do double digit growth, despite all the challenges,” he predicts.
Of course, Mr Hayek neglects to mention that much of this increase is coming off the depressed sales during Covid lockdowns worldwide.
He also seems to forget that sales of his lower and mid-priced brands are down considerably over prior years, as a result of the impact of smartwatches and, most specifically, the Apple Watch, which now generates more sales per annum than any Swiss brand in any category.
Finally, and most importantly, while sales of his brands sold in Swatch Group boutiques may be up overall, he neglects, again, to mention all the loyal retailers that helped to build his brands and were unceremoniously shut down if in proximity to those Swatch Group boutiques – but what do a relative handful of livelihoods destroyed matter if the Swatch Group, and other watch companies following a similar path, ultimately thrive?