While major luxury groups are cautious about a global economic slowdown, there is little evidence that they are seeing an impact in sales and distribution of watches.
Swiss watch exports rose by 14%, year-on-year, in June, continuing a trend that has seen growth of 11.8% for the first half of 2023, and putting the sector on track to beat its record performance in 2022.
Exports to Hong Kong rose by 46.5% in June, re-establishing its position as a top three market behind Mainland China (exports up 9% in June) and the United States, still the biggest territory in the world for Swiss watches, and with growth in the month of 8.8%.
The UK market has seen a slowdown in retail sales in May and June, according to analyst GfK, but was the fourth largest market in the world for Swiss watch exports in June, with YoY growth of 5.6% and a 6.5% share of the global market.
Tourist tax
It is noteworthy that the UK market grew more slowly than competitor countries on the Continent. Swiss watch exports to France rose by 13.9%, Italy was up 32.4% and Germany by 17.4%.
This could be a sign that the so called tourist tax in the UK, which makes it difficult for overseas visitors to reclaim 20% VAT as they can on the Continent, is hampering British retailers.
Grey market
Cooling retail sales in key markets like the United States and UK, while Swiss watch exports continue to rise, suggests improving levels of inventory in the channel.
Customers can hope that for supply constrained brands like Rolex, Patek Philippe, Richard Mille and Audemars Piguet, waiting lists may come down.
For brands without supply constraints, the fear will be that inventory could build up in the channel that may then find its way onto the grey market at discounted prices.
For the first half of 2023, the United States is by far the largest market for Swiss watches, with exports totalling CHF 2 billion, up 10% on last year.
Mainland China is second with exports worth CHF 1.4 billion, up 25%, and Hong Kong is third with exports of CHF 1.25 billion, a rise of 29%.
The UK has fallen behind Japan to sit as the fifth largest market in the world with exports in H1 worth CHF 839 million, up 7.8% over the same period in 2022.
The Middle East is becoming a hugely important market to Swiss watchmakers. Total exports to the United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain hit CHF 1.1 billion in the first six months of 2023, which would place it as the fourth largest market in the world.
