It is hard to imagine 2018 being any more difficult for watchmakers and retailers concentrated in the sub-£500 price bracket, but the omens and evidence from retail analyst GfK are not good.
The total value of watches priced at under £500 fell for a 15th consecutive month in February, with a year-on-year drop of over 15% compared to the same month in 2017.
GfK has not provided its own analysis on the data, but what the market knows is that fewer young people are wearing watches than ever before, and it is this generation that has typically bought or been gifted inexpensive watches. The trend towards people telling the time on their smartphones is looking increasingly irreversible.
The trend towards people buying less expensive watches online is not compensating for declining sales on the high street. Online sales at all price points fell by 2% in value, and volumes dropped even faster by 8.1% in February.
The good news is that the luxury end of the market is continuing to fire, with the value of sales up by 14.6% in February compared to a year ago and the average selling price of each watch rising by 22.8%.
This has contributed to an overall rise in the total value of watches at all price points of 4.4%. That overall annual growth percentage is slowing now that the pound is strengthening against the dollar and Swiss watch brands have increased UK prices.
The average monthly rise in the value of watches sold at over £1000 was 30% in the 12 months following the UK’s vote to leave the European Union. Now it is down to low single digits.
London and the rest of Great Britain grew at dramatically different rates in February, with London sales rising by an impressive 12.8% while the rest of GB was virtually flat at 0.1% growth.