Swiss horol­o­gists are hav­ing a hard time

The in­dus­try is low­er­ing prices and look­ing to new mar­kets “The rich, in­stead of buy­ing two, they will buy one”

Bloomberg Businessweek (North America) - - Conntents - Corinne Gretler The bot­tom line High-end Swiss lux­ury watches saw sales drop 3.3 per­cent in 2015, the first an­nual de­cline since 2009.

Last year wasn’t great for Switzer­land’s lux­ury watch­mak­ers, and 2016 isn’t look­ing any bet­ter. At an in­vi­ta­tion-only Geneva trade show in Jan­uary at­tended by 24 of the world’s most ex­pen­sive watch brands, the con­sen­sus was that Hong Kong’s lux­ury slump, a rocky Chi­nese econ­omy, and the Novem­ber ter­ror­ist at­tacks in Paris—as well as com­pe­ti­tion from the Ap­ple Watch—will hurt sales this year.

“We ex­pect 2016 to be a very, very dif­fi­cult year,” Vin­cent Per­ri­ard, chief ex­ec­u­tive of­fi­cer of lux­ury watch­maker HYT, said at the trade show, of­fi­cially called the Sa­lon In­ter­na­tional de la Haute Hor­logerie. “One of our points of sale in Paris sold no watches at all, from any brand, from the day of the ter­ror­ist at­tack un­til now. Zero sales.”

A dearth of Chi­nese tourists af­ter the Nov. 13 mas­sacre topped off a bad year. Swiss watch ex­ports de­clined 3.3 per­cent, to 21.5 bil­lion Swiss francs ($21.1 bil­lion), in 2015, the first an­nual drop since 2009, ac­cord­ing to the Fed­er­a­tion of the Swiss Watch In­dus­try.

The in­dus­try was jolted in early 2015 when the Swiss Na­tional Bank said it would no longer main­tain its cap on the

Swiss franc. The cur­rency rose against the euro, boost­ing pro­duc­tion costs for watch­mak­ers. Van­ish­ing stock mar­ket wealth changed habits, too. “The rich, in­stead of buy­ing two, they will buy one,” says Marc Gau­dreault, CEO of Parmigiani Fleurier, whose watches sell for an av­er­age 30,000 francs.

A slow­down in Rus­sia has led Ulysse Nardin, the 170-year-old watch­maker bought by lux­ury goods group Ker­ing in 2014, to cut jobs. Third-quar­ter sales for Cie Fi­nanciere Richemont, maker of Cartier watches, fell 4 per­cent from the pre­vi­ous year. The com­pany plans to de­crease in­vest­ments in man­u­fac­tur­ing.

Fall­ing de­mand has forced mak­ers such as Greubel Forsey, with watches that av­er­age about 480,000 francs, to seek out new clients and travel more to meet them, says Chief Op­er­at­ing Of­fi­cer David Bernard of his sales­peo­ple. “Now you need to go, ex­plain, show that you’re there.” The brand has in­tro­duced a less ex­pen­sive time­piece start­ing at 150,000 francs.

Fam­ily-owned H. Moser & Cie, founded in 1828, is look­ing to the U.S., the No. 2 mar­ket for Swiss watch ex­ports af­ter Hong Kong. Cities such as Chicago, Hous­ton, and Mi­ami of­fer po­ten­tial, driven mostly by tourism and greater con­cen­tra­tions of wealth, say many rep­re­sen­ta­tives at the Geneva show.

Try­ing to lure younger buy­ers, Omega, owned by Swatch Group, signed Ed­die Red­mayne as a brand am­bas­sador last year, af­ter his Os­car win. Moser, hop­ing to grab some of the at­ten­tion lav­ished on the Ap­ple Watch, cre­ated a me­chan­i­cal replica called the Swiss Alp Watch that has none of the tech ap­pli­ca­tions. The ploy drew many vis­i­tors to Moser’s booth to com­pare their Ap­ple Watches with the copy.

“The Ap­ple Watch, smart­watches, the Google watches—99 per­cent are un­der $500,” Montblanc CEO Jerome Lambert says. “In that price zone, the rel­e­vance for fine watch­mak­ing is zero.” Still, TAG Heuer has in­tro­duced the Con­nected Watch, a $1,500 smart­watch.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.