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How has COVID affected the Swiss Watch industry?
This is a tale of two markets
The best of times…
For the likes of Rolex, Patek Philippe, and Audemars Piguet, three independent companies that have several wait-listed models in their catalogue, the impact of the pandemic has been limited. You could also add a number of specialist low-volume producers, such as Richard Mille and F.P.Journe to this list.
Yes, there have been important disruptions to the production line, but there is no sign that demand has slackened. Indeed, prices have gone north during 2020 despite a strong Swiss Franc. This is in part because their watches are seen as a good store of value.
The second-hand market for luxury watches has seen strong increases after a temporary drop at the beginning of the pandemic. The bottom line may have been lower than anticipated, but these companies are stronger than ever and are looking at ways to change their marketing to adapt to the new normal.
…the worst of times.
For almost everyone else, including some prestigious names, the pandemic has hurt. Several other luxury brands had also benefited in recent years from a resurgence of interest in fine watches. Much of this was driven by Instagram and YouTube.
While sales are sharply down during the pandemic, many of the big names are protected by virtue of belonging to either Swatch Group, Richemont, or LVMH. However, of the hundreds of Swiss watch brands out there, we can expect that 50 to 100 will not survive the crisis. By December, year-on-year exports had fallen 33% by volume, but only 22% by value, suggesting that the luxury segment fared better. With tourism at a stand-still, and a poor online presence, lower-tier producers have been hit hardest.
And when we get past this period?
In the final analysis, why would someone wear a watch today, with a smartphone always at hand? Apple watches outsold the entire Swiss watch industry in 2019, and yet the market for great Swiss watches has been going from strength to strength.
Logic might suggest that the market will polarize between smarter-and-smarter, erm… smartwatches, and beautiful luxury mechanical icons. It may not be an easy ride for the brands that fall in between.
Swiss Watch statistics 2021, Federation of the Swiss Watch Industry