Watch Industry Braces For Historic Downturn HoDinkee proclaims. That’s like saying a car crash victim lying by the side of the road is bracing for impact. Dude, the downturn is here. Last month, Swiss watch exports fell by a staggering 81 percent. There’s no sign of a “revenge shopping” recovery. The real economy is in the tank. Ho’ writer Joe Thompson offers us a piercing glimpse into the obvious, then shares the following eye-opening prediction . . .
The steep downturn will take a toll on the Swiss watch industry. Oliver Müller of LuxeConsult expects 30 to 60 brands to go out of business.
This is not the first time we’ve heard that estimate. watchpro.com teased with Swiss watchmakers file for bankruptcy as Coronavirus impact bites – without telling us which watchmakers bit the dust.
Nor did Mr. Corder hazard a guess which watch brands will bite the dust. So here’s some no-holds-barred speculation on the post-Coronageddon watch industry landscape . . .
The key factor here – that none of the watch industry media cheerleaders are mentioning: the rise of the Apple Watch.
appleinsider.com reports that Apple shipped 30.7 million units worldwide in 2019, up 36 percent from 22.5 million in 2018, outselling the entire Swiss watch industry. Worse still for Swiss (and Japanese) watchmakers: 75 percent of those customers were first-timers.
Worse still for Swiss (and Japanese) watchmakers, businessinsider.com reports that “Apple shipped 7.6 million smartwatches worldwide in the first quarter of 2020, according to recent data from Strategy Analytics, an increase of 23% compared to 6.2 million in the first quarter of 2019.”
This while the Swiss watch industry went into a Coronacoma.
Not to put too fine a point on it, the rise and rise of the Apple Watch and its ilk (Garmin, Fitbit, Galaxy, etc.) doom all but a handful of low end traditional watch brands. Switzerland makes nothing like the Apple Watch at any price – and certainly not at an average price of around $350.
If you’re a traditional watchmaker operating under $1k you’re staring into the abyss: a fundamental change in consumer tastes in a rapidly contracting market that the COVID-19 pandemic did nothing to reverse, and everything to accelerate.
Who’s for the chop? I reckon brands like Tissot, Movado, Hamilton, Mondaine, Victorinox, Swatch, Timex, Shinola, Invicta, Nixon and Bulova, Braun, Mido, Raymond Weil, Baume & Mercier all face extinction.
Brands at the bottom of this food chain – Nixon, MVMT, Invicta, designer-branded Chinese crap – are also looking at lights out. Seiko, Citizen, Casio and Timex could well be the last brands standing.
Could one of them fail? Mass extinction in the watch industry basement may leave enough resources for all of those competitors. It may not. Which is why Seiko’s moving upmarket and Citizen’s about to launch a smartwatch.
Micro-brand and boutique watch brands using off-the-shelf movements – brands like Farer, Autodromo, anOrdain, Baltic, Gorilla, Brew, Magrette, Monta, BOLDR and Undone – are also in a fight to the death. A horological cage match that will have far more losers than winners. If any.
Luxury Swiss watch brands operating at the $2k – $10k end of the market – OMEGA, TAG Heuer, NOMOS, IWC, Grand Seiko, Ball, Oris, entry-level Rolex , Breitlings, Bell & Ross and suchlike – are being hit with a double-whammy: the current economic downturn and the not-immediately-apparent-to-them smartwatch crisis.
These brands’ guardians labor under the illusion that newbie smartwatch wearers will “graduate” to mechanical timepieces. There is zero evidence for this. Today’s Yuppie smartwatch wearer might eventually pick up a luxury watch for style points, but not more than a couple of pieces. If that.
Over the last few years, Swiss high horology has enjoyed enormous success. The pandemic hit pause. The resulting worldwide recession will hurt sales in the short term. The question is: will there be 62k Patek Philippe, 40k Audemars Piguet and 20k Vacheron Constantin buyers worldwide per year when retail recovers?
Sure! The planet’s home to plenty of extremely wealthy people who covet high horology. Depending on their financial discipline, chi-chi brands like A. Lange & Söhne, Glashütte, Grönefeld, Cartier, Jaeger-LeCoultre, Piaget, Bulgari, and God help us Richard Mille will take a licking and keep on ticking.
Rolex? Rolex is a world unto itself. Before Coronageddon, the watchmaker cranked out one million pieces per year. Going forward, will there be that many buyers for the world’s most recognizable status symbol/watch brand? While deep-pocketed Rolex will recover, I bet we’re close to – if not past – peak Rolex.
At the end of Coronageddon, we will see a significantly smaller market for traditional watches. And a lot less brands competing for that business. High horology will be with us forevermore. For the rest of the playas it’s the end of the [watch] world as we know it.
God willing, The Truth About Watches will still be here, doing what we do. God willing, so will you. Rest assured we’ll keep you abreast of watch industry developments are they occur. One thing’s for sure: it won’t be boring.