The U.K. is back in full lockdown. All non-essential businesses are shuttered. While we can take comfort in the fact that the new strain of COVID-19 doesn’t threaten to make Sean of The Dead into reality, the pre-Christmas cancellation is a bullet to the brain for U.K. watch sales. As for Swiss wristwatch exports generally . . .
They’re holding on by the skin of their teeth – to a level below 2019 which is even more frightening than Sean’s zombies . . .
Swiss Watch Exports Down 3.2% in November 2020, With Signs of Improvement monochrome-watches.com trumpets. Make that “spins.” As the above chart from the Swiss Watch Federation (FH) indicates, the industry is still a very sick puppy.
Swiss wristwatch exports may have levelled off, but they’re levelled off at a level that leaves many watchmakers struggling to survive. Could your business survive a 23.5 percent downturn over 11 months? (That’s not a rhetorical question.)
The fact that Swiss watch exports “only” dropped 3.2 percent in the month of November is due to China. The FH stat shows a huge disparity between the performance of the Chinese market and, well, everywhere else. It also somehow forgets to include numbers for Singapore (-31.9%), Italy (-27.8%) and France (-29.0%). And again, the net result is only a positive if viewed month-to-month.
The Swiss watch industry isn’t just ailing badly in terms of raw numbers. Deloitte has released a survey on the state of the Swiss watch industry; its getting massacred at the bottom end of the market. Again. Still.
Since 2012, the trend of exports of entry-level quartz watches has been downwards, growing more acute in 2019 when export volumes were 10 million units lower than in 2011. This decline was further accelerated in 2020 by COVID-19, as illustrated in Chart 2.
During times of crisis, those with less discretionary income have a tendency to save, and there has been a big impact of sales of entry-level watches from cautious spending, growing competition from similarly-priced smartwatches and non-Swiss fashion brands, and less need for the “Swiss made” label in this price range.
It’s the smartwatch comment that’s the most chilling (for the Swiss). Check out Chart 11. Plus twenty percent vs. -23 percent units sold is bad enough. The raw numbers discrepancy between smart and dumb watches is staggering.
The Apple Watch alone is outselling the entire Swiss watch industry. Specifically, 30.6m units vs. 20.6m in 2020 Q1, and Apple accounts for just 55 percent of the entire smartwatch market.
This is only going in one direction. “The worth of the global smartwatch market is estimated at USD 48.44 Billion in 2020,” marketdataforecast.com reports, “it’s projected to reach USD 130.92 Billion by 2025.”
Are entry-level quartz watches the canary in the coal mine? timeandtidewatches.com asks, sensibly enough. Yup. All those global smartwatch sales have come – will come – at the expense of low to mid-market Swiss [branded if not made] quartz watches, COVID-19 be damned.
No wonder 60 percent of the Swiss execs Deloitte surveyed consider quartz crisis 2.0 a threat to their industry’s long-term future. Not to mention the hit happening to cheap mechanical watches. Oh wait . . .
Respondents fear that a continuing fall in sales in entry-level quartz watches and low-to-mid-range mechanical watches, which are not performing as well as in the past, could weaken the industry in Switzerland. This would inevitably have a knock-on effect on prices, job losses and losses of know-how.
Grim stuff. And it gets worse. According to Deloitte’s consumer survey, given $5649.08 to spend on a watch, at least a third of respondents would rather buy a smartwatch every year for ten years than a single luxury watch. It’s a dopey question, but OMG. Really?
With each passing day, the Swiss watch industry is becoming more and more dependent on high-priced products. In fact, without sales of luxury Swiss watches, they’d be dead in the water. And even that last redoubt is under assault.
With the second wave of COVID currently affecting Europe and the US, no one can say for certain how long the crisis will last. However, as [Switzerland’s] largest exporter and a pillar of the Swiss economy, the Swiss watch industry will adapt and recover.
Deloitte’s conclusion strikes a distinctly Pollyannaish note. Well they would do, wouldn’t they? The high-priced consultant wants to help Swiss watch companies boost Swiss wristwatch exports. Maintain them? Stop them from sliding off a cliff? Whatever. No skin off Deloitte’s nose.
At the tail end of Coronageddon, the Swiss watch industry is undergoing a wrenching period of downsizing and consolidation. Chart 15 indicates that its movers and shakers are in deep denial about the real, underlying and ongoing, inescapable threat to their livelihood.
China isn’t going to save Switzerland. Without an answer to the smartwatch, the Swiss watch industry will never again be the behemoth, the ne plus ultra it was just a few short years ago.