Review: Current trends in watchmaking
Continuing economic recession casts a long shadow on the industry
Middle East maintains its retail momentum
Survival of the fittest - companies adopt Never say die spirit
The current looming economic meltdown has certainly taken its toll on the premium Swiss watch industry. International export figures released by the Federation of the Swiss Watch Industry lament the steady decline in premium watch exports both in quantity and value.
The very highend of the Swiss premium watch spectrum though appears to be doing its best to beat the continuing menace of recession. Demand sharply contracted in the first nine months of 2009, with exports of Swiss timepieces plunging 26 % worldwide, 42 % in the USA and a colossal 59 % in Russia. Exports of highend watches from the country declined by double digits in 6 of the 10 markets compared to the previous year.
Jean Daniel Pasche, President of the Federation acknowledges the colossal problem of the industry in the light of the current crisis and admitted that 3,500 jobs were lost since the start of the year and these included several highprofile and toplevel executives.
Presenting a doomsday scenario, the pessimists of the industry are predicting that roughly 200 of the current 600 brands in Switzerland would shut down.
According to industry insiders, analysts and even watch company officials, the Middle East appears to be far less affected than other regions and the region appears to be resilient as far as demand for watches and luxury goods is concerned. Several prominent premium brands have recently made a beeline to open boutiques and exclusive showrooms in the region. Notable recent examples are TAG Heuer in Abu Dhabi, Versace in Dubai and Panerai in Doha, Qatar, to name only a few. New tieups are also being continually reported, as brands are keen to jump on to the bandwagon and seize a slice of the action. The success of the recently concluded sellout Jewellery Arabia 2009 exhibition in Bahrain and the record visitor turnout is also an indicator of the faith in the region.
Whilst there appears to be no discerning lack of appetite or capacity among the super rich of the Middle East to buy highly prized, expensive luxury watches, there is a growing inclination to be less willing to spend that much. Customers in this league are merely holding back, reluctant to part with their money, thereby putting pressure on retailers and stockists, keen to maintain sales and keep cashflow going. It is very likely they will come back to make their purchases another day.
To match the mood, dynamics and new realities in the market place, watch companies have been rethinking their retail and marketing strategies. These are some salient observations and include, but are not restricted to the following:
- Watch retailers reeling under the brunt of the recession are cutting on indents and inventories. Retailers are ordering fewer of these watches, thereby reducing stocks to maintain a higher level of liquidity.
- Watch brands are increasingly looking to untapped markets that present better potential and better growth prospects such as the Middle East and China & the Far East. For example, according to Philippe LeopoldMetzger, CEO, Piaget, the brand will have 14 points of sale in China by December 2009.
- Some brands including Roger Dubuis, IWC and Audemars Piguet are placing special emphasis on their own channel distribution network and opened flagship locations in Shanghai / Middle East, Hong Kong and New York respectively.
- At the low and mid range segments, retailers are struggling to offload merchandise that has accumulated in the pipeline. Many are resorting to massive discounts and special offers that would have been unthinkable say two years ago.
- Another survival tactic is putting more exclusivity in watches. These include a cocktail of distinctive complications and specialized attributes that contribute to giving a model true valueformoney. Innovation is key and bards are vying with each other for the top spot through inventiveness and ingenuity.
- Independent watchmakers are bringing out fewer new models than they used to or delaying presenting new models until the market gains momentum. Even for limited edition collections, the numbers are being considerably reduced.
- Some brands such as Patek Philippe, considered for long a staunch male bastion, are slowly but steadily moving to appeal to and cater for a female audience. This is an unusual departure for a brand that has for centuries been associated with mens watches since its inception in 1839. The recently introduced Ladies First Chronograph, the brands newest presentation, has its movement crafted entirely inhouse. The reverse is also true and some brands are wooing male customers with more masculine versions of their watches.
- Brands are also increasingly resorting to luring new fans with themed models, patronage, endorsements, sports and psychology.
All is not doom and gloom though. Some leading brands are currently in expansion mode or following through their growth plans. The recession has had a negligible or at worst only a marginal impact. Order books look good and booked solid for several months. Many of these brands have invested in upgrading manufacturing facilities, R & D and product innovation technologies.
One such company exuding optimism and confidence is top Swiss brand Hublot. The companys CEO Jean Claude Biver believes that professionally managed healthy brands with a longterm vision should always make plans and be prepared for any financial contingencies and crises such as the industry is currently experiencing worldwide, and expected to do so over every economic cycle. Being ready for unpredictable or unforeseen events and being able to overcome challenges and bounce back is the hallmark of good, industry leaders, he opined.
This notwithstanding, the industry is here to stay, reinvent itself and thrive. Having successfully beaten back the challenge of quartz watches by the Japanese in the 1970s, the industry appears set not only to weather the current financial storm, but also to emerge renewed and invigorated after the crises have ended.