An exceptional moment of luxury watches ends – The Post

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The last three years have been a period of exceptional sales of luxury Swiss watches: they have been increasing since the coronavirus pandemic, simply because the wealthiest consumers wanted to spend the considerable savings accumulated due to the restrictions. As of 2021, demand for watches from Audemars Piguet, Rolex, Patek Philippe, Omega and other Swiss brands has increased to the extent that they will bring exports to almost 25 billion francs (26.4 billion euros) in 2022, 20 percent more than in 2019. .

2023 was also good, but for a few months this growth slowed, both because of how the world economy is developing and for reasons within the sector. Most insiders believe that the exceptional support caused by the pandemic has expired and that the sector will now return to more normal numbers.

Since August, the growth of Swiss watch exports has gradually become less intense compared to the previous year: while it was still up 14.3 percent in June, it decreased by 0.7 percent in July and then rose again until August to just above 4 percent and remain on average at these levels.

The data goes back to October, when exports were 5 percent higher than a year ago. According to data from the Federation of the Swiss Watch Industry, however, the cheapest models were the most successful.

In the first ten months of the year, however, the sector exported the same as the entire year 2021, and with November and December it could end the year at the same level as last year. But demand has softened in recent months, and executives at a variety of brands — from legacy to new businesses that have thrived during the period — think growth is destined to decline.

“What we saw in 2021 and 2022 was outside the norm,” he said Bloomberg François-Henry Bennahmias, CEO of Audemars Piguet, a wristwatch brand known for its Royal Oak model and whose watches are sold at prices from 20,000 euros upwards. The enormous growth of recent years dates back to the consequences of the coronavirus pandemic: it caused consumers to accumulate large savings and, in the case of the wealthiest, the savings were spent on expensive and luxury purchases such as watches. “We couldn’t even imagine that we would experience such a period in our lives. I don’t think he’ll ever come back,” Bennahmias said.

The trend of the world economy has changed significantly over the last year, the accumulated savings were first spent and then eroded by the increase in the cost of living. Inflation and rising interest rates have forced a general slowdown in an economy whose outlook was already poor due to the war in Ukraine and now the war between Israel and Hamas. In situations like this, luxury is almost always among the first sectors to suffer, as it is the first to cut back on spending even by wealthy consumers: even big luxury groups such as LVMH and Kering have suffered sales declines due to concerns about inflation and possible recession.

The slowdown in the watch sector was clearly visible in November when the Swiss group Richemont published its half-year results with a 3 percent drop in watch sales. Richemont is a luxury conglomerate that owns some of the most famous and highly regarded high-end watch brands: Cartier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget and Vacheron Constantin, among others.

The decline the industry is going through can also be attributed to some decisions made by the manufacturers themselves. With the dramatic increase in demand and the simultaneous increase in production costs, companies increased their selling prices, which may have played a role in the decline in sales. Rolex is among the most important companies in the industry, producing more than one million watches a year with an estimated turnover of over 9 billion francs (around 9.5 billion euros): it has raised prices twice in 2022. Also, some Swatch Group brands such as Omega, Longines and Tissot have increased prices.

However, the opposite is happening on the second-hand market, which confirms the gradual decline in consumer interest. According to the “Bloomberg Subdial Watch Index,” an index that tracks the 50 best-selling models in terms of value, average prices have been falling for more than a year: the index has fallen about 42 percent since its peak in April 2022.

– Listen to the Tenimi Bordone episode: The luxury watch bubble is about to burst

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