In The Swiss Watch Downturn, Correlation Doesn’t Suggest Causation (Until It Does)
There’s a lot being made concerning the seemingly swift decline in Swiss watch gross sales. CultOfMac, as is their wont, is pointing to Apple Watch gross sales whereas nonetheless others are moaning about millennials who refuse to purchase a $6,000 James Bond watch. So what’s actually occurring?
Watch exports fell eight.5% within the final three months, partially on account of a slowdown in Asian luxurious gross sales in addition to a surge within the worth of the Swiss franc. However the main slowdown appears to be within the low finish – which means the $200-$500 mark – whilst Switzerland is making an attempt desperately to persuade youthful individuals that a $6,000 watch is a superb deal.
So what’s occurring? Smartwatches are killing the low finish. I predicted this virtually when yr in the past I wrote about how the watch business might save itself. Briefly, low cost watches are uninteresting within the face of low cost shopper electronics and simply because the telephone has changed the watch for a lot of older people, the smartwatch will substitute the telephone for millennials.
What’s subsequent for the business? Large consolidation and a downturn as dangerous because the quartz disaster. That is the top for a lot of smaller producers, together with the OEMs who present rubbish watches for Calvin Klein, Fossil, and Burberry. Cheaper producers with a historical past – Timex, Citizen, and Seiko, primarily – will survive as a result of there’ll all the time be a marketplace for a reasonable timepiece that will get the job achieved. However everybody else is toast. The sensible watch – not simply the Apple Watch – is consuming a lot of the low finish pie.
What can the Swiss watch teams do? Not a lot, sadly. Usually, they should supply a worth proposition past the unique watch proposition which was, briefly, “This watch will inform the time properly.” Whereas many people don’t keep in mind the heady days when Timex was truly competing with Rolex within the Nineteen Fifties, as soon as upon a time all watch manufacturers have been roughly equal. The imaginative and prescient of the superior Swiss watch is as synthetic as Santa Claus and Mom’s Day however it’s a highly effective message. Nevertheless, years in the past, all watch corporations have been in deep competitors with one another over timekeeping.
Now, sixty years later, watch corporations have little else to supply when it comes to advertising message. Swiss watches, we’re informed, are intrinsically higher. They aren’t, actually, just because many aren’t made with the care that goes into even the bottom finish digital system. In reality, at this level most reasonably priced watches are mass-produced junk. These are the watches that may disappear.
However a subset of the excessive-finish watches – principally nonetheless made by Swiss and German makers – are nonetheless intrinsically essential as artistic endeavors and science and nicely value funding. However how do you inform that to somebody who needs an Apple Watch in aluminum with an orange band however will accept no watch in any respect?
Anecdotally many people nonetheless say that the Apple Watch is never seen within the wild however this doesn’t imply they aren’t promoting. There aren’t many watches within the wild in any respect lately and most of us aren’t watch hounds who discover precisely what individuals are sporting from throughout the room. However the smartwatches are on the market. Apple has in all probability bought about 6 million of this stuff and they’ll promote extra. Android units are floating round and I’ve seen extra Samsung watches in New York than Omegas. Issues are altering.
Finally the top the Swiss watch business is in a downturn as a result of it has lengthy been filled with benighted wealthy individuals with no imaginative and prescient for the longer term. The good producers sat on their arms for the previous decade, elevating costs and aiming their unattainable advertising message on the style world. Now they’re screwed. Years later they should persuade a whole era that they alienated with resolute depth to purchase their wares. It’s going to suck for them, and that’s actually what’s inflicting this messy downturn however at the least now they will attempt to perceive the issue and repair the trigger.