File photo of a woman filming watches with her cellphone at the Rolex booth during the luxury watch fair 'Watches and Wonders Geneva', in Geneva on March 27, 2023. Photo: AFP
The 2024 Geneva watch fair opens on Tuesday amid slower demand in China for fancy Swiss timepieces and more timid consumer spending across the board on luxury items.
The Watches and Wonders salon, which runs until April 15, will see 54 watch brands show off their latest creations, including Rolex, Patek Philippe, Cartier, Chopard, Hermes and Chanel.
Formerly reserved for industry players, Swiss watchmaking’s landmark event is trying to seduce a new generation of buyers by opening to the public for three days.
During previous open days, visitors were aged 35 on average, “which is extremely encouraging”, said Matthieu Humair, the CEO of the foundation that runs the salon.
Last year, Swiss watch exports broke records for the third-consecutive year, hitting Sf 26.7 billion Swiss francs (R546bn).
The 2020 downturn caused by the Covid-19 pandemic was quickly reversed by what financial analysts called revenge buying, with consumers using the savings accumulated during lockdowns to splash out.
However, the growth in Swiss watch exports has slowed.
Exports were up 7.6% in 2023, having risen 11% in 2022 and 31% in 2021.
Exports in January were up 3.1% compared with the same month in 2023, said the Federation of the Swiss Watch Industry.
Exports then saw their biggest year-on-year decline since the post-Covid surge, down 3.8% in February.
‘More steel, less bling’
“We are seeing an overall slowdown,” said Karine Szegedi, the consumer industry lead in Switzerland at the auditing firm Deloitte.
“The situation is tougher than anticipated for a certain number of players in watchmaking,” she said.
“The clientele is more cautious,” she said, with consumption in China and Hong Kong having “not returned to pre-Covid levels”.
She said revenge buying had peaked and also cited inflation, rising interest rates and even lay-offs in the technology sector affecting the consumer base for luxury goods.
In an early sign of the slowdown, subcontractors who supply watch components saw orders reduced or postponed, said Szegedi.
The slowdown is not affecting all brands equally. The most high-end companies rely on a wealthy clientele who are not particularly exposed to the vagaries of the economy, meaning the brands have continued to grow.
According to a study by US bank Morgan Stanley, models with price tags above Sf25 000 account for 69% of growth in the Swiss watch industry.
“I expect the mood to be relatively subdued given the industry slowdown,” said Jon Cox, an industry analyst with Kepler Cheuvreux financial services.
However, the atmosphere at Watches and Wonders would not be “despondent” he said, forecasting a “soft landing” for manufacturers this year with 4% market growth.
“Given the environment, you may see a back-to-basics approach by watchmakers: more steel, less bling.”
AFP
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