The value of Swiss watch exports since January this year is now 3.3% lower than for the first six months of 2023, the Federation of the Swiss Watch Industry reports today.
June’s decline, alone, was a sobering 7.2% as the slowdown since the post-pandemic boom for luxury brands continues to unwind.
Retailers including Watches of Switzerland Group have said they are starting to see light at the end of the tunnel and its main markets, the UK and United States, are proving more resilient than China and Hong Kong.
While China and Hong Kong experienced slumps in June of 36.5% and 23.1%, the value of exports to the UK ticked down by a mere 2.3% and the United States was up by 6.5%.
Remarkably, Japan was the second biggest market in the world for Swiss watch exports in June, overtaking its once mighty rivals in Asia thanks to a historically weak yen attracting high spending tourists.
Watch brands would normally respond to a currency variation that gives one market an advantage over others by rising prices, but with sales declining in most key territories, the temptation to simply cash-in with Japan is proving irresistible, for now.
There is a clear and present danger that Swiss watch manufacturers do not stamp on the brakes hard enough when it comes to supply.
Swatch Group and Richemont have both reported significant declines in turnover for the first half of this year through both wholesale and direct sales to consumers through their own boutiques and ecommerce.
In previous downturns, supply has outpaced demand, leading to discounting by retailers and dumping of stock on the grey market, both of which entrench weak demand at authorised dealers that are trying to sell at full recommended prices.
Watches of Switzerland Group addressed this issue in its financial report for FY24, which ended in April.
“Following the more challenging trading conditions of FY24, we are cautiously optimistic about trading in FY25. The industry as a whole is being more conservative on production, which we believe is a responsible approach to the long-term stability of the luxury watch market,” the company said.