Few industries embrace the old adage ‘less is more’ quite like Swiss watchmakers.
And for good reason.
If you are in the business of selling miniature masterpieces, it pays not to make too many of them or they lose exclusivity.
That is one reason why the entire Swiss watch business hit a ceiling a few years ago when it could not break above global export value of CHF 21 billion.
Last year was an all-time record for the Swiss with total exports valued at CHF 22.3 billion, but this doesn’t sound quite so exciting when you take into account Swiss watch exports were CHF 21.5 billion six years ago in 2015.
Manufacturing precise, micro-engineered and intricately decorated timepieces is very difficult, and so is increasing production.
But production has actually been falling dramatically over recent years. In 2015, the Swiss exported over 28,000 watches. Last year — an all-time record I remind you — this had almost halved only 15.7 million units.
The fall in units is mostly down to the cheaper end of the market being decimated by the rise in smartwatch sales, but even at the top end production is pretty much flat.
In 2015, there were 1.6 million Swiss watches priced at over CHF 3,000 exported. Last year this had inched up to just CHF 1.8 million.
That is 300,000 more watches for the entire world, a pitiful number when you consider that The United States, alone, added 2,251,000 new millionaires in a year from 2019 to 2020. There were almost six million new millionaires minted worldwide last year.
It is true that it takes a considerable length of time to train watchmakers to the standards required by the luxury industry, but investment in these skills has been too little and too late.
This will leave retailers disappointing customers, not just for the unicorn watches of Rolex, Patek Philippe and Audemars Piguet, but for a growing number of brands and for more and more models.
This is supporting prices, so retailers are under less pressure to discount than at any time in living memory, but it is also leading to frustration and lost sales.
This is a once in a generation opportunity to push towards CHF 30 billion in Swiss watch exports, but investment must go into increasing production rather than just hiking prices.