Grey market trading threatens to undercut official retailer pricing


A slow down for luxury watch sales in Asia is being blamed for a global glut of inventory, some of which will wash-up on UK shores.

Despite the UK being crowned as the fastest growing market in the world for Swiss watchmakers last year, retailers are facing growing competition from grey market importers and online traders offering discounted prices for even the most prestigious brands.

Exports of Swiss watches Hong Kong dropped 22.9%, according to the Federation of the Swiss Watch Industry, and China didn’t perform much better.

The UK registered double-digit growth.

In an interview with business magazine Fortune, David Sadigh, founder and chief executive of the market research firm, Digital Luxury Group in Geneva, said that years of rising sales to Asia lulled luxury brands into thinking that the good times would roll forever. “Watch brands saw big numbers everywhere, and they started overproducing,” he said. “But sales have not been at their level of expectations.” The surplus stock ends up in these gray markets.

Fortune says that even Swatch, Richemont and LVMH – which have bank vault-tight policies to minimise grey market trading – are suffering.

“With that demand dropping, watches are ending up in gray market sites, at lower prices,” Fortune reporter Stacy Perman says.

“It will take a while to sell those watches,” Mr Sadigh concludes.



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