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Tuesday, 24 September 2019

Luxury watches to the rescue

Luxury watches to the rescue

In recent years, while the luxury world in general has been declining and the digital sector has globally increased, there is one area which appears to be in countertrend: listed Swiss watch brands in Zurich.

A step back: Richemont, the group that controls brands like Cartier, Iwc, Vacheron Constantin and Piaget, sails along on last year’s prices of around 86 Francs, a little behind compared to Lvmh which has grown by a good 30%. Worse still for Swatch Group, the brainchild of Nick Hayek who also controls Omega, Tissot and Longines which, compared to last year, is showing a downturn of about 35%. Moreover, in 2018, 22.7 million Apple Watches were sold compared to the 23.7 million items sold by the entire Swiss watch industry.

But these numbers could be deceiving: the big crisis, according to several experts, has already passed. In fact, high-range products, with items starting at 3,000 Francs, are recovering: turnover, which amounts to 10.7 billion Francs or 10 billion Euros, +1.4%, is recording a 6% increase despite the commercial tensions and political disorders in Hong Kong which is still the most important market. Forecasts for the coming year are also excellent.

The Swatch Group explains why: “In the first half of 2019, measures were undertaken against the grey market, especially in Europe, the Middle East, Eastern Europe and South America, which immediately resulted in a negative impact on sales. But in the long term, it will lead to positive results on the major markets.”

According to analysts, these groups’ decision to fight the “grey market”, in other words, everything that is not sold and is re-launched onto the market through unauthorized channels at discounted prices, is admirable. “These watches can often be found on Internet and official retailers are strongly tempted to send these goods to China, thus creating unfair competition.”

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