Countries around the world, including our own United States, are in the process of opening their doors, and economies once again after an unprecedented worldwide event, one I needn’t mention for the sake of giving our readers a break from certain terms and phrases. We will spend our time here looking at when the fire started, what it charred, some of it beyond recognition no doubt, while other parts of the industry learn to fly like a Phoenix out of the ashes. That is the nature of any crisis, period.
It has been a good 12 years since the last punch below the belt of the Swiss watch industry from the 2008 sub-prime economic crisis. That seemed all but forgotten of late with a satisfying market keeping everyone busy and in business, that was until February 2020 when the entire world got sucker-punched, the luxury watch industry no exception. It was hard to watch some things such as Baselworld gasping for air until Rolex, Patek Philippe, Tudor, Channel, and Chopard left the show giving Baselworld it’s final death blow. All 5 brands will be heading to a new concept with FHH (formerly SIHH) Think WatchTime New York and now also WatchTime Los Angeles, although postponed like everything else, with its CEO present panel discussions and workshops and you will have a pretty good idea where the future of watch shows lies. Ironically, closer to the consumer in an unprecedented moment of human separation.
So let’s try to make sense of some of the numbers, even though with the crisis still ongoing, figures, for a while at least, will morph and change until some level of stabilization takes a grip on the entire economic world. The entire story begins in early February and continues forward as we speak. Closing manufacture, canceled trade shows, and shuttering of some retail sites looks terrible, obviously, but not everyone is touting gloom and doom. Oliver Muller of the watch brand consultancy Luxe Consult thinks the troubles won’t last long. Short term impact is tremendous but temporary and cyclical as well as being the main driver for change.
Chrono24 the worlds leading online marketplace for new and pre-owned watches reported that as of March 15th they had seen a 15% decrease in sales, mostly in a 2 week period coinciding with the beginning of the quarantine. Boston Consulting Group estimates a 600 billion dollar decline in sales across all price points due to one factor, less disposable income, people have lost time and economic footing. That is simple math we can all wrap our minds around. But, with that being said stainless steel Rolex sport models, which remain in short supply and most certainly will through the holiday season, have not seen much of a price drop and all indicators point to that stability remaining, Patek Philippe Natilus, and the Audemars Piguet Royal Oak have not been impacted to the degree other brands, and other models, have suffered either. But this is really not a new fact. Every down market has seen Rolex and Patek Philippe come back even stronger because they can afford to invest while others can not, and as a consequence take market share and position themselves for the rebound of the economy.
So what changes are going to be the most prominent in the luxury watch market? As with any economic upheaval, simply stated you have a rearranging of clientele. I think that question was being answered in the last 2 to 3 years leading up to this latest worldwide health crisis, Online marketing, and sales. Brands and independent dealers need to dedicate more resources to digital with experts in-house, being extremely careful not to dilute the passion for watches. This provides an excellent opportunity to test and learn then move on to optimize investments and reduce or eliminate low producing activities all the while keeping the experience engaging. Not at all a small task to be sure. The luxury watch industry had been positioning to gain control of more of their products’ life span, namely pre-owned sales, all with the necessary assistance of the internet, and they were gaining ground. People’s newfound fear of disease and their desire to avoid, at least for a time, physical market places, will certainly push brands big and small, online and brick and mortar, to ramp up their internet presence making sure ease of transaction, security, and quality all take center stage.
Case in point. For the first time in Patek Philippe history, they have authorized dealers to sell their watches online for a limited time. Although it is a temporary sales period it is very telling as to the further and rapid digitalization of the Swiss watch industry.