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Business of Fashion
23-05-2025
- Business
- Business of Fashion
Can Swiss Watches Compete on Value?
With the price of gold soaring, the Swiss franc still trading high and US tariffs looming, luxury watch companies are facing a growing problem: Watch prices keep rising. That consumers have become more price sensitive and value conscious amid a downturn in overall luxury spending and growing competition from rival luxury categories only compounds the issue. Can luxury watches still compete? 'People want to get something for their money,' said Karine Szegedi, a partner at Deloitte and author of its annual Swiss Watch Industry Insights reports. 'They don't only buy a watch because it's luxury: it has to be priced at the right level. Pricing has gone up so far, so what's the right price now?' The question is vexing brands, too. 'In more than 20 years in this industry, I've never experienced something like this,' said Edouard Meylan, chief executive of the independent watchmaker H. Moser & Cie, which has annual revenues of around 100 million Swiss francs, according to estimates by Morgan Stanley. 'Setting the right price has become more and more challenging. We believe in pricing that reflects the real value of what we create, not the noise around it.' If one thing seems certain, it's that buyers are buying fewer new watches. According to the Federation of the Swiss Watch Industry (FHS), export volumes continue to tumble, down 5.8 percent year-on-year to the end of March, following a slump of 9.4 percent last year. Over the past decade, total volumes have almost halved, decreasing from 28.1 million units in 2015 to 15.3 million last year. 'Consumers today are demonstrating a more value-conscious approach,' said Yves Bugmann, president of the FHS. 'The current environment reflects a more cautious and discerning mindset.' Since the launch of Apple's Watch a decade ago, luxury watch brands have aimed to create clean air between them and the smartwatch market. Today, while some direct-to-consumer microbrands sell mechanical watches marketed as accessible luxury for under $1,000, Swiss-made mid-market luxury mechanicals typically now start at around $2,000, with prices rising quickly from there. Brands are about to find out just how much price elasticity there is in their products. With gold prices hitting $3,500 an ounce in mid-May, a rise of around 40 percent in 12 months, and tariffs of 31 percent on Swiss watch exports to the US set to take effect from July 1, brands have already started pushing prices up. Independent research has shown that average prices of Swiss watches available online in the US spiked in April. Watches priced over $100,000 were most impacted, rising on average 17.5 percent, according to the Geneva-based agency Digital Luxury Group. The group's research showed price increases became more marginal the lower the price segment, with watches costing less than $10,000 increasing only 4.2 percent on average. But few watches in this price bracket contain gold. One watch retailer suggested that this trend was temporary, though, and that price increases would soon level out. 'Recent years have seen extraordinary trends of price increases, which has adversely impacted volumes,' said Brian Duffy, chief executive of Watches of Switzerland Group, which operates a network of watch stores across the US and UK and last week reported revenues for its most recent financial year of £1.65 billion, an 8 percent year-on-year increase. 'We believe that this period is largely over.' Even then, brands have been left battling to shore up their value propositions. Many have settled on a path to the low-volume, high-value category, where it's thought consumer price sensitivity is lower. According to Bugmann, export figures suggest this might be a smart play. 'Despite prevailing economic headwinds, demand among affluent consumers remains comparatively robust,' he said. 'In 2024, the segment of watches with an export price above 3,000 Swiss francs recorded a slight increase of 1.0 percent, further underscoring the sustained strength of this market tier.' One critic said brands had only themselves to blame for their current predicament. 'Brands are caught in an economic trap, exacerbated by their own short-term thinking during the pandemic,' said Chris Hall, author of a weekly watch industry newsletter called The Fourth Wheel. 'When demand was running out of control, they hiked prices just because they could. Now, having budgeted for a 'new normal' that could never have been sustained, they have been hit by more legitimate reasons to raise prices: the cost of raw materials, currency fluctuations, tariffs and so on. So customers have seen watches that are completely or substantially unchanged rise more than 40 percent in some cases.' Many brands are resorting to smaller watches or more affordable materials so they can offer watches at prices that appear to offer a stronger value proposition. In April, Rolex introduced a new line called Land-Dweller with a new-generation time-and-date movement and a mix of steel and white gold in its case and bracelet that it calls Rolesor. The two materials are all but indistinguishable, but the 36mm watch retails from $14,450, considerably less than the $40,200 list price of the solid gold version of Rolex's Day-Date 36. 'Brands are responding to value and affordability issues through product innovation and increasing focus on value through a move to steel from gold, and simpler functionality,' said Duffy. Also in April, TAG Heuer reintroduced the Formula 1, a collection of colourful 38mm watches based on a design that helped grow the brand in the mid-1980s after Heuer was acquired by the Saudi group Techniques d'Avant Garde and renamed. The contemporary collection starts from $1,800 with a watch with a solar-powered movement and a case made of a bio-polymer the brand is calling TH-Polylight. 'Value doesn't mean a cheap watch,' said Nicholas Biebuyck, TAG Heuer's Heritage Director. 'The case material in the Formula 1 is a robust material tested in our laboratory, the movement has 10 months of autonomy and long service intervals, and the watch comes with five years of warranty. This is something of great quality.' Some brands, including TAG Heuer, have been criticised for investing heavily in marketing. Antoine Pin, the company's chief executive, told The Business of Fashion earlier this year the brand spent almost 20 percent of its revenues on marketing. TAG Heuer is part of LVMH, which is spending a reported $1 billion over 10 years on a Formula 1 sponsorship deal that has made TAG Heuer the sport's official timekeeper. But Biebuyck is unrepentant. 'I've lost count of the number of disruptors in this industry who sell watches for under $1,000 and don't advertise or sponsor,' he said. 'Either they die a death very quickly, or they end up going down the traditional marketing route and putting stickers on a rally car or something, because you have to elevate the prestige of your brand in the mind of the consumer.' Some Swiss watch brands are betting big on value. Oris, an independent company that sells 40,000 watches a year with an average retail price of around 2,100 Swiss francs, according to Morgan Stanley estimates, introduced a steel sports watch with a mechanical movement called the Big Crown Pointer Date last month, priced from $2,300. 'We have tried to bring watches that are more at the entry-level of what we do and make sure we have a very attractive and interesting offer there,' said Rolf Studer, the company's co-chief executive, noting that in some countries the strength of the Swiss franc accounted for as much as two thirds of recent price rises. 'It is a problem for our industry that our currency keeps getting stronger, and it's a problem for the middle class and entry-level luxury buyer, because an offering that was in reach only a short time ago may have gotten out of reach.' Duffy recognised the sentiment. 'Luxury watches are a low-frequency category and we experienced some purchase deferrals, impacted by high price increases,' he said. 'But we have seen a normalisation of consumer behaviour in 2025 and consumer sentiment towards the luxury watch category remains strong.' Others said they expected volumes to remain low and that this would heat up the battle. 'We are past the period of absolute expansion in luxury,' said Biebuyck. 'Gone are the days when people wanted 50, 100 watches; now they want 10 or 20 great watches. And that means brands are now fighting for dollars and having to take clients from competitors. It's tooth and nail out there.' While global economic and political uncertainty persists, few expected the value challenge would ease off. 'In the current economic context, marked by fluctuating exchange rates, increased tariffs and rising raw material costs, it is likely that some watch companies will need to further adjust their pricing strategies in order to protect margins,' said Bugmann.
Korea Herald
13-05-2025
- Business
- Korea Herald
Swiss watchmaker H. Moser & Cie. opens 1st boutique in S. Korea
Swiss luxury watch brand H. Moser & Cie. is set to open its first South Korean boutique on Wednesday at the Galleria Department Store in Seoul's Apgujeong-dong. The boutique, created in partnership with Damiani Group's retail chain Rocca, is the fifth for the brand globally, following locations in Shanghai, Beijing, Hong Kong and San Francisco. 'Korea is a very important and influential market,' said Edouard Meylan, CEO of H. Moser & Cie., at a press conference in Seoul on Tuesday. 'We've grown quickly in the past 10 years, and now we're ready to bring Moser to Korean collectors.' With fewer than 4,000 watches produced annually, H. Moser & Cie. is known for its exclusivity and craftsmanship. The new boutique reflects the brand's minimalist and modern aesthetic, using glass and concrete to evoke the feeling of an art gallery. 'Our watches are created as pieces of art,' Meylan said. 'We don't place our logo on the dial because we want the craftsmanship to speak for itself. It's a quiet confidence that our customers appreciate.' Moser's signature collections as well as one limited-edition Streamliner Tourbillon Skeleton Boutique Edition will be available at the Seoul location. Only 17 Streamliner Tourbillon Skeleton Boutique Edition watches are available worldwide. The launch comes amid growing demand for high-end independent watch brands in Korea's luxury market. The boutique aims to offer local consumers a deeper connection to Moser's heritage and artisanal approach.
The National
13-03-2025
- Business
- The National
How Middle Eastern enthusiasts are redefining the world of luxury watchmaking
A new wave of Middle Eastern collectors is transforming the global luxury watch industry, infusing it with fresh perspectives and helping redefine high-end watchmaking. With an eye for craftsmanship, a respect for cultural heritage and an appetite for exclusivity, these collectors are influencing the evolution of luxury timepieces – merging Swiss precision with design elements rooted in regional identity. Their growing presence is amplifying demand for rare and bespoke watches, as well as fostering a fusion of tradition and innovation that is reshaping the watch industry. The Middle East has long been a key market for luxury goods, and high-end timepieces are no exception. The region's collectors – from the UAE, Saudi Arabia, Qatar and Kuwait – are known by watchmakers to be among the most discerning, seeking out limited-editions, bespoke creations and heritage pieces that tell a story. 'Dubai is again affirming its status as the premier marketplace for rare and extraordinary timepieces in the region,' explains Remy Julia, head of watches, Christie's Middle East. 'The deep-rooted relationships nurtured with collectors here and further afield are pivotal, yet it's the market's richness, cultivated over decades and notably propelled by commissions from royal houses and ministries, that truly sets it apart.' Valued at about $15.85 billion today, the Middle Eastern luxury market is anticipated to reach close to $31.7 billion by 2030. This expansion is being propelled by the increasing affluence and evolving consumer preferences in key markets such as the UAE and Saudi Arabia, according to a report by Boston Consulting Group. 'What might be considered a small collector here would be regarded as a major collector elsewhere,' says H Moser & Cie chief executive Edouard Meylan. For more than a century, Swiss watchmaking has been the gold standard in precision and artistry. Brands such as Audemars Piguet, Rolex, Breitling and Tag Heuer remain aspirational symbols in the world of watchmaking. However, the new wave of Middle Eastern collectors is pushing maisons to go beyond technical mastery, encouraging the integration of personal and cultural elements into their designs. Unlike mainstream collectors in other markets who may focus on brand prestige alone, Middle Eastern buyers are curating collections that reflect their personal narratives. Whether it's through calligraphic engravings, intricate enamel work, or timepieces inspired by the Middle East, this demand for cultural resonance has led to a rise in collaborations between Swiss maisons and regional designers – which includes Reservoir working with Emirati artist Abdulla Lutfi. A prominent trend involves embedding dials with Arabic numerals or regional collaborations. Others feature motifs inspired by traditional Middle Eastern symbols crafted in precious metals and gemstones such as the Rolex Day-Date or the latest Audemars Piguet Royal Oak Perpetual Calendar Ultra-Thin. These elements not only imbue the timepieces with symbolic meaning but also transform them into wearable art. Beyond simply owning a rare reference, collectors are commissioning one-of-a-kind timepieces that are tailored to their exact specifications. Swiss watchmakers have responded with ultra-personalised services, with brands such as Jaeger-LeCoultre allowing clients to modify everything from dial aesthetics to case engravings. Through this service, bespoke designs based on a photograph, a sketch or an idea can be commissioned. Some maisons now offer private ateliers that are dedicated to these bespoke requests, crafting limited-run or unique pieces that integrate Arabic numerals, regional motifs, or even custom complications that resonate with the collector's heritage. High jewellery elements, such as diamond-encrusted bezels or emerald-set crowns, further enhance the allure of these exceptional creations. Middle Eastern collectors are not only impacting local markets, but are also influencing global design and consumer preferences. International brands are increasingly incorporating cultural motifs into their collections, tapping into a broader appreciation for diversity and heritage in watchmaking. At the same time, this demand has sparked a renewed interest in traditional artisanal techniques, from hand-engraving to guilloche and cloisonne enamel work, ensuring that these time-honoured crafts continue to thrive in an industry that is often driven by technological innovation. Middle Eastern collectors are not just acquiring watches; they are actively shaping the future of haute horology, and industry events such as Dubai Watch Week are proof of that. Their affinity for storytelling, craftsmanship and exclusivity has pushed watchmakers to explore new creative possibilities, bridging the gap between Swiss expertise and cultural identity. In doing so, they are ensuring that luxury watchmaking remains as relevant and meaningful as ever, seamlessly weaving together past, present and future in the art of timekeeping.
