GENEVA — This is not the best time for the upscale watch industry.
After several years of booming business, Switzerland’s luxury watch sector is coming under pressure as the global economy shrivels and sales slow, including in emerging growth markets from China to Russia.
Nowhere was the new mood more evident than at the Salon International de la Haute Horlogerie, or SIHH, the trade show here that is a bellwether for the industry along with Basel World, which takes place from March 26 to April 2.
SIHH, which showcases luxury group Compagnie Financière Richemont’s brands — from Jaeger-LeCoultre to Cartier — along with a handful of independent ones, including Audemars Piguet and Girard-Perregaux, convened in January for the first time, instead of on the heels of the Basel show.
With buyers coming off one of the worst Christmas selling seasons in a decade, especially in the U.S., it was no surprise that many traveled to SIHH with trepidation. Exports of Swiss watches fell by 15 percent in November. December figures have yet to be reported. Many buyers said they feared the temptation of buying too many expensive watches that they really didn’t need and probably couldn’t sell.
Attendance from American retailers declined 50 percent, with overall attendance at the fair down 20 percent, according to organizers. Retailers, however, said they were pleased with Richemont’s understanding of the current climate, with the group’s luxury brands ready to help retailers weather the storm.
Brands, for instance, kept the number of introductions to a minimum and reined in the bells and whistles that had driven watch prices through the roof in recent years. They were not enforcing minimum buying numbers, either.
Companies concentrated on their expertise for high-end complicated pieces, which most executives suggested would continue to sell even as the midrange starts to tank. Retailers suggested that lower and midrange brands were performing poorly, particularly in the U.S.
The brands that retailers said seem to be suffering most include Tag Heuer and Breitling, neither of which showed at SIHH. Rolex’s performance also was said to be mixed, with brands such as Bell & Ross and Hublot doing somewhat better.
“The $5,000 customer is gone,” said Andrew Block, executive vice president of Tourneau. “What we’re seeing is a return to more heritage pieces.”
Brands at SIHH followed that cue by exhibiting their expertise in manufacturing the most fabulous watches in the world. Skeleton watches and tourbillons were popular, as were fly-back chronographs and divers’ watches.
Cartier introduced stunning complicated pieces, as did Jaeger-LeCoultre, Audemars Piguet, Piaget, A. Lange & Söhne and IWC. Stand-out introductions also came from the likes of Vacheron Constantin and Van Cleef & Arpels, which continued to offer so-called poetic complications with watches that depicted the changing seasons. Montblanc also continued its march upscale with impressive complicated pieces and Piaget revamped its Polo line, as well as showing brilliant jewelry watches.
“Creativity is more important than ever right now,” said Bernard Fornas, president of Cartier International. “When the economy drops, real luxury comes back. People return to brands with strong DNA.”
Fornas said that, despite rough sales — Cartier reduced production in one of its Swiss plants already, cutting the hours of 180 of the staff — the company would continue with geographic expansion and advertising.
“Frivolous times are gone,” said Fornas, who predicted a return to more sober styles. “Expensive things will still sell. It’s not that there’s no money.”
But people aren’t in a mood to buy, particularly in the U.S., where there’s a feel-guilty factor at play.
Fornas said business was stronger in other regions.
“When I come back from the Middle East and China, I’m still optimistic,” said Fornas. “When I come back from New York, I’m not optimistic at all.”
Stanislas de Quercize, president of Van Cleef, said business has continued at the high end.
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