Apple Takes a Bite Out of the Swiss Watch Industry
While not all of the blame for the gloomy decline in Swiss watch exports can be pinned on the Apple Watch, the presence of the pricey wearable device certainly hasn’t helped. After perusing the figures for Q3 from the Federation of the Swiss Watch Industry, analysts are scrambling to explain the ominous drop in sales.
Watches in the low to mid-segment of the market have taken the biggest hit and it’s probably not a coincidence that that is where the best-selling model in the Apple Watch collection is providing formidable competition. With prices starting at $350, the Apple Watch Sport is a tempting alternative to traditional watches with similar price tags.
Another major factor in sliding watch sales is the turbulence in the formerly lucrative Asian market, which accounts for more than 50 percent of luxury watch sales. Kepler Cheuvreax analyst Jon Cox told Techradar, “The problem is further weakness of Chinese demand amid economic uncertainty and the ongoing fallout from the anti-gifting campaign.”
He added, “Over two-thirds of the value of Swiss watch exports comes from watches retailing on average at USD17,000 each—if you can afford one of those babies you can afford an Apple Watch.”
So what can Swiss watchmakers do to hold onto their piece of the pie when their wares are under attack at all levels? According to Ben Woods of CCS Insights, “Traditional watch makers are coming under pressure. It would be naive to think the Apple Watch has not impacted the traditional market in some form. Watchmakers are reticent to acknowledge that’s happening because it’s not in their interest.”
One way the makers of traditional watches are fighting back is by developing their own versions of the smartwatch like the device coming from TAG Heuer next month. Woods made this prediction: “Watch manufacturers can no longer ignore this challenge, and they will partner with tech companies to do that.”
Woods added that the tech giants can be expected to step up their game by making their watches not only smarter but also more stylish. “The electronic companies are putting a greater importance of fashion, and you’re going to see them standing up.”