Swiss Watchmakers Sing the Blues
These are turbulent times for the makers of fine Swiss timepieces. Not only are the watchmakers faced with competition from smartwatches, economic factors are making it more challenging to stay in the black. A new survey reveals why the Swiss watchmaking industry is feeling uncertain about the future.
The consulting firm Deloitte just released a report based on an online survey and discussions with 51 watchmaking execs and found that they’re not happy campers. The report shows 41% of the executives feeling negative about their prospects over the next 12 months with only 14% being positive. Deloitte has been conducting this survey with Swiss watchmakers since 2012 but this was the first time that the pessimists outnumbered the optimists.
What are the reasons for all this gloom and doom? The number one risk named by 69% of respondents was the strength of the Swiss franc, which has resulted in higher prices being passed on to customers.
Another problem facing the industry is falling demand, most notably in Hong Kong and China. Weaker sales are blamed on lack of growth in the economies of these countries as well as the Chinese government cracking down on corruption and kick-backs. This has resulted in a drop in the sales of luxury products that were frequently given as inducements to government officials.
25% of those surveyed named smartwatches as a major threat, a big increase from just 11% last year. 39% of the Swiss watchmakers stated that the release of the Apple Watch was their wake-up call to take wearable devices more seriously.
“The Swiss watch industry is at a turning point,” concluded the report, adding “… but a critical point now seems to have been reached, especially in the low-to mid-price range segments of the market.” That means that the ball is in their court and it’s up to the Swiss watch industry how they react to these challenges.