Luxury Watch Market is Growing
As this year’s Salon International de la Haute Horlogerie winds down, there is good news and bad news for the makers of fine watches. A study by Digital Luxury Group’s WorldWatchReport and Luxury Society shows an uptick in consumer curiosity about upscale timepieces. Interest in luxury watches rose by 16% in the third quarter of 2014.
Spokesperson Aurel Bacs gave this assessment: “We have witnessed an explosion in terms of interest and awareness on five continents. Today, awareness of fine watches has grown beyond our wildest expectations.”
Of course, this study was done before the recent shocking news concerning the Swiss franc.
Swiss Franc News Rocks SIHH
There was more to talk about at SIHH than just the fabulous array of luxury timepieces. One of the hottest topics of conversation was the Swiss National Bank’s lifting of the cap on the Swiss franc in relation to the euro and what the possible impact of this action might be.
The luxury industry was caught by surprise when the SNB lifted a cap that had remained in place for more than three years, creating an artificial stability that was no longer there. The timing couldn’t have been more awkward, happening the week before some of the major luxury watch brands would be displaying their latest models in Geneva.
While the prevailing sentiment seems to be that this is bad news, no one knows for sure what the effect on the luxury market will be. The expected currency volatility could tack on an extra 5% to 7% to the price of a luxury watch, which may sound ominous—but do the superrich who can afford to drop more on a watch than most people make in a year really care?
Costco Triumphs Over Omega in Court
Lovers of luxury watches who balk at paying a bit more can try shopping for their next timepiece at Costco. For the last decade, the big box discount chain has been embroiled in a legal battle with Swiss watchmaker Omega over copyright infringement.
Although Omega sells its watches exclusively through a select group of authorized retailers that does not include Costco, the chain obtained a small number of the Seamaster model via a gray market transaction with a company that purchased items supposed to be sold only outside the U.S. In 2004, Costco began selling the Seamaster (complete with the Omega copyrighted globe design) for $1,299, a substantial discount from the list price of $1,999.
Omega filed suit against Costco and the case has been working its way through the courts for the last ten years. The Supreme Court ruled in favor of Omega but later overruled itself. The case then went to a federal appeals court that handed down a ruling against Omega this week. According to the decision, “Omega’s right to control importation and distribution of its copyrighted Omega Globe expired after that authorized first sale [abroad], and Costco’s subsequent sale of the watches did not constitute copyright infringement.”
Does this mean we can expect to see more discounts on luxury watches from Costco and other chains? Not likely since for the buyers of luxury goods, exclusivity is part of the appeal. Swiss watch brands will just work harder to keep their products out of the hands of mass market retailers.