The 2024 Geneva watch fair opens on Tuesday
amid slower demand in China for fancy Swiss timepieces and more timid consumer
spending across the board on luxury items.
The Watches and Wonders salon, which runs until April 15, will see 54 major
watch brands show off their latest creations, including Rolex, Patek Philippe,
Cartier, Chopard, Hermes and Chanel.
Formerly reserved for industry players, Swiss watchmaking’s landmark event
is trying to seduce a new generation of buyers by opening up to the public for
three days.
Visitors during previous open days were aged 35 on average, “which is
extremely encouraging”, said Matthieu Humair, chief executive of the
foundation that runs the salon.
Last year, Swiss watch exports broke records for the third straight year,
hitting 26.7 billion Swiss francs ($29.5 billion).
The 2020 downturn caused by the Covid-19 pandemic was quickly reversed by
what financial analysts called revenge buying, with consumers using the
savings accumulated during lockdowns to splash out.
However, the growth in Swiss watch exports has slowed.
Exports were up 7.6 percent in 2023, having risen 11 percent in 2022 and 31
percent in 2021.
Exports in January were up 3.1 percent compared with the same month in
2023, said the Federation of the Swiss Watch Industry.
Exports then saw their biggest year-on-year decline since the post-Covid
surge, down 3.8 percent in February.
‘More steel, less bling’
“We are seeing an overall slowdown,” said Karine Szegedi, the consumer
industry lead in Switzerland at the auditing firm Deloitte.
“The situation is tougher than anticipated for a certain number of players
in watchmaking,” she told AFP.
“The clientele is more cautious,” she said, with consumption in China and
Hong Kong having “not returned to pre-Covid levels”.
She said revenge buying had peaked and also cited inflation, rising
interest rates and even layoffs in the technology sector affecting the
consumer base for luxury goods.
In an early sign of the slowdown, subcontractors who supply watch
components saw orders reduced or postponed, said Szegedi.
This slowdown is not affecting all brands equally. The most high-end
companies rely on a very wealthy clientele who are not particularly exposed to
the vagaries of the economy, meaning those brands have continued to grow.
According to a study by US bank Morgan Stanley, models with price tags
above 25,000 francs account for 69 percent of growth in the Swiss watch
industry.
“I expect the mood to be relatively subdued given the industry slowdown,”
Jon Cox, an industry analyst with Kepler Cheuvreux financial services, told
AFP.
However, the atmosphere at Watches and Wonders will not be “despondent” he
said, forecasting a “soft landing” for manufacturers this year with four
percent market growth.
“Given the environment, you may see a back-to-basics approach by
watchmakers: more steel, less bling.”(AFP)
