The Swiss Watch Industry’s Struggles Intensify

Written by Eashan Trehan

The Swiss watch industry is an icon of the larger luxury goods industry, but is experiencing mounting troubles amidst the ongoing pandemic. The industry that boasts names such as Audemars Piguet, Patek Philippe and Ulysse Nardin has been brought to its knees by the Coronavirus pandemic that has resulted in plummeting demand and factory closures for Swiss watch makers, whose attention is now firmly tuned towards cutting costs and preserving cash. Many watchmakers, including Rolex and Patek Philippe have delayed launching new versions of their products until 2021.

These companies focus on exports for driving sales of their watches, with China being one of the key markets, however, the strength of the Swiss franc has already been hurting exports during past years (The weaker the domestic currency, the better it generally is for export oriented sellers). The higher value of the currency needs to either be passed onto consumers who will have to pay a higher price or needs to be borne by watchmakers in the form of higher costs. With prices inching higher, smartwatches entering into the foray and an economic upheaval hurting discretionary expenditures, the industry is staring at a crisis.

The entry of smartwatches and fitness bands have resulted in a shift in consumer trends among the younger millennial generation in particular, which has eaten into the profits of entry-level watches in particular. Higher end watches on the other hand are significantly brand-name driven, meaning that the industry could witness a consolidation in favour of bigger, more established brand names in future.

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