It is variously being called a correction, a downturn, a consolidation and even a bubble. But the true effect of the recent softening in luxury watch sales in key markets will fully emerge this week as news filters back from Baselworld, the most important show of its type in the international calendar.
Baselworld’s organisers do not give any hint of being ruffled by market conditions. “All the biggest and most prestigious brands will be attending Baselworld 2016 and will present the new creations and innovations that will become the trends that will prevail for the following 12 months,” says Baselworld’s managing director, Sylvie Ritter. Ms Ritter says there will, however, be “comparatively fewer” jewellery brands from Asia after declines in their home markets.
One trend Baselworld will certainly be seeing is the hunt for value for money. “In my opinion, value for money represents the future of the watch business,” says Philippe-E. Peverelli, managing director of Tudor, the more affordable sister brand of Rolex, which celebrates its 70th anniversary this year.
“We all felt rich for a few years while watches were selling well everywhere, but now we are back in the real world and every brand is going to have to look in the mirror and recognise its own true value.”
He is bearish on Hong Kong: “I don’t believe sales in Hong Kong will ever be as strong as they were before the downturn, but we can now benefit from the fact that the Chinese travel the world and can buy anywhere.”
Rob Diver, TAG Heuer’s UK brand manager, says: “I wouldn’t be surprised to see retailers going for volume sales at competitive price points. And I think we’ll benefit from the fact that, more than ever, end customers are going to be looking for the safety that comes with buying a watch from a major brand.”
Affordability and conservatism will also be the keywords on the Raymond Weil stand at this year’s Baselworld, where its chief executive Elie Bernheim will be working especially hard to push watches in the £500-£2,500 price bracket. “I think the key to success at Baselworld, and in the year ahead, is going to be to make watches more accessible. More than ever before, people are looking for good products at sensible prices and that is the area on which we have focused,” says Mr Bernheim, whose company sells about 200,000 units annually through 3,500 outlets worldwide.
“We haven’t found it necessary to move heavily into [cheaper] quartz movements to do this, but we have negotiated with our longstanding suppliers in order to be able to continue making mechanical pieces of our usual quality to offer at aggressive prices,” he adds.
On the buying side, Neil Duckworth, who has been in the business for more than 30 years as a retailer and now as a distributor of luxury watches, believes many of his colleagues will shy away from the more expensive products of lesser-known brands. “If I were a retailer, I wouldn’t attend Baselworld with the idea of adding any more high-priced watches to my portfolio. It’s no longer going to be very easy to sell a watch costing £10,000-£15,000 or more unless it is from a big, instantly recognised brand. I do think, however, that watches in the £1,500-£3,000 price bracket by small, independent makers, which don’t have huge collections, are going to prove popular at the show,” says Mr Duckworth.
“The brands that belong to large groups tend to push retailers very hard to take on stock, whereas the relationship with a small, non-group maker tends to be more of a partnership. I also think this year’s Baselworld will see more retailers asking to get involved in the internet strategies of the big brands, simply because online selling is growing so rapidly.”
But while such talk of affordability and saleability is extremely relevant to the current market situation, some are hoping Baselworld will produce at least a few fireworks.
One of them is Wei Koh, the founder and editor-in-chief of Revolution, the international watch magazine, who believes it is essential that the industry does not allow itself to stagnate.
“Judging from the SIHH show in January, it seems as though people are making the safest and most commercial watches possible. There’s nothing wrong with that but equally the brands must remember that the best way to combat consumer apathy is to make watches fearlessly — the market is only going to be stimulated if watches are created which collectors want to buy.”
Mr Koh’s faith abides. “I think we can safely say that mechanical watchmaking will prevail. It has survived for 400 years already, so the small blip that it’s experiencing now is hardly likely to kill it off. Like sailing yachts and internal combustion engines, interesting watches are cool and will therefore be around for a long time to come.”