Don’t forget that people are still buying watches. The total value of Swiss watch exports in October 2016 was about 1.6 billion Swiss francs, and a higher 1.76 billion Swiss francs in November. That is still a good amount of money, even if numbers are down. More important is that while the industry is still experiencing month-after-month decreases in exports, the severity of those decreases are lessening. This means we are getting closer and closer to stability. My hope is that in the next 12 months the Swiss watch industry will at least see flattening export volumes where there is little to no variation month on month. That, in my opinion, will signal a base line of current demand that the industry should seek before considering its next moves. In other words, before the Swiss watch industry focuses on growth, it needs to aim for stability with figures that plateau.

World Distribution Swiss Watch Exports by Year. Source: fhs.swiss

Finally, let’s quickly discuss the overall top markets, and mention some of the few places around the world where exports are actually increasing. I don’t per se know why those regions are increasing their import volumes (and it isn’t as though they were all major markets to begin with), but it is interesting to speculate. In this order, the top markets for the export of Swiss watches in all of 2016 thus far are (in ascending order): 10. UAE, 9. France, 8. Singapore, 7. Germany, 6. Italy, 5. United Kingdom, 4. China, 3. Japan, 2. USA, and 1. Hong Kong.

The top two markets are each almost double the volume of the third and fourth largest markets which says a lot about their power of affecting the overall performance of the Swiss watch industry. Hong Kong and the USA are very close in overall imports of Swiss watches and, if the trends continue, the USA will overtake Hong Kong as the world’s most important market for watches very soon. Compared to 2014, the exports of Swiss watches to Hong Kong is down a massive 44.6%. From 2015, exports are down a further 28.4%. Compare that to decreases of just 9.6% and 9.7%, respectively, for the USA. This could very well mean that sometime in 2017 the USA will overtake Hong Kong to be the biggest importer of Swiss watches. That is very important for luxury watch brands to consider, and I’ll explain why.

Given the size of the USA market for watches, most watch brand offices in the USA are woefully understaffed both in the number and competency of people. Moreover, in the United States many brands continue to struggle in working effectively with their retail partners to create meaningful and effective marketing and advertising materials, as well as to combat the problems of the gray market. On top of that, many watch brands in the USA staff very few if any people from the USA in positions of decision-making power. That translates into a situation where virtually all important decisions about what happens in the US market come from managers in Europe, or people who temporarily move to America to “run the market.”

In my experience, even the most well-meaning of these individuals, without proper consultation and advice from people who best understand the American market, end up making poor or ineffective decisions. In less important markets for the brand this might not be as big of a deal, but for the second, or even top market in the world, understaffed and under-experienced offices meant to the run the market seem like rather avoidable liabilities.

World Distribution Swiss Watch Exports between January-November, 2016. Source: fhs.swiss

I found it interesting that countries like Italy enjoy very close to the same exports as places like China. Places like Singapore (which are tiny) have about the same volume of exports as France, even though both are reportedly struggling. One of the reasons for struggles and diminished exports in many countries is likely related to fewer sales to tourists – many of which were Chinese. Earlier in 2016, I reported on new taxes and policies in China designed to make it more difficult for Chinese tourists to enjoy better prices when buying items both inside of mainland China, as well as brought in after being purchased outside of China. Efforts against corruption, and later for purchasing goods outside of China without paying duties are having real effects on the purchase of luxury timepieces in very significant ways.

So where is there growth in the export of Swiss watches? There isn’t too much of it, but there is growth to be seen. Perhaps the most significant market to experience a growth in exports is the United Kingdom that saw 24.4% growth in 2016 versus 2014, and 4.5% growth in 2016 versus 2015. Other areas for growth include places such as South Korea, Canada, Kuwait, Israel, and Bahrain. fhs.swiss