The Swiss watch industry has faced its fair share of changes recently. With a go-slow in the Chinese luxury goods market, the growing power of tourist shoppers and the demands of the digital world, which many luxury brands were long reticent to enter, this is an historic industry that is adapting impressively to new challenges.
Analysts at Bernstein claim high-end Swiss watches are set to remain among the fastest-growing luxury product categories in the coming years, forecasting 8 to 9 per cent annual growth to 2017, compared with 6 to 7 per cent for the luxury market as a whole. In the first ten months of this year, exports of Swiss watches amounted to £12.1 billion, up 1.9 per cent on the same period last year, according to the Federation of the Swiss Watch Industry.
Switzerland’s association with watches and clocks began almost five centuries ago. French Protestant reformer John Calvin was living in exile near Geneva in the mid-16th century when he began imposing hard-line doctrine on daily life, eventually banning the wearing of jewellery.
But Geneva’s goldsmiths and jewellers cleverly transferred their skills to making pocket watches. Fifty years later and Geneva’s watchmakers had banded together to form the Watchmakers’ Guild of Geneva, which established the Geneva Seal: 12 stringent watchmaking guidelines that even Calvin couldn’t beat.
To this day, the Geneva Seal is applied to some of the finest Swiss watches; requirements include making the watch in the Canton of Geneva and polishing inner steel parts of a watch to precise angles and levels of surface smoothness.
By the mid-17th century, Geneva was so crowded with watchmakers that many decided to move onwards and upwards, opening workshops in the Jura Mountains.
Despite the Chinese economic slowdown earlier this year, today nearly half the luxury watches currently sold in Europe are bought by Chinese tourists, says Professor Scott Gallaway, founder of L2, a New York-based digital innovation think tank. When the Chinese government recently introduced anti-corruption laws to curb government officials from splashing out on lavish gifts, the Swiss watch industry felt the blow.
Now, top Swiss watch industry executives are starting to look elsewhere for growth. In its annual Swiss watch survey of 50 leading industry executives, Deloitte forecasts demand will hold up well from Latin and North America; from tourists travelling to Switzerland and major European cities on luxury shopping sprees. The high end of the market remains buoyant. Two thirds of those polled said they expect the strongest growth in the next year to come from watches costing more than £3,000.
With increased reliance on the global jet set, who shop as they travel, and high confidence in the demand for pricey timepieces, some Swiss watchmakers are opening boutiques in the so-called London luxury quarter, a cluster of 42 streets in Mayfair, Piccadilly and St James’s anchored by Bond Street.
In 2014, Richard Mille, who refers to his watches as “racing machines on the wrist” and whose offerings include the RM 031 with a price tag of £718,500, will open on Mayfair’s Mount Street. While counting fashion greats Balenciaga and Marc Jacobs among his neighbours, he’ll be doors away from other Swiss watchmakers familiar to watch connoisseurs, at the Parmigiani boutique and at William & Son, William Asprey’s luxury emporium which stocks rarefied Swiss watch brands H. Moser, De Bethune, and the man some fans call “the god of watchmaking” for his intricate handiwork, F. P. Journe. Next summer, Watches of Switzerland opens a giant 17,000- square-foot, three-floor mecca on Regent Street.
With increased reliance on the global jet set, who shop as they travel, and high confidence in the demand for pricey timepieces, some Swiss watchmakers are opening boutiques in the so-called London luxury quarter
According to Aurel Bacs, the international head of watches at Christie’s Geneva, Swiss watches exert an unquestionably universal allure. “One of the joys of my job is seeing the chief executive of a publicly listed company, a musician and a football player sitting together talking about the intricacies of a Swiss watch dial or the beauty of a watch movement,” says Mr Bacs, who knows “at least three” collectors who each own more than 1,000 watches.
Last month, he presided over three watch auctions in Geneva, during which 370 fine watches fetched $43.9 million in 24 hours and produced 100 auction records, including the record for any watch-sale series in history. The top sale was a 1957 pink-gold Patek Philippe which sold for $2.2 million. A crowd had formed outside the brimming saleroom and it all ended with a standing ovation.
The joy and reassurance of pure, old-fashioned craftsmanship may be one of this industry’s most enduring selling points, but nowadays social-media marketing is all par for the course. Since Rolex launched its Facebook page this April, it has scooped more than 1.6 million likes, while IWC (International Watch Company) posts celebrity stories and tracks its customer engagement closely, monitoring how social-media activity affects e-mail sign-ups, catalogue requests and sales.
Yet nearly 50 per cent of top watch executives surveyed by Deloitte said social media and the open discussion uncontrolled by the brands themselves that it encourages, pose the biggest online risk to the industry, surpassing online counterfeits.
Against this backdrop, Samsung has come up with a watch you might think could pose an even bigger threat to Swiss watchmakers – wearable technology. In September, Samsung launched the Galaxy Gear which can make phone calls, surf the web and take photos, all for a cool $299.
Proof of demand for similar devices came last year when 20-something Canadian industrial engineer Eric Migicovsky launched an online crowdfunding campaign on the Kickstarter website for his Pebble smartwatch, hoping to raise $100,000 in a month. He raised $1 million in 24 hours and went on to secure $10.2 million in investment and 275,000 pre-orders.
But Luc Perramond, chief executive of Hermès Watches, remains upbeat. “I do not see smartwatches as a threat, but as a stimulation. The technical innovation should attract the interest of younger customers for wristwatches. Consequently, it is beneficial for the whole industry,” he says.
For Swiss watch purists, the coming year promises to nod to technology from a century ago. Some of the earliest wrist-mounted watches ever made were prompted by soldiers in the trenches who found pocketwatches unpractical. As the centenary of the First World War approaches, there is much talk of military watches and their understated, legible style, from the Bell & Ross WW1 Regulator, to Zenith’s Captain and Cartier’s Tank, famously inspired by First World War tank tracks.
Meanwhile, if SalonQP, London’s annual fine watch exhibition held at the Saatchi Gallery last month, is anything to go by, interest in Switzerland’s most individualistic watches is gaining traction. Among 76 exhibitors, including Tag Heuer, Jaeger-LeCoultre, Chopard, Hermès, Vacheron Constantin and Bonham’s, were 42 of Switzerland’s lesser-known independent watchmakers, who manufacture in small numbers and sometimes undertake every aspect of production in-house.
Kari Voutilainen has created watches for some of the biggest names in the Swiss watch industry, although he is not contractually allowed to name them and now creates 50 of his own watches a year. “Independent Swiss watchmakers are less commercial and more artistic operations, and they are an increasingly popular breed of ‘Made in Switzerland’ watches,” he says.
