Swiss Luxury Watch Brands

Jean-Frédéric Dufour, the CEO of Swiss luxury watch brand Rolex, stated at the Watches and Wonders Geneva exhibition that treating luxury watches as investment targets has become an extremely risky behavior. This statement reflects the severe challenges facing the Swiss watch industry.

In recent years, while the export value of Swiss watches has shown an upward trend, the shipment volume has continued to decline. This contradictory situation of quantity and price is due to the Swiss watch brands’ insistence on a high-end positioning, continuously raising product prices in an attempt to transform watches into luxury goods.

However, with the changing consumption habits of Chinese consumers and the evolution of global political, economic, and cultural trends, this “jewelry-like product” with luxury attributes has gradually lost its market appeal. Particularly in the Chinese market, the export value of Swiss watches has declined significantly in the past year, even falling back to the level before 2021.

Moreover, with the rise of a new generation of consumers, they are more focused on practicality and value for money, and their demand for luxury goods is also gradually decreasing. This means that Swiss watch brands may need to adjust their positioning and marketing strategies in the future to adapt to the constantly changing market demands.

Swiss Luxury Watch Brands Challenges to the Pricing Strategy

The Swiss watch industry has always insisted on a high-end positioning, continuously raising product prices in an attempt to transform watches into luxury goods. Taking Rolex as an example, the official price of its diving watch introduced in 1954 was only a few hundred dollars, but after numerous price increases, the current entry price is around 100,000 Chinese yuan.

This continuous price increase strategy has achieved good results in the past. Last year, the sales of the Rolex brand alone reached around $11.5 billion, and another 6 Swiss watch brands had sales exceeding 10 billion Chinese yuan.

However, with the changing consumption habits of Chinese consumers and the evolution of global political, economic, and cultural trends, this “jewelry-like product” with luxury attributes has gradually lost its appeal. Chinese consumers are becoming increasingly sensitive to the prices of luxury goods, and watches, after losing their timekeeping function and frequent price hikes, have strayed far from the concept of “value for money”.

Therefore, even in 2023, when the consumption outlook was initially very optimistic, the performance of watches was weaker than other luxury goods categories. The Bain report showed that the year-on-year growth rate of watches in the overall Chinese luxury goods consumption was the smallest, far lower than that of fashion, jewelry, leather goods, and beauty.

China Market Becomes the Key

China briefly became the largest export destination for Swiss watches in 2020, but over the past three years, the United States has consistently been the largest consumer market for Swiss watches.

According to the “2023 Global Luxury Report” released by Bain, by 2030, Chinese consumers are expected to contribute 35% to 40% of the sales in the personal luxury goods market, but how much of that will be contributed by watches remains a question mark.

The report points out that the biggest factor affecting sales is the generational change in the watch customer base. As the Z-generation enters the main consumer group, and the Millennials even become the new generation of consumers, the influence of watch culture on these generations who grew up with electronic products is gradually waning.

Therefore, the performance of the Chinese market will be the key to the future development of Swiss watch brands. According to data from China’s General Administration of Customs, the import value of Swiss watches in the first quarter of this year has quickly fallen back to the level before 2021, indicating a decline in demand in the Chinese market.

Swiss Watch Brands Need to Adjust Positioning

Facing the rapidly changing market environment, Swiss watch brands must adjust their own positioning and marketing strategies to adapt to the constantly evolving consumer demand.

On the one hand, they need to rethink their product positioning, whether to continue to insist on the high-end luxury goods route or to shift towards a more value-for-money approach. At the same time, they also need to closely monitor the needs of the new generation of consumers and adjust their product design and marketing methods to attract a wider consumer base.

On the other hand, Swiss watch brands also need to strengthen their interaction with consumers, understand their real needs, and adjust their development strategies in a timely manner according to market changes. Only in this way can Swiss watch brands maintain their advantages in future competition and regain their former glory.