The virtue of value
There just doesn’t seem to be an end to the bad news coming out of the Swiss watch industry. Figures released by the Federation of the Swiss Watch Industry, or FH, on 23 August suggest that exports have plummeted again. In July, exports to the top six markets, which account for around half of all exported Swiss watches, fell by 15.6%. The Hong Kong market alone crashed by 32.7%.
Don’t say it aloud just yet, but it appears the Swiss watch business is in the midst of a full-blown crisis. Things look particularly bad for brands at either end of the price spectrum. Watches in the Swiss franc (CHF) 0-200 (Rs0-13,600) category have seen export volumes fall by 19.7%, while those in the CHF 3,000-plus category have seen them fall by 14.4%. Watches in the middle are, comparatively, doing much better.
What does all this mean? For one thing, it means that mid-range watches are somehow still holding on to their markets, even if FH data shows that their prices are falling sharply. This is a bit counter-intuitive at first glance. Especially when people assume that the biggest challenges to Swiss watches come from smartwatches and wearables. If so, shouldn’t the mid-priced segment be the one hit hardest by Apple and the others?
It is always risky to presume what is really going on in the world of watch markets. But we can make some educated guesses. Perhaps what we are seeing is consumers reacting to the weak economy by opting for watches that are of good value. This can, plausibly, work at both ends of the market.
If you are on a very tight budget but looking to buy a watch, you are probably thinking to yourself: Why buy a cheap thing I will have to replace in a year or two? Why not upgrade slightly to a Rado or a Tissot and buy something that will last much longer at only a slight premium?
At the other end of the market, you are perhaps a high-end consumer who wants to spend a tidy sum, but now wants to exercise a bit of restraint. So you turn to one of the many good-value, high-end models that populate the market, such as one of Rolex’s Air-Kings or one of the new TAG Heuers unveiled this year.
If this is indeed what is happening, and I have a niggling suspicion that it is, then this goes completely against some of the positions I have taken in the past. In the past, it felt like there was going to be a bloodbath in the mid-price brands thanks to a shortage of Swiss movements and the wearables boom. But the economic downturn has, perhaps, helped buck this trend by directing more consumers into a price segment that may have otherwise struggled.
But one must also give credit where horological credit is due. Brands such as Rado, Tissot and Raymond Weil continue to innovate and excite consumers in difficult environments. They find cost-effective ways of keeping consumers interested in their products. They may not boast of all the bells and whistles of high-end brands, but they make for an outstanding balance of value and quality.
The value brands often don’t get the credit they deserve. But in times of economic crisis, they often make more sense than many other watch brands.