No better time to buy a Swiss watch2 min read . Updated: 18 Apr 2015, 12:11 AM IST
If you have been eyeing a luxury timepiece, get it now. Threatened by the Apple Watch, prices have dropped to their lowest in a decade says Sidin Vadukut
A perfect storm has hit the Swiss watch industry, and things cannot possibly get better for customers. Two trends are at play here. The first appears to be a rebalancing of the Chinese market. The second is the Apple Watch. Throw in a third element—fear—and you are looking at the closest the world watch business has come to a buyer’s market in perhaps the last 10 years (of course, it will never become a buyer’s market in the theoretical sense. Luxury goods are never value for money in any realistic sense of the word).
“Prices had reached such high levels," Aldo Magada told me last month. I met Magada in Basel, Switzerland, during the 2015 edition of the Baselworld watch and jewellery fair. Magada has not been chief executive of the LVMH Moët Hennessy Louis Vuitton group’s Zenith watch brand for long. So he speaks with uncharacteristic candour. “Over the last five-six years…Swiss watch prices had gone up…40%. Something like that." And now these prices are correcting; in some cases, drastically.
While China remains the most important international market for watches, consumption patterns in that part of the world also seem to be changing. Demand has moved a step below on the luxury pyramid of brands. Over the last few years, we had seen how Chinese customers were demanding more elegant, minimal timepieces. And we saw brands falling over each other to satisfy this demand.
Now, there is pressure on prices as well. Perhaps the Chinese economy is slowing slightly, and consumers are adjusting spending budgets.
There is also much talk of anti-corruption crackdowns in China. So much so that lesser-known brand names are trying to cash in. A sales manager for a second-tier Swiss brand told me he was hoping to sell pieces to Chinese buyers too afraid to publicly flaunt Rolexes and Cartiers in this political climate.
Then there is the pressure from Cupertino. Guy Semon, general director at Tag Heuer, told me that nobody in the Swiss watch industry wants to take the smartwatch for granted. Wait. No. Let me correct that. Nobody wants to take the Apple Watch for granted. There was no talk of any other wearable at Basel. “I remember what happened to the industry when the quartz crisis happened," Semon told me. “Entire watchmaking villages and communities were wiped out."
It seems unlikely that Apple will have the same catastrophic impact that Japanese quartz watches had on the Swiss business. But nobody wants to take a chance. In particular, there is huge pressure on brands that compete with entry-level Apple Watch models.
Why would anybody spend $500 (around ₹ 31,000) on a mechanical watch when they can get a smartwatch for the same price? This is a question I heard over and over again at Basel. In the next 12 months, we should have an answer.
What does this mean for the consumer? Outstanding value and great bargains. Baselworld 2015 presented a lavish collection of really good watches at excellent prices. From Tag Heuer to Corum to Calvin Klein, there are excellent watches available at great prices. And this will have a domino effect across the sector.
I am loath to ask readers to buy, buy, buy. But think about it. Either the Apple Watch will flop and Swiss brands will slowly inflate prices again. Or it will be a smash hit and half these brands will go out of business. Either way, the window of opportunity seems narrow.
Why not peek through?
Also Read: Sidin’s previous Lounge columns