Volume leads UK’s Swiss watch sales as value dips

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UK shoppers look for value from Swiss watch brands.

A report released by the Federation of the Swiss Watch industry (FHS) last month revealed that while the value of Swiss watch exports to the UK has been declining, volumes increased during the month of June indicating that Swiss watches with lower price points are driving the market as consumers focus on getting the best value for money.

Retailers and distributors of Swiss watches in the UK noted recent changes to the market, with several recognising trending in sales to support the FHS’s findings.

Laurie Milne, watch brand consultant for Twelve Thirteen, has witnessed several affordable brands excel in recent months. “The market has accelerated at the lower end with really great watch sell-through coming from brands such as Michael Kors, Emporio Armani and Hugo Boss watches,” said Milne. “This is an excellent trend for the industry and continues the multi-ownership trend and the establishment of a watch as a true fashion accessory.”

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Reports seem to confirm that fashion-led, entry-level watches are driving the recorded increase in volume but Daniel Allen, assistant manager at the Petty Currie branch of Ernest Jones in Cambridge, argues that the watches being sold for lower price points are not necessarily of a poorer quality.

“The lowest priced Swiss watch is now Calvin Klein at just over £100,” Allen said. “But you can get a Citizen Eco Drive which is a more technologically advanced watch for the same price with three years more guarantee and the knowledge that you’ll never need a battery.”

Allen notes how changes in the availability of movements has affected several brands. He points out that numerous brands are selling watches using similar calibres of movements but positioned at very different price points. “Some Swiss-made brands are using the same ETA movement for a £100 watch as they do for a £1,000 watch,” he said. “Swiss ETA watches are loading their value, which I think is a contributing factor towards the Swatch Group reducing the availability of its ETA movements.”

Last month, LVMH group purchased the Geneva-based watchmaking workshop La Fabrique du Temps; a move that some might suggest could be in reaction to Swatch making its ETA movements harder for many non-Swatch brands to acquire. Many smaller brands have reported having to wait up to six months for movements to be delivered with one brand even being met with laughter from ETA when enquiring about waiting times when phoning up to place an order.

Other retailers have noticed slight changes in the market that tip the scales towards lower-priced models but overall are experiencing healthy watch sales. Jim Hunter of retailer Gatwards of Hitchin recognised a small downturn in June for sales of higher-end timepieces but found that watches at a lower-end price sold as normal.

“If [the FHS figures] are correct, it would show a decrease in value, and my figures show that,” he explained. “But I have to say that sales have bounced back in July and if they continue at the current rate it could be a very good month, possibly the best on record.”

Stuart Laing, head of buying consortium the Houlden Group, also recorded a “slight decline” on his members’ watch sales outside of London, but says this will be temporary while consumers get used to the latest price increases at the higher end of the market. “The rate of sale will return once these prices have been digested,” he explained. “Just look at the Swiss franc. Three years ago it was CHF2.06 to £1, so a CHF10,000 watch wholesaling to us was £4,854, but today it would be £7,581. Add to that the huge rise in the price of gold plus manufacturing and general cost rises, and then you have a massive jump in prices.”

Laing doesn’t believe that the latest figures from FHS represent a long-lasting trend for fashion watches to trump fine. “I don’t think lower-priced watches are selling a lot more; simply the high end consumer is just having a temporary rest,” he surmised.

Despite championing the rise of the lower-end of the market, Twelve Thirteen’s Milne concedes that the top end of the market is still protected in its luxury bubble. “There is a very significant market developing at the top end with the super rich,” he said. “Rolex continues to march.”

Craig Leach of Swico, UK distributor of Raymond Weil (pictured below), said the brand experienced a strong sell-through in June, with “strong double digits across combined multiple distribution”. For Leach and Raymond Weil, the second quarter of 2011 has been much stronger than the first. “I feel this has been driven by consumers seeking out brands that offer the best quality to price ratio, with good design but not trendy,” said Leach.

 

This article was taken from the August 2011 issue of Professional Jeweller magazine. See the whole edition by clicking here.

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