The economic crisis caused by the measures taken by governments following the spread of the Coronavirus is certainly a topic on the agenda. Not even Swiss watchmaking was exempt from the consequences of the crisis.
How will the current economic crisis be reflected in the luxury watch market?
Let's find out together in this article.
Production
Swiss watch production has been significantly impacted by government measures taken during the spread of Covid-19. It is said – the world of Swiss timepieces is proverbially secretive – that i production drops are between five and twenty percent of the annual average.
A drop in production, in the absence of changes in demand, usually means an increase in prices. But how is global watch demand going?
The question
To understand how the prices of luxury watches could evolve after the economic crisis we must examine the question of demand. The market, in fact, is made up of two: those who sell and those who buy. And if it is true that those who sell have reduced stocks available, it is equally true that if those who should buy do not buy, the stocks remain unsold and prices must fall.
However, this is not the case with the current situation in luxury watchmaking. The severe economic crisis has not affected all social groups equally: those higher up, as often happens, have been less affected by financial adversity.
Consequence of what has just been written is that the demand for the most prestigious brands, such as Patek Philippe, Rolex, Audemars Piguet, Omega, Cartier, and for the most prestigious models of some other manufacturers, such as the Carrera by Tag Heuer or the Navitimer by Breitling, it has not fallen particularly heavily. There are certainly consequences of the economic crisis regarding the decrease in the circulation of luxury watches: sales volumes are more modest than in the past. But what is sold, is sold at the previous price: in short, you don't get a Rolex Submariner or a Rolex GMT at a lower price than last year, let alone on the list…
The good news: the return of the local market
There are certainly problems resulting from the economic crisis caused by the measures taken by governments following the spread of the Coronavirus, such as the difficulty encountered by luxury shops in historic centers which are affected by the decline in tourism. Those who in the past have focused heavily on "traveling" customers who come to Rome, Milan or Venice from the four corners of the globe and are willing to spend large sums with ease, have certainly been impacted.
However, it is not an entirely gloomy picture: the shops in the area, those that have been able to build a strong bond with customers over the years through fairness and trust, have withstood the crisis well, indeed, at times they have even increased their turnover.
Conclusions
The Swiss luxury watch market, as far as we know today, is holding up. The biggest problems concern brands in the under 1000-2000 range, on the one hand, and dealers who have focused on foreign customers on the other.
High-end luxury watches and dealers who have chosen to "manage the territory", however, have been less affected by the economic crisis induced by government measures taken following the spread of Covid-19.
