With constant news streams reporting on how disposable incomes are down, consumer prices are up, the housing market is flat and the outlook is bleak, you would be forgiven for thinking that sales of luxury items have fallen. You would be wrong. In fact, the luxury Swiss watch industry has just released average annual growth figures for the industry in 2011 and they increased an astonishing 19.1 per cent from 2010, and these figures don’t even include Christmas sales. So why is this industry seemingly recession-proof?
Historically, luxury watch sales have fallen during recession as in 2009, ‘only’ SFr13.2 billion compared to SFr18 billion in 2011. In fact prior to this, in the 1980’s when the Quartz movement fuelled supplies of digital watches, the mechanical timepiece (luxury watch) was almost written off altogether.
Fashion trends and consumer habits are evolving, especially in the men’s sector. Watches are fast-becoming a reward for hard work and success and young, aspirational men are happy to spend upwards of $3,000 for their Swiss timepiece. It is not about a show of wealth to them, more an interest in the history and the horology of a timepiece. They are looking for something that delivers accurate timekeeping and will act as a long term investment.
David Hagan, of luxury watch-dealer David Duggan watch store in Mayfair, London says:
“They are looking for something timeless and classic. If you are going to spend five, fifteen or five hundred thousand on a watch you want something special to you.”
“Now there is a real collector’s market they hold their value and are easily turnable back into cash.”
The industry proceeds with caution, despite these positive results. Luxury brands such as Chopard, Cartier and even Rolex watches are careful to produce timepieces that will sell, and steer clear of the flamboyant designs that the pre-recession climate accommodated.
In fact the industry has been clever by reshaping consumer perceptions and making luxury timepieces a collector’s item, a long-term investment that will pay dividends and a status symbol.
The future of the luxury watch industry looks good. There are two currently un-tapped markets: the women’s industry and Asia.
Luxury brands are wizening up to these opportunities. They understand that where men go, women tend to follow and that women are becoming increasingly aware of the intricacies and benefits of a mechanical timepiece. That is why there is a huge increase in presence of women’s timepieces as the annual watch and jewellery event, Baselworld 2013. Baselworld is the biggest horology event in the calendar year and a great litmus test of future trends.
The other opportunity for growth is Asia, as it is largely untapped territory. Luxury timepiece brands such as Zenith, Cartier, Panerai and Rolex have been making real investment into development, logistics and staff to deliver their timepieces to the Asian market.
There is a word of caution however: brands with plenty of history are proving successful, however newer brands are not. The Asian market has local tastes therefore customers often prefer completely bespoke watches.
Thanks to these evolving trends, luxury timepieces can be somewhat of an investment. Most Rolex’s, Panerai’s and other luxury brands hold their value. Limited edition pieces will increase in value, the longer you hold onto it. For example, Eric Clapton sold his 1987 Patek Philippe for $3.6million in November 2012. This was a rare timepiece.
The future looks bright for the luxury watch industry. If you have the money to make the investment, you too could profit from this resurgence of popularity.
Info sourced by his author for luxuryactivist.com. All content is copyrighted with no reproduction rights available.