Blame the Apple Watch: Swiss watchmakers see exports decline in October

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It was Swiss watchmaking legend Jean-Claude Biver who said in 2014 that the Apple Watch (and smartwatches more broadly) “wouldn’t create another crisis for the Swiss watch industry.” It now appears that Mr. Biver may have spoken too soon. According to a Swiss customs office statement released Thursday, October saw the biggest decline in the export of Swiss timepieces in six years: a 7.6 percent dip in global shipments, including a 12 percent decline in shipments to the U.S. alone, and a drop in total revenue of 2 billion Swiss francs ($2 billion).

It’s the continuation of a trend that began earlier this year. In August, exports fell 9.3 percent year-over-year — then the steepest monthly decline since November 2009. September witnessed a 9.9 percent drop in Swiss luxury wristwear shipments, bookending a Q3 that saw sales decline 8.5 percent. Since January, Swiss watch exports have slid 3.2 percent overall.

These sustained, precipitous drops are especially dramatic in context. In October 2014, Swiss watch exports made one of the highest year-on-year gains of the year — 5.2 percent. And 2014 was a record year for the Swiss watch industry overall, generating $23.9 billion in sales.

The natural inclination is to blame smartwatches, a market segment which is expected to reach $32.9 billion by 2020, but they’re far from the biggest factor. Analysts point to weak demand in Asian nations, especially Hong Kong, which saw its sales share of Swiss wristwear tumble 10 percent in October from the same period a year ago. Other overseas markets haven’t fared much better — in August, sales to China were 40 percent of total sales, down from 49 percent in July 2014, and in the same month the South Korea market shrank to 29 percent.

Still, analysts say the role of smartwatches in recent declines can’t be ignored. “Traditional watch makers are coming under pressure,” Ben Woods, Chief of Research at CCS Insights, told Tech Radar in October. “It would be naïve to think the Apple Watch has not impacted the traditional market in some form.”

The heirloom quality of high-end watches — traditions of passing watches down one generation to the next — has helped to shield luxury brands from the growth of wearable tech, but mid- and low-end brands haven’t been so lucky. Fossil projected a Q4 sales decline in this segment of as much as 16 percent.

That’s led some watchmakers like Swiss company Swatch to embrace digital with open arms. The company beat Apple to the mobile watch payments punch with a wearable it debuted in October (Apply Pay has yet to roll out in broadly in China).

But all the same, high-end brands aren’t hedging their bets. Tag Heuer and Movado introduced luxury smartwatches earlier this month. In February, a coalition of Swiss watchmakers including Frederique Constant, Mondaine, and Alpina announced a partnership with motion-tracking company Fullpower to create a unified smartwatch platform, MotionX.


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