ZURICH – The heads of some of the biggest Swiss watch brands, from Patek Philippe to Oris, said demand for luxury timepieces is starting to slow from an unprecedented industry boom during the Covid-19 pandemic.
“In the past two months, the market has been a little bit slower than before,” said Mr Thierry Stern, the chairman and controlling shareholder of Patek Philippe, the family-owned Geneva-based brand.
“I won’t say that it’s very bad – not at all. But I just see that it’s slowing down,” he added in an interview.
Oris, the independent brand, said that although its revenues are up by double-digit percentage points so far in 2023, it too is seeing some early signs of softness from retailer orders.
“The sell-out has been continuously good, but then stocking has been a little bit softer,” co-chief executive Rolf Studer said in an interview.
The comments mark an early indication that the luxury watch sector may be cooling after demand and Swiss exports surged to record levels close to 25 billion Swiss francs (S$37.3 billion) during the pandemic as a new generation of consumers, particularly in the United States, rediscovered mechanical timepieces.
Demand for Patek’s watches, which start at around US$30,000, still far outstrips supply. But the company’s president said anticipation of new models or concerns about Russia’s invasion of Ukraine and economic uncertainty could be damping consumer appetites.
Oris, whose average watch price is up from 2,200 francs to 2,400, said the US market was still strong, as was France, but European countries including Germany, Belgium and the Netherlands were more challenging.
“You see that people are a little more cautious,” Mr Studer said.
Mr Julien Tornare, the head of the Zenith watch brand, warned that there is “quite a bit of instability everywhere” despite ending 2022 with the best-ever sales performance since being acquired by luxury juggernaut LVMH Moet Hennessy Louis Vuitton in 1999.
Mr Tornare pointed to the “trauma” of the three-year pandemic shutdown of the China retail market, which was the top destination for Swiss watch exports before being surpassed by the US in 2021.
“I think we need to be a bit patient to get back to what we knew before,” Mr Tornare said of Chinese buyers who have yet to fully return to pre-pandemic spending habits since the end of zero-Covid policies there.
Cooling demand would be a mixed blessing for Patek and other top watch brands like Rolex, as it might reduce the time that customers must spend on waitlists before getting the call from authorised dealers.
The gap between Patek’s production of about 70,000 watches per year and demand is so big that “it’s not so bad if we see a certain slowdown”, Mr Stern said. BLOOMBERG
