Over the past week, Swiss watchmakers woke up to news of another steep decline as October shipments of mechanical watches declined 12% to $2 billion, which is the largest decline in six years.
The country with the most pronounced drop-off was Hong Kong, whose share of shipments dropped just under 40%. Hong Kong, which is traditionally a huge marketplace for Swiss watches, is seeing declining sales from high-end Swiss manufacturers like Richemont, while others like Tag Heuer has closed stores in the country this year due to weak demand. Swiss Watch sales are said to make up roughly one tenth of the country’s total exports, which have declined 3.2% over the first ten months of this year. The news is followed by similar drop-offs over the course of the year, including an 8.5% drop-off last quarter, which was reported last month.
Simultaneously, smart watch sales are continuing to accelerate with the Apple Watch sales reaching more than $1.69 billion in revenue through the end of September. The smart watch category as a whole has received a total lift from Apple’s entry into the market, with both Pebble and Fitbit reporting better-than-expected numbers for their respective smartwatch lineups as well.
The notion of mechanical watch buyers not being drawn to smart watches seems to slowly be changing with some Swiss watch companies now doing a 180 and embracing the idea of smart technology on the wrist. Tag Heuer recently released a “smart” version of its famous Careera watch earlier this month, which is running on Google’s Android Wear platform and retailing for $1,500.
News of the Swiss watch makers facing a steep decline is likely going to be repetitive unless they turn around and start creating smart watches that are equally as capable as their mechanical counterparts in their respective field. We’ll have to wait and see what happens.
Source: Bloomberg
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