Global Recession Impacts Luxury Watches

The global recession has impacted the once recession-proof Swiss luxury watch business, according to reports from the Federation of the Swiss Watch Industry, the Richemont Group (Cartier’s parent), and the prestigious Salon International de la Haute Horlogerie luxury watch fair in Geneva, Switzerland.

* After several record-breaking years, Swiss watch exports in November—traditionally their best month—declined (by 15.3 percent in value, compared to November 2007) for the first time in almost four years. While all price segments dropped, the fall was greatest (down 30 percent) for watches between about $435 and $2,600 (export prices).

The declines “clearly illustrates the curb on growth suffered by the industry as a result of the world economic climate,” an FH report said. Watch exports, about 10 percent of all Swiss exports, are expected to be less this year than in 2008.

* The 18th SIHH (Jan. 19 -23) expects 15 percent fewer visitors—especially from the United States and Japan—than in 2008, when 17,000 from prestigious retailers worldwide attended the invitation-only event. Some show officials and attendees blame the global economic climate and what one Swiss newspaper calls “this challenging [watch] industry environment.”

Some also suggest holding the SIHH—usually in March/April to coincide with the international Basel, Switzerland, watch fair—in mid-January, due to a scheduling conflict at Geneva’s convention center, is also a factor.

In addition, SIHH’s exhibitors canceled their traditional evening events, normally highlights of the week, which celebrate the luxury watch business, some “to save money,” said a show spokesperson. (One exception: IWC’s dinner for retailer and celebrity guests, with Academy Award winner Kevin Spacey’s spontaneous performance, for IWC’s partnership with the Darwin Foundation and its Aquatimer diver’s watches.)

Even so, those at this first-ever SIHH winter edition saw some new features.

The Ralph Lauren Watch and Jewelry Co, a recent joint venture between the Richemont Group and the Polo Ralph Lauren fashion brand, has joined the SIHH exhibitors and unveiled its first-ever collection of timepieces. This is Richemont’s first joint venture with a luxury fashion designer and Polo Ralph Lauren’s first foray into luxury watches.

The FH is showing the newest version of its world-traveling exhibition, “Think Time, Think Swiss Excellence,” not seen previously in Switzerland.

An area in SIHH displayed the work of the Fondation de la Haute Horlogerie, which promotes luxury watchmakign worldwide and is the SIHH’s organizer.

The 2009 SIHH features 17 of the globe’s most prestigious brands (12 owned by the Geneva-based Richemont Group). They are A. Lange & Söhne, Alfred Dunhill, Audemars Piguet, Baume & Mercier, Cartier, Girard-Perregaux, IWC, Jaeger-LeCoultre, Jean Richard, Montblanc, Officine Panerai, Parmigiani Fleurier, Piaget, Ralph Lauren, Roger Dubuis, Vacheron Constantin and Van Cleef & Arpels.

* The Richemont Group, whose several prestigious international jewelry and watch brands include Cartier, IWC, and Vacheron-Constantin, issued a grim report this month. Important third-quarter sales (including Christmas) dropped 12 percent overall, and 28 percent in the Americas alone, due to the global financial crisis and a decline in consumer confidence which had “a significant impact” on regional sales, it said. One result: Cartier is putting almost all 200 full-time workers making watch cases at one of its Swiss watch factories on part-time.

“Demand for luxury goods … has fallen dramatically,” the statement said, “and Richemont is facing the toughest market conditions since its formation 20 years ago.” With the current economic climate and uncertainties, it expects “no significant recovery in the foreseeable future” and will “take the necessary steps to not only see the difficult times through but to emerge stronger.”

Speaking at SIHH, Bernard Fornas, Cartier International president and chief executive officer, told Reuters news service that “real, true luxury is back,” because the financial crisis is changing consumers’ attitudes and buying. “When people are buying something they are very tough with their choice of brands,” he said, and are now more likely to favor “strong” luxury brands, rather than lower-priced ones which call themsevlves luxury. Still, echoing Richemont’s forecast, Fornas told Reuters, that currently “[we] don’t see … where the end of the tunnel is [and] see no cause for optimism.”

Caption: Top Swiss government and watch officials gather at the opening of the 2009 SIHH. Pictured are (from left) Pierre-François Unger, from the Geneva State Council; Bernard Fornas, chief executive officer of Cartier International; Fabienne Lupo, managing director of the Fondation de la Haute Horlogerie (SIHH’s organizer); Philippe Metzger, CEO of Piaget; and Juan Carlos Torres, CEO of Vacheron Constantin.