Leading execs voiced fears about the Swiss franc, the gray market, and counterfeits
Eighty-two percent of Swiss watch executives forecast a gloomy outlook for their business, according to the 2016 Deloitte Swiss Watch Industry study.
In 2015, just 41 percent—half of this year’s number—voiced concerns about the future.
“Weak foreign demand” was perceived as the greatest risk, followed by the strength of the Swiss franc and weak domestic demand.
Swiss watch exports have fallen for the last 13 months, and most executives expect the declines to continue. Still, 22 percent of watch execs cited the United States as a possible growth market, up from 13 percent in 2015. Some see the United States soon becoming the leading watch export market.
For the first time since the survey debuted in 2012, counterfeiting ranked among the top five perceived risks. Online is making distribution of fake timepieces easier, the survey says.
The gray market has also turned into a significant problem: More than 50 percent of executives (an increase of 18 points from last year) consider it a significant reputational risk.
Online is also growing as a watch sales channel. Half of the executives surveyed plan more emphasis on online resellers over the next year, up from 19 percent last year. Another 25 percent say online boutiques will became their most important sales channel.
In another change emphasizing the newfound importance of digital, social media was now cited as the most important element of a company’s marketing strategy, followed by blogs.
The report notes that in the fourth quarter of 2015, more smartwatches were shipped than Swiss watches, though the latter still reigns in terms of value. But despite the growth of the smartwatch sales, it is still “unclear” if they present a threat to Switzerland, the report says, noting most of the current export decline has been fueled by decreased sales from Hong Kong and China and the strong Swiss franc. Smartwatches were ranked as the number four perceived risk, the survey says.