With the Swiss franc hitting record levels against the dollar, leading watch manufacturers are warning retailers that they will have to raise prices.
At press time, the franc, traditionally viewed as a “reserve currency,” had jumped 25 percent since the beginning of 2011, according to Forex NewsNow.com. And Switzerland-based manufacturers, some of whom have instituted increases, say that retailers should brace for more.
“We are anticipating a price increase,” says Stacie Orloff, president of Bell & Ross America, adding that her company hasn’t yet raised prices. “We haven’t made any decisions other than we will be anticipating an increase of 5 to 10 percent.”
And Orloff thinks she’s not alone. “From what I hear, all my competitors have either risen prices already or are anticipating doing it again,” she says. “The franc is just out of control.”
Jean-Claude Biver, CEO of Hublot, foresees a price hike in December. “We don’t raise prices at the same speed the dollar is weakening,” he says. “We prefer to suffer in margins rather than to suffer in turnover. But there is always a point where you have to pass it on.”
Still, he says the franc’s rise doesn’t seem to have dented Hublot’s business. “The impact is probably there, but we, and the rest of the Swiss industry, are on track to have the best year in our history,” he says. “We are on the high end, so we are somewhat protected. If a watch retails for $21,900, and it goes up to $23,600, that is a 10 percent difference. But the price sensitivity is not as dramatic as it would be on the lower end.”
Steven Kaiser, president of Kaiser Time, which advises watch brands, says the franc’s rise has posed a real problem for companies.
“This is going to require a lot of creative solutions,” he says. “At some point, you can’t keep losing money. But you can’t keep raising prices either.”