More Bad News For The Watch Industry (Which Isn't Necessarily Bad)

Swiss exports are on track to reach the lowest level since 1984!

It has now become common knowledge that this past year has been one of the worst on record for the watch industry. Data released by Bloomberg and the FHS (Federation of the Swiss Watch Industry FH) show that sales have dropped over 45% between 2015 and 2016, and the level of Switzerland’s watch exports dropped 11 percent during the first 10 months of the year.

As it stands, Swiss exports are on track to reach the lowest level since 1984. This is interesting because 1984 was at the height of digital watch popularity. It was also the year that Swatch Group AG was formed in reaction to the low-cost competition coming out of Asia. This is similar to the situation in 2015-16 with the advent of the smartwatch, namely the Apple Watch. The Apple watch didn’t break any records its first year, but with its second release, which is water resistant, it’s already showing signs of expanding its market. 

In addition, Vacheron Constantin (a “holy trinity” brand), Cartier, and Vulcain (who supplies watches to U.S. Presidents) have all cut jobs. Swatch Group has not done so, but it too could follow suit as their costs mount. 

Making matters worse, interest rates in the United States, the largest watch market by far, have started to go up and the inflation rate is obviously not that far behind. In short, all signs point to uncertainty in the watch industry as a whole.

Above is a graph which shows Swiss watch exports in units per millions from 1980 through 2016. The peak was clearly in the early 90’s with a strong move upward between 2009-10, which is also when we saw watch prices (new and vintage), really jump, which takes us to where we are today.

The 12-month moving average shows a decline in sales since Dec 2015.

The 12-month moving average shows a decline in sales since Dec 2015.

Another interesting graph is the 12-month moving average, which shows a decline in sales since Dec 2015 at -2% down to -10% these past couple months. October and November stayed the same at -10%, but that’s hardly good news. In fact, looking back to August and September we saw an increase only to have it dip again. If this pattern continues, we may see another small increase due to the Holiday season in December, but then we should expect a significant drop in January and February 2017 as the “winter blah’s” take hold.

Also interesting is in which price ranges the shifts are happening:

Watches in the $0-$200 category rose in units and value by +2.9%, but watches in the $200-$500 categories dropped more than any other in units -7.5% and in value -8.5%. 

Watches in the $500-$3000 category represent the only other price point that rose. In units sold by +2.2%, and value +2.6%.

And not surprisingly, the most high-end and most expensive category, the $3000+ category, dropped in unites sold by -3.6%, and a whopping -7.1% in value.

Precious metals & "others" took the biggest hit.

Precious metals & "others" took the biggest hit.

Some more clues as to what may be happening come from an analysis of materials (graph above). Stainless Steel watches had an increase in sales by a very decent +6.4%, but precious metals dropped across the board at a rate of about -12%.

An even more telling clue comes from the actual markets. When looking at the 6 most important watch markets in the world, the United States saw a -18% drop in sales, Italy -12%, Germany -8.7%, and in Hong Kong about -1%. China saw a nice increase at +7.9% as did the United Kingdom at +6.5%. This works out to a net -5.6% drop overall.

U.S. showed the biggest drop.

U.S. showed the biggest drop.

So, what to make of this data?

My general perception is that for a while now the watch industry was given a finger, and in return, they took an arm. But, now the people are simply just giving them the finger good and hard.


Truth be told, they deserve it. For far too long manufacturers across the board have produced over priced uninteresting watches (some exceptions notwithstanding). They’ve lost that perfect combination of mechanical substance and style that once was common place in the 1950s and 1960s. Without a doubt, this is the reason why the vintage market continues to do so well, and why the trend has been towards a more vintage look and feel with each new watch release from many brands.


Only time will tell what happens next, but my advice is to keep your eyes open, because as mentioned here, we could be heading towards a buyer's market. which is not necessarily bad.