Tokyo (SCCIJ) – The Swiss watch industry has recovered well from the Corona shock. Exports of timepieces made in Switzerland last year even exceeded the pre-crisis level in 2019. Simultaneously, Swiss foreign trade overcame the pandemic slump. Swiss exports rose 15% to 259,5 billion francs.
Exports of Swiss watchmakers in 2021 smashed the previous annual sales record.
Sharp turnaround
The return to pre-crisis levels of Swiss watch exports as early as September and a positive performance in the fourth quarter produced the best-ever annual results for the sector, at 22.3 billion francs, 2.7% higher than in 2019 and a 0.2% improvement over the previous record set in 2014. Compared to the first pandemic year 2020, exports jumped by 31%.
While the Covid-19 pandemic continued to make its presence felt throughout the year, its consequences for the watch market proved less severe. Overall, luxury personal goods benefited from the sharp increase in demand in China and the United States. Digitalization and the shift of savings accumulated during the various lockdowns created additional demand. While travel retail suffered from the decline in tourism, an increase in domestic purchases, a switch to digital channels, and the development of the duty-free market in Hainan offset losses to some extent.
Market polarizations
Despite the still precarious health situation, luxury personal goods should see increased demand in 2022. The strong results achieved last year – and even earlier, in 2020, in China – will nonetheless create a slightly unfavorable base effect. Given these factors and a still significant degree of uncertainty, the forecasts for Swiss watch exports are based on cautious optimism.
However, discrepancies exist between the various actors in the luxury sector and Swiss watchmaking. Growth is being driven more by a set of brands than by product categories as in the past. The same polarization is being seen in markets and price segments, as evidenced by the decline in volumes. This can be explained in part by current economic factors associated with the pandemic but also, more worryingly, by structural changes, to which the sector must respond and adapt.
Product development
Exports of wristwatches increased by 3.5% compared with 2019, to 21.2 billion francs. The number of items, though, continued to fall, to 15.7 million. This is a decline of 4.9 million or almost a quarter compared with 2019. Including movements, the number was 22.3 million.
The number of watches with export prices at less than 500 francs fell sharply, accounting for over 95% of the decline in volumes, with a 25.1% drop in their export value. The decrease of watches priced between 500 and 3,000 francs was significantly less marked, while timepieces for more than 3,000 francs grew by almost 10%.
Not unanimous markets
Among the main regions, America (+21.7% compared with 2019) recorded the strongest growth thanks to the United States, absorbing 17% of Swiss watch exports. In Asia (+1.0%), growth in China was offset by often marked declines in most other markets on the continent. Its market share was 52%. Exports to Japan declined by a moderate 11.9%.
The United States (+27.8%) witnessed remarkable growth throughout the year and was once again the leading market for Swiss watch exports. China (+48.8%) came in just behind. Between them, these markets represented 27% of total value and accounted for most of the growth observed.
Text: SCCIJ based on a press release by the Federation of the Swiss Watch Industry; Picture source: flickr/Tobit Flatcher CC BY-NC 2.0
