Adapting to a changing landscape
The Deloitte Swiss Watch Industry Study 2021
The pandemic disrupted the Swiss watch industry and proved a catalyst for some beneficial change. The industry is more optimistic compared to 2020, but concerns remain, and many players are adapting their business strategies to new realities. Over the past 18 months, the Swiss watch industry underwent an acceleration of digitalisation and this continues. But this shift was borne out of necessity. In the future, proactively recognising, anticipating and adapting to the demands of a changing landscape will make the difference between those in the industry who simply survive and those that thrive.
This eighth edition of the Deloitte Swiss Watch Industry Study is based on an online survey of 67 senior executives, interviews with industry experts and an online survey of 5,558 consumers in China, France, Germany, Hong Kong, Italy, Japan, Singapore, Switzerland, the United Arab Emirates, the United Kingdom and the United States.
77% of executives surveyed judge the outlook for the Swiss watch industry as positive for the next year.
Key findings
Hover over one of the watch segments to find out more
Industry prospects are positive
77% of executives surveyed judge the outlook for the Swiss watch industry as positive for the next year, but they expect growth only in segments of Chf 5,000 (export price) and above. 24% expect the Swiss watch industry overall to achieve pre-pandemic sales volumes by the end of 2021, with 36% predicting sales parity by the end of 2022.
China’s influence
Chinese consumers have helped the industry through the pandemic. The Chinese luxury watch consumer is much younger, on average, than consumers in other countries, willing to spend more and very open to innovative and new retail models. The industry is focusing its attention on mainland China and working out the best ways to approach this market.
It’s all about omnichannel
67% of executives surveyed believe that offline sales will continue to dominate, but digitalisation continues to accelerate and an omnichannel strategy is essential. Nearly half of consumers want to buy via e-retailers, social media or e-auctions.
Consumer behaviours
With Millennials and Gen Z gaining more purchasing power, they are the generations most interested in watches and they prefer luxury mechanical watches if given the choice. Smartwatch wearers continue to increase in numbers, but 23% of consumers wear both traditional and smartwatches. Timepieces have become solid investments and almost 1 in 5 consumers buy watches for this purpose.
Pre-owned professionalises
Brands see the pre-owned market as a way to introduce themselves to new audiences. 65% of executives are implementing some type of strategy for the certified pre-owned market. The proportion of consumers who are likely to buy pre-owned increased 11 percentage points compared to 2020.
Serious about sustainability
72% of brands are investing more in sustainability to reduce their carbon footprint and address consumer demands. 60% of consumers consider sustainability in their purchasing decision with the most important aspects being ethical sourcing and the environmental impact of the materials. Supply chain transparency and traceability are crucial now and in the future.
Industry highlights
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Geographical growth prospects
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Supply and demand challenges
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Omnichannel and omnipresent
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Consumer spending
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Pre-owned preference
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What is your why?
Geographical growth prospects
Unsurprisingly, as was the case last year, China is most often mentioned as the next big growth market for the Swiss watch industry, followed by the United States and India. Executives surveyed almost unanimously (96%) forecast growth in China, and 57 percent strong growth. Other growth regions include the rest of Asia, North America, and the Middle East, with between 80 and 90 percent of executives predicting growth. One-fourth of executives expect growth in Europe and only one-third in Hong Kong, with all other regions forecast to decline or stagnate.
Challenges posed by supply and demand
Uncertainty stemming from the pandemic and its repercussions on demand, supply and the labour market continue to be a challenge for the industry. Weaker foreign demand is still considered a significant risk, but decidedly less so than last year. Challenges posed by weaker domestic demand and the strength of the Swiss Franc have also significantly decreased compared to our 2020 study. However, the risks posed by shortages of qualified labour and the insufficient supply of parts, movements and other raw materials have increased.
Omnichannel and omnipresent
Last year brands and retailers moved their operations online, with some expanding their existing digital channels and others scrambling to put an e-commerce platform in place. This process continues, with executives still planning to prioritise the optimisation of sales channels (84%), further development of e-commerce offerings (81%) and strengthening their omnichannel strategy (79%). Developing e-commerce as a matter of high priority increased from 26% to 50% compared to our 2020 survey.
Consumers are willing to spend
On average approximately one-third of respondents are willing to spend more than Chf 1,000 (or local currency equivalent) on a watch, but this varies considerably between countries. Germans are more conservative with their discretionary income, whereas in China and Hong Kong over two-thirds of respondents are willing to spend more than Chf 1,000. This is another reason why China and, now to a lesser extent, Hong Kong are crucial for the luxury segment and why Swiss brands are investing in this growth market.
Increasing preference for pre-owned
There is an increase in the number of consumers who are very or somewhat likely to buy a pre-owned luxury timepiece in the next 12 months compared to our 2020 survey. Millennials and Gen Z are most likely to purchase pre-owned watches. There is far less stigma among younger consumers today about buying items that were previously owned. Consumers surveyed consider pre-owned watches because of their lower price (44%), the opportunity to purchase a discontinued model (31%) and for investment purposes (26%).
What is your why?
Brands are motivated to invest more into sustainability to reduce their environmental impact and because sustainability is part of their corporate strategy. Changing consumer behaviour has been a catalyst for the sustainability shift happening across many industries. It has impelled watch brands to invest more in sustainability, with 66 percent doing so to burnish their brand image and 64 percent in response to changing consumer demands and behaviours.
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Previous editions
The Deloitte Swiss Watch Industry Study 2020, An accelerated transformation The Deloitte Swiss Watch Industry Study 2017, It's all about digital The Deloitte Swiss Watch Industry Study 2016, Navigating through stormy waters The Deloitte Swiss Watch Industry Study 2015, Uncertain times The Deloitte Swiss Watch Industry Study 2014, Changing times The Deloitte Swiss Watch Industry Study 2013, Time for the future