According to an article from the Wall Street Journal, the luxury watch market is taking a particularly hard hit due to a “sluggish global economy and changing consumer tastes.”
At the moment, Hong Kong—which is the top market for Swiss watch exports—is experiencing this the most. The country’s luxury sales are so slow that the luxury brands like Cartier and Tag Heuer are resorting to buying back their timepieces from dealers.
Retailers note that expensive, flashy designs are losing ground to simpler luxury watches with more casual designs.
“The market right now is very, very quiet,” says Alain Lam, executive director of Oriental Watch Holdings, one of the largest luxury watch dealers in Hong Kong. “The more expensive and the shinier the watch, the slower it moves.”
Analysts note that watches that are no longer selling may be stripped of precious metals before being destroyed to cut back on excess inventory. Conversely, these watch models could also be taken from one market and sold in another with higher demand.
However, there is an underlying fear is that excess inventory could end up on the black market. Luca Solca, a luxury brands analyst at Exane BNP Paribas, notes that to prevent this, more watch brands will need to help dealers in Hong Kong clear their inventory.
Back in May, CEO Richard Lepeu announced that Richemont would buy back its Cartier brand watches after April’s global sales decline of 18 per cent. Since then, Richemont has also agreed to buy back Piaget, Montblanc, IWC Schaffhausen and others on a case-by-case basis.
LVMH also suffered from the decline, buying back its Tag Heuer watches. However, Jean-Jacques Guiony, the group’s CFO says that bringing down the price point will help sales.
As this trend continues overseas, ensure that you’re closely watching the sales of your luxury timepieces. Consider offering reasonable deals or financing on these pieces to continue to see profits and keep inventory moving.
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