The Swiss watch industry achieved its highest earnings ever in 2022 by raising prices on its premium watches, according to a report by Morgan Stanley. Despite a decline in the volume of watches exported, the industry managed to offset this impact, while the smartwatch industry saw a 17% decline in sales in the fourth quarter of 2022, marking its first decline since the launch of the Apple Watch in 2015.
Morgan Stanley predicts that the Swiss watch industry will grow at a compound annual growth rate of around 7%, similar to the personal luxury goods industry in the coming years. Analysts note that the negative impact of smartwatches on the Swiss watches industry will be relatively insignificant going forward, with the exception of some brands like Tissot and Rado.
Luxury watch brands, including Rolex, are using digital tools such as Snapchat and Bitcoin to attract younger consumers and expand demand. Snapchat enables prospective customers to try on luxury brand watches virtually using their smartphones or tablets, while some watchmakers accept Bitcoin as payment.
Despite this, the industry reported that Rolex finalized another round of price increases in January 2022, just four months after making a 5% hike on some watch models. The price increase was made to protect the watchmaker’s margins at a time of currency fluctuations and a strong US dollar.
Overall, the Swiss watch industry remains robust, with luxury shoppers continuing to show strong demand for high-end watches, regardless of the smartwatch industry’s decline. The Watches and Wonder trade fair in Geneva also showcased that wearing a watch is still trendy, and even appealing to the youngest generation not used to wearing watches, according to Rolex CEO Jean-Frederic Dufour.
