Times in the tiny Swiss watch ateliers are getting tough. While I originally assumed that Swiss watches would survive the onslaught of smartwatches, I was wrong. “To suggest that the iWatch will influence Swiss watch buyers is like saying the market for a fine Bordeaux is affected by the advent of a new flavor of Vitamin Water,” I wrote in September. Boy do I feel silly.
Here’s the real situation: watch sales are falling month over month at a startling rate. Sales were down 12.3% in October, one of the industry’s most important months, and it doesn’t look like November will be much better. The holiday season is one of the most important for any manufacturer – Black Friday is called “black” because it makes retailers profitable – and the holidays and graduation season are the two most important points in a watch manufacturer’s year. Sure October isn’t prime watch sales territory but if it is any indication then things will get worse before they get better.
In short, smartwatches are eating the Swiss market. Tag can launch as many smartwatches as it wants and everyone can add motion tracking to their watches but it doesn’t change the fact that a smartwatch is a commodity product available in stores around the world while watches are, historically, sold in specialized shops that make the average consumer feel like an interloper.
Can Switzerland save itself? I don’t think so. The requirements are fairly simple: a reduction in prices at the entry level ($500-$800 vs $1,000-$5,000), a move away from stores and boutiques to online sales (“doors” in the watch parlance), and a compelling sales case for the young consumer. Switzerland is awful at doing all of those things.
Watch companies act like they’re Apple and, for decades, they were. For decades they were the only purveyors of a superior product to a mass of semi-wealthy consumers that wanted the best watch at prices that would make most people balk. Those days are gone. Now they are just another PC maker in a sea of clones. Why do I need a solid gold Rolex when my “rose gold” Apple Watch can lead me to my next appointment? Why do I need a Patek to pass down to my grandchildren when I can own a few dozen Android Wear watches over an eighteen year period? I know the answer and so do most watch enthusiasts. But the mass of consumers don’t know that to support the watch industry is akin to supporting the last vestiges of a mechanical past and the sole hope for a unique future in micro mechanics. To them a watch is just a watch and that’s why Switzerland is in the trouble they’re in.