The 2024 Geneva watch fair opened on Tuesday amid slower demand in China for fancy Swiss timepieces and timid consumer spending across the board on luxury items. The Watches and Wonders salon, which runs until April 15, sees 54 major watch brands display their latest creations, including Rolex, Patek Philippe, Cartier, Chopard, Hermes and Chanel.
Brazilian supermodel Gisele Bundchen and Chinese actor Wang Yang were among the stars checking out the timepieces on show at Swiss watchmaking’s landmark event.
Last year, Swiss watch exports broke records for the third straight year, hitting 26.7 billion Swiss francs ($29.5 billion). The 2020 downturn caused by the Covid-19 pandemic was quickly reversed by what financial analysts called revenge buying, with consumers splashing out with savings accumulated during lockdowns. However, the growth in Swiss watch exports has slowed, with exports up 7.6 percent in 2023, having risen 11 percent in 2022 and 31 percent in 2021.
‘Back to reality’
"I don’t want to say it’s a bad time; it’s a little calmer,” Thierry Stern, president of luxury watchmaker Patek Philippe, told AFP. "Maybe we’re coming back to reality.” Stern says he remains confident about the prospects for his own brand, which remains ever-popular with auction room collectors. Per year, "I make 72,000 watches and they will almost all be sold here in one week,” he added, with the salon being an opportunity for retailers to stock up their boutiques.
Formerly reserved for industry players, the salon is trying to seduce a new generation of buyers by allowing in the public on the last three days, with guided tours and an interactive zone focusing on watchmaking of the future. The average age of visitors during previous open days was 35, "which is extremely encouraging”, said Matthieu Humair, chief executive of the foundation that runs the salon.
‘More steel, less bling’
Jon Cox, an industry analyst with Kepler Cheuvreux financial services, told AFP the mood at the salon might be "subdued” this year rather than "despondent”. "Given the environment, you may see a back-to-basics approach by watchmakers: more steel, less bling,” he said. Cox is forecasting a "soft landing” for manufacturers this year with four percent market growth.
However, after touring the displays, Oliver Muller, founder of the watchmaking consultancy company LuxeConsult, said: "I’ve been positively surprised by the new innovations. I expected a lot more caution.” "I didn’t see any crazy stuff but lots of very beautiful things,” he told AFP.
This slowdown is not affecting all brands equally. The most high-end names, like Patek Philippe, rely on a very wealthy clientele who are not particularly exposed to the vagaries of the economy, meaning those brands have continued to grow.
According to a study by US bank Morgan Stanley, models with price tags above 25,000 francs account for 69 percent of growth in the Swiss watch industry. "We are seeing an overall slowdown,” said Karine Szegedi, the consumer industry lead in Switzerland at the auditing firm Deloitte. "The situation is tougher than anticipated for a certain number of players in watchmaking,” she told AFP. "The clientele is more cautious,” she said, with consumption in China and Hong Kong having "not returned to pre-Covid levels”.
She said revenge buying has peaked and inflation, rising interest rates and even layoffs in the technology sector are affecting the consumer base for luxury goods. In an early sign of the slowdown, subcontractors who supply watch components saw orders reduced or postponed, said Szegedi. — AFP