Tight market hits Watches & Wonders
With sales slipping in the industry’s largest market, the annual Watches & Wonders exhibition in Hong Kong may be cut back to every two years.
High-end watchmakers are looking at a shift in strategy in Hong Kong in the face of the most severe downturn the industry has faced since the 2008-09 financial crisis, reports Reuters.
Branching out from the two biggest trade shows in Switzerland, the Salon International de la Haute Horlogerie (SIHH) in Geneva and Baselworld, Watches & Wonders was launched in 2013 by the Fondation de la Haute Horlogerie, which is now talking with exhibitors about the show’s future format, according to Richard Mille, CEO of independent watchmaker Richard Mille.
Watches & Wonders mainly showcases Richemont-owned brands like Cartier, Montblanc and Vacheron Constantin, as well as some independents, reports Bloomberg.
“Some brands have been fighting to get out, completely out, to stop Watches & Wonders,” Mille said at this week’s SIHH in Geneva, the industry’s first event of the year.
“Some of the brands want to do it every two years, some say every year. It’s a negotiation.”
A decision will be made after this week’s show, according to foundation chairwoman Fabienne Lupo.
The event also competes with the annual Hong Kong Watch & Clock Fair, which had nearly 800 exhibitors last year.
China’s crackdown on extravagant spending plus currency fluctuations have hit the demand for expensive timepieces in Hong Kong, with Swiss watch exports to the island city plunging 23 per cent in the first 11 months of 2015, and facing the first annual decline since 2009. TAG Heuer closed one of its Hong Kong stores in August.
Mille, whose watches sell from about 70,000 Swiss francs ($70,000) upward, says the objective of exhibiting in Watches & Wonders is to make contact with clients who are unable to attend the boutique shows. “It’s not cheap, but it’s worthwhile.”
Meanwhile, high-end watchmakers are considering expanding their range of more affordable products. Executives at the Geneva event say the industry is having to adapt to a market with fewer Chinese, Middle Eastern and Russian buyers than a year ago, an outcome of record low oil prices and signs of economic weakness in China.
Cartier, Richemont’s leading brand and main source of profit, is presenting more models than ever at more accessible prices at this week’s SIHH. Among them is Cartier’s new Drive model, a steel-cased men’s watch priced at a little more than 5000 euros ($5430). Previously, Cartier would offer only new models in gold and leather, with prices starting at more than 10,000 euros.
Sister brand Piaget, generally starting no lower than 10,000 euros, has re-launched a women’s line starting at about 7000 euros, while Richemont stablemate Montblanc has introduced a wide range of lower-priced models.
Montblanc CEO Jerome Lambert says that whatever happens, his company will stay active in Hong Kong with major exhibitions.
“There is a different price awareness among customers now… and less price elasticity,” Piaget chief executive Philippe Leopold-Metzger told Reuters at the fair. “Times are difficult.”
Several watchmakers have cut staff numbers in recent months, including Kering‘s newly acquired Ulysse Nardin and privately owned Parimigiani and Christophe Claret. Piaget closed a boutique in Shanghai last month, and Parmigiani plants to cut back its global outlets to about 250 from around 300 by the end of the year.
Van Cleef & Arpels, one of the fastest-growing brands within the Richemont group, has also seen a slowdown in Hong Kong, Macao and the US. It is looking at new growth opportunities in such markets as Australia, Canada and Thailand, where it has just opened a store.