With watch industry volumes in freefall and luxury makers bracing for a year of contracting revenues, several brands are turning to bestselling models in a bid to stimulate consumer interest. Some analysts are calling the move a “flight to quality”.
It is a proven formula. During the financial crisis, brands and buyers banked on classics to climb out of a sales lull, while the uncertainties of the pandemic gave way to pent-up demand for benchmark designs by recognisable dial names such as Rolex, Patek Philippe and Audemars Piguet. A mix of post-pandemic “revenge purchasing”, market speculation and the reassurance of enduring designs saw retail outlets emptied and pre-owned values of models such as Rolex’s Cosmograph Daytona and Patek Philippe’s Nautilus pushed through the roof.
But since the cryptocurrency bubble burst in the spring of 2023 and amid the long-term effects of the post-pandemic cost of living crisis, demand for luxury watches has stalled. According to the Federation of the Swiss Watch Industry, last year export volumes of watches from Switzerland dropped by almost 10 per cent year-on-year to a historic low, while revenues took a 2.8 per cent hit. At the same time, according to research by Morgan Stanley and WatchCharts, prices of secondary market watches have fallen for 11 consecutive quarters to the end of last year.
“As consumers watch their dollars, they cut their shopping lists and only the most desirable brands stay on them,” says Luca Solca, managing director of Bernstein’s global luxury goods division. “This explains the huge polarisation we are seeing across all product categories in hard and soft luxury.”
Solca points to Rolex’s continued growth: according to estimates published in February by Morgan Stanley, Switzerland’s richest watch brand recorded revenues of SFr10.6bn ($12.1bn) last year against sales of around 1.2mn watches, which would give it a market share of 32 per cent, an increase of almost 10 per cent in five years.
Rolex’s slice of the pie will increase this year, according to Solca. “The element that exacerbates this trend is the complete absence of any spillover,” he says. “As Rolex can satisfy demand, there is less of a reason to find a substitute at Omega, IWC, Zenith or anywhere else.”
Brian Duffy, chief executive of the Watches of Switzerland Group, one of the world’s largest retailers of Rolex and Patek Philippe, has observed the same. “Inevitably, when there’s some nervousness in the market you get risk aversion,” he says. “And there’s nothing risky in buying a Rolex or a Patek. Brands that are more peripheral, you’ll maybe take a little less chance on.”
Carsten Keller, chief executive of the online watch marketplace Chrono24, says design classics are outperforming in the secondary market. “When we look at our watch buyers’ preferences in 2024, the heritage brands are the clear winners,” he says. “Consumers have shown an undeniably appreciative response to the brands and models that hold true to their design ethos and dedication to quality with a steady handed, non-hyper reactive market strategy.”
Jérôme Lambert, who recently returned as chief executive of Jaeger-LeCoultre after a stint as chief executive of its parent company Richemont, says the way buyers view a watch purchase has changed.
“During the pandemic, many clients approached watch purchases as financial placements rather than personal acquisitions, often driven by the speculative value of timepieces,” he says. “Now, clients seek watches that are not just investments but meaningful objects to be treasured for generations.”
According to Ilaria Resta, chief executive of Audemars Piguet, the trend creates a healthy kind of pressure for her brand, a family-owned company that claims to have more than doubled its revenues over the past decade. “Times like this stimulate creativity in a way, and brands have to dig deep to make the most of it,” she says. “Clients tend to look for safe havens when uncertainty raises its head.”
At Panerai, the focus for the next three years will be on its Luminor, a historic model with one of the most recognisable silhouettes in watch design thanks to its cushion shape and crown-protecting device, a tactic that the brand’s former chief executive Jean-Marc Pontroué believes will yield dividends in a fragile market.
Panerai’s Luminor Marina line
“Business will be flat in the coming years and we don’t expect a new double-digit increase, but we are entering an era where the race is for market share,” says Pontroué, whose successor at Panerai, Emmanuel Perrin, officially takes over on Tuesday.
Industry insiders say one advantage the luxury watch industry has is that buyers have become more predictable. “The trends we’re seeing in consumer behaviour are global,” says Georges Kern, Breitling chief executive, adding that mid-century designs such as the Chronomat and Navitimer perform all over the world and continue to uphold the brand. “The same models we sell in Switzerland, the US or China are also successful in other markets.”
Lambert agrees, describing a “global phenomenon and a universal trend”. This year, Jaeger-LeCoultre will centre its activities around its Reverso, an art deco design from 1931 that continues to dominate the brand’s collections and shape its reputation with consumers.
Resta says AP’s clients cannot be bracketed by age, either. “The interest in mechanical watches keep growing stronger, whether we talk about the younger generations or our more mature clients,” she says.
Nicholas Biebuyck, Tag Heuer’s heritage director goes further, suggesting patterns emerging among young consumers are now shaping brand behaviours. “We’ve seen a generational handover in the watch community,” he says. “Now, we have a lot of young people coming in with very different consumer behaviour to previous generations that’s around education and the understanding of a brand and what it represents. And that has moved people away from hype-driven design and instead brought a return to classicism.”
At Watches and Wonders Geneva this week, Tag Heuer will centre its strategy around the Carrera, a chronograph model that debuted in 1963, and reviving its Formula 1 watch of 1986 as it marks its return as Formula 1’s official timekeeper. “For the watchmaking industry, focusing on a niche is very powerful,” says Biebuyck. “Something that has become an icon over decades is what people want.”
Tag Heuer’s Monaco Split-Seconds Chronograph F1
Even so, the industry finds itself having to second-guess the future. The watch development cycle typically runs into years, making last-minute alterations to collections to accommodate sudden market changes all but impossible. Panerai, for example, has already done its product assortment for 2026, with 2027 almost 80 per cent locked in.
For one brand, sticking with what went before has become a rule. “Every time we have tried to capture a specific trend, age, gender or region of the world, it never works,” says Cynthia Tabet, Piaget’s chief marketing officer. Piaget’s new Sixtie collection of trapezoid-shaped watches, introduced this week in Geneva, is based on a design from the late 1960s. “What works for our customers is coherence with the Piaget legacy,” she says.
Ageless designs alone will not be enough to pull the industry out of its slump, though, says Pontroué. Cost is a factor, too. “As an industry we have been very quick to go very high,” he says, referring to watch prices that soared during the pandemic as brands capitalised on surging demand. “The Swiss watch industry and the luxury world have lost millions of customers in that race. We have to reconquer this audience in the opening price point segment if we don’t want to become only an haute couture country in the next 10 years.”
Last month, Kern and the Swiss private equity firm Partners Group that controls Breitling announced they had acquired the historic dial name Gallet and would be releasing vintage-inspired designs priced between SFr3,000 and SFr5,000. “The money is still there, the high-net-worth individual is still buying, and the fundamentals of the luxury watch industry remain strong,” he says. “As an industry, we have to focus on long-term growth, not short-term bumps in the road.”
Pontroué urges balance, though. “Even if the business is tougher, as it has been for 18 months, we mustn’t forget to tell spectacular stories that capture the spirit of the brand, which enables us to penetrate new customers,” he says. “You need extravagance at its best, to keep the mystique and to go beyond functionality, which nobody cares about.”
