The Swiss watch industry has been facing challenging conditions in recent years. As competition from fitness bands and smartwatches heats up, exports of quartz watches fell in 2017 to their lowest level in 33 years. This has forced Swiss watchmakers to shift focus towards more premium timepieces.
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For a long time, the industry, which typically generates more than $20 billion in annual exports, enjoyed an air of exclusivity. Now traditional watchmakers are losing market share. This is particularly the case with entry-level watches which are seeing a threat from high-end wearables such as the Apple Watch and a plethora of other smart and hybrid timepieces.
According to Federation of the Swiss Watch Industry statistics, Swiss watchmakers shipped 17 million quartz and electronic units in 2017. This equated to some $3.7 billion in value, down 3.8% on the previous year. In fact, this was the sixth consecutive year of decline and the lowest level since 1993.
Some traditional watchmakers are making tentative steps in the fast-growing wearables market via technology partnerships and investments. This includes Tag Heuer, Frederique Constant and a number of others.
But the industry’s unique positioning in the luxury segment, the strong brand image, the appeal of the Swiss Made label, all offer opportunities to traditional Swiss watchmakers. Particularly in the high-end part of the market. And it is precisely the luxury mechanical watch segment which helped overall Swiss watch exports increase 2.7% in 2017 to $21bn. This was the first rise in three years.
Only time will tell whether quartz Swiss watchmakers manage to turn market fortunes around. If it is to survive, this part of the industry cannot afford to ignore the potential opportunities and threats posed by the new smartwatch segment.
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