The Swiss watch industry driven by e-commerce and the second-hand market

On 13 October, Deloitte published its Swiss Watch Industry Study 2022, which is based on online surveys of a great number of senior industry executives, consumers in the home and top export markets, as well as interviews with industry experts. With the year 2022 being characterised by geopolitical uncertainty and rising inflation, what conclusions have been drawn for the state of the Swiss watch industry and what can be predicted for the future?

Whilst 57% of industry executives are expecting a good year ahead for the watchmaking sector, this number represents a 20% decrease compared to 2021, which can be explained by geopolitical tensions and the rising uncertainty caused by the war in Ukraine and the pressure building up between China and the United States. In terms of market share, Swiss watch exports in 2022 will continue to be directed primarily towards Europe (30%), followed by the United States (15%) and China (11%). Concerning the next big growth markets, the US is the most important one, followed by India, China and the countries comprising the Gulf Cooperation Council (GCC).

Driven by the Millennials’ and Gen Z’s clear preference for e-commerce, online sales continue to grow and will likely double by 2030 to represent 30% of purchases. Indeed, 45% of consumers under 40 are more likely to buy a watch online. Nevertheless, traditional stores will still dominate in the close future.

There is a clear pattern when it comes to younger consumers, which does not only involve online purchases. Whilst owning a watch has become important for 1 in 3 Millennial and Gen Z individuals, they also have a strong penchant for pre-owned watches due to price sensitivity, the willingness to acquire a discontinued model, and for environmental reasons. Close to half of these consumers (48%) consider purchasing a second-hand piece, which explains Deloitte’s estimates: by 2030, the pre-owned market is likely to grow to CHF35 billion, making up for more than half of the primary market.

Despite sustainability playing a great role in today’s purchase decisions, only 32% of consumers believe that it is more important than brand image, even though younger customers place more importance on a timepiece’s sustainability credentials. There is a clear consensus within the industry with regards to a sustainable future, and industry executives consider the ethical sourcing of materials and human rights to be the most important environmental aspect. Karine Szegedi, Head of Consumer and Fashion & Luxury at Deloitte Switzerland, states: “Although the Swiss watch industry is a traditional one, it is nevertheless one of the most innovative”.

Furthermore, timepieces are increasingly seen as an investment for resale, with almost one in four consumers buying watches for this purpose. Singapore (33%), Hong Kong (32%), and China (29%) lead the way, which may explain why consumers in some Asian markets spend more on new watches. “The scarcity of luxury watches at present, caused by supply chain issues and the current economic environment, is attracting customers who want to invest in a watch in the hope that its resale value will increase”, explains Karine Szegedi.

Other factors Deloitte reports as influencing the Swiss watch industry is the expansion of female designs and ranges within brands. Indeed, 44% of female consumers favour female-specific designs, whilst 26% have a preference for unisex options.

The metaverse is also still a hot topic for watch brands, with 57% of them planning to launch an NFT as a digital twin in the next year, for certification purposes, as well as to accessorise in the metaverse. Nevertheless, it might not come as a surprise that 31% of consumers still do not fully understand this virtual asset.