Watch industry: Deloitte study predicts a booming in India

The latest Deloitte Swiss Watch Industry Study, released on Thursday 12 October, analyses a decline in optimism among industry professionals. The causes are the complex geopolitical situation, inflation and the rising cost of living. The watch industry is now betting on India as the next growth market.

Cristina D’Agostino

By Cristina D’Agostino12 octobre 2023

India is set to become one of the Top 10 watch-importing countries by 2028 (FONDATION DE LA HAUTE HORLOGERIE/KEYSTONE/Cyril Zingaro)

India is set to be the next growth market for the watch industry, according to the Swiss Watch Industry report released on Thursday 12 October 2023. In its survey of industry professionals, India is expected to join the Top 10 watch-importing countries by 2028. The trend has been significant since the beginning of 2023, with sales up by 18% compared to the same period in 2022, already totalling 133.7 million francs in value. This represents an increase of 60% over the same period compared with 2021. Analysts at Deloitte predict that the value should reach 400 million by 2028. The growth potential is very real. When asked whether they would like to wear a watch, 94% of Indian consumers said they would. Although the average income is still relatively low, there were 849,000 millionaires in the country in 2022, which is set to rise to 1.6 million by 2026, according to Deloitte. As for the economic outlook, 75% of Indian consumers say their financial situation will improve by 2022. Several multi-brand players exist in the country, including Ethos Ltd and Kappor Watch Company. By the end of the year, the Jio World Plaza department store in Mumbai will feature many brands, including Cartier, Gucci and Louis Vuitton.

The first eight months of 2023 saw Swiss watch exports grow by 10.2% in volume and 9.3% in value, despite a strong franc that makes Swiss watches more expensive abroad. According to the Deloitte report, the United States remains the leading market since the beginning of the year, with 2.7 billion in exports. China has grown by 9.3%, albeit at a lower level of 7.5%. Hong Kong has seen strong growth due to the reopening of the region to large numbers of Chinese, with 80% of the 20.5 million registered visitors being Chinese.

Major concerns for brands

While the first eight months of 2023 have been buoyant for the Swiss watch industry, the major concerns of brands are manifold. Those selling watches under 5,000 Swiss francs are seeking to increase production volume, to compensate for falling margins and rising raw material prices, as well as higher production costs. Increasing production capacity in Switzerland remains the priority for those offering watches between 5,000 and 15,000 Swiss francs, as the brands are particularly sensitive to the shortage of components that penalised the sector during the pandemic. For all the brands, the main concern remains the strong franc and labour shortage.

Against this backdrop, Deloitte notes a decline in optimism. While most professionals in the sector remain confident (60%) about the Swiss economy, only 44% are optimistic about the watch industry, and 25% of executives are even pessimistic for the year ahead.

The primary threat to the watch industry for all remains the concentration of players in the industry and the decline in export volumes, followed by component delivery times and the takeover of subcontractors by large groups.

In terms of distribution, the majority of respondents (62%) are moving towards physical points of sale. This trend is even more pronounced at the very top end of the market. The main reason remains experience, touch & feel and service. But in China, for 39% of respondents, it is also to avoid online counterfeiting. In this respect, the Deloitte report points out that, according to a study by the specialist Watchfinder, 40 million fake watches are sold worldwide yearly.

The final area examined by the report is the secondary market, which continues to grow despite the end of the speculative bubble. New generations are more inclined to buy a watch on the secondary market than baby boomers. On the other hand, they are less likely to buy a watch as an investment: only 27% of those surveyed said they were interested, compared with 36% in 2022.

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