Swiss watch industry: online trade will double by 2030

The consulting and auditing firm Deloitte has published a major study on the Swiss watch industry for the ninth time. It is based on an online survey of 70 senior executives in the industry conducted between mid-August and mid-September 2022, supplemented by interviews with industry experts. At the same time, Deloitte conducted an online survey of 5,579 consumers in Switzerland and in the Swiss watch industry's largest export markets: China, France, Germany, Hong Kong, Italy, Japan, Singapore, United Arab Emirates and the United Kingdom. According to the company, the study follows an independent approach and is also based on internal research by Deloitte.

Swiss watch industry between growth and uncertainty

The majority (57%) of watch industry executives surveyed in the study view the outlook for the industry over the next year as positive, despite rising inflation and geopolitical turmoil. This is a significant drop from last year, when more than three-quarters (77%) were positive about the outlook. In addition, nearly 80 percent of watch industry executives say that geopolitical uncertainty caused by the war in Ukraine and tensions between China and the U.S. is significantly impacting their company's outlook.

In terms of growth, most industry executives consider the USA, which is already the most important market for the Swiss watch industry in terms of export volume, to be the next big growth market, followed by India and China. However, growth expectations vary greatly depending on the region: For Hong Kong, for example, a further decline or stagnation is expected, and only 57 percent expect the Chinese market to grow. By contrast, more than three quarters (77%) expect the market in North America to continue growing.

Watches are increasingly purchased on the Internet

According to this study on the Swiss watch industry, 40 percent of all consumers and 45 percent of respondents under the age of 40 would be most likely to purchase a new watch from online retailers. Nevertheless, most watch industry executives are convinced that traditional watch stores will remain the most important sales platform in the near future.
"Two out of five consumers prefer to buy their watches online. To meet the expectations of their clientele, it is therefore essential that the watch industry significantly expands its online offering and complements its already rich offline offering," stresses Karine Szegedi, Head of Consumer Goods Industry and Member of the Executive Board at Deloitte Switzerland. "According to our estimates, the share of watches purchased online is likely to double to 30 percent by 2030."

Watches are increasingly seen as an investment

Almost a quarter of respondents (23%) buy watches for investment purposes, with a view to subsequently reselling them. Singapore (33%), Hong Kong (32%) and China (29%) lead the way. This may also explain why consumers in some Asian markets are more willing to spend more money on new watches. In China, for example, over a third (35%) are willing to pay CHF 5,000 or more for a new watch, compared to 8 percent in Switzerland and just 2 percent in France. 36 percent of respondents who buy watches as an investment say they intend to resell them at a higher price. 33 percent would like to diversify their investment portfolio as a result. Consumers in China are particularly interested in diversifying their portfolios by purchasing watches (55%). "Especially in a volatile market environment with high inflationary pressures, luxury watches are seen as reliable value investments," explains Karine Szegedi. "The shortage of luxury watches caused by supply chain issues and the current economic environment attracts a clientele that invests in the hope of reselling the watches at a higher price."

The secondhand market continues to grow

With almost a third of the customers surveyed (31%) planning to buy a second-hand watch in the coming year and companies setting up their own sales channels for used watches, the segment is visibly gaining in importance. Second-hand watches are becoming increasingly popular, especially among millennials and Generation Z: 48 percent of them say they are interested in such a watch. Most respondents are motivated in particular by the opportunity to buy a luxury watch at a lower price (44%). Others take the opportunity to buy a watch that is no longer manufactured (29%) or opt for a second-hand watch for reasons of sustainability (21%).

The executives surveyed have an even more positive view of the secondary market than last year. More than 70 percent believe that the secondhand market has a positive impact on brand value and perception, and welcome the side effect it has on the awareness and visibility of the watch industry as a whole. "The secondhand watch market has enormous growth potential," says Karine Szegedi. "Looking at current trends and the fact that brands continue to invest in this area, we expect the market volume to increase significantly in the coming years from its current 20 billion Swiss francs. By the end of the decade, it should reach 35 billion Swiss francs, which would represent more than half of the primary market."

Swiss watch industry does more for brand image or sustainability

For a quarter of respondents, owning a wristwatch has become more important in the last five years. This proportion is even higher among Millennials (35%) and Generation Z (33%). With more younger people showing an interest in watches, it seems reasonable to assume that the aspect of sustainability is gaining in importance. However, only 32 percent of respondents state that they consider sustainability to be more important than brand image. The same proportion state that sustainability is not important to them if they like the watch. Over one-fifth (21%) state that brand image is more important than sustainability.

Nevertheless, there is a clear consensus in the watch industry that it must make its contribution to a more sustainable future. Many brands have already taken steps in this direction. For most executives (64%), ethical raw material sourcing and human rights are the most important sustainability issues, followed by reporting and compliance (21%) and packaging (12%). "While the Swiss watch industry is rooted in tradition, it is still one of the most innovative industries," said Karine Szegedi. "This spirit of innovation has been crucial to finding new materials that are more recyclable, sustainable and have a better environmental footprint."

Source and further information: Deloitte