(Bloomberg) — Consumers driving the biggest mechanical watch boom in decades are looking for more expensive watches, and from entry-level brands to the most exclusive independents, Swiss manufacturers are happy to oblige.
Take Oris Watches, a brand known for its affordable dive watches. The switch to higher-quality models has taken the average selling price from 2,000 Swiss francs ($2,038) to around 2,400 francs in three years, according to co-CEO Rolf Studer. This has encouraged the company to make more watches with in-house developed movements, such as its ProPilot X Caliber 400 featuring a titanium case and bracelet which sells for 3,900 Swiss francs.
“It’s the top end that’s thriving,” Studer said. “People know more, they demand more, and they’re willing to spend money on a higher level of surveillance.”
The unprecedented surge in interest in luxury watches was sparked by the pandemic, when a new breed of collectors and enthusiasts stuck at home during lockdowns began to covet fancy timepieces online. These days, watch exports from Switzerland, the center of the world watch industry, are near record value levels. Watches priced above 3,000 Swiss francs are driving the increases as buyers become more educated and seek higher quality calibers.
The change was spearheaded by Rolex, which dominates the Swiss industry with an estimated turnover of 8 billion Swiss francs and nearly 29% market share in luxury watches. Rolex sales increased by around 17% between 2019 and 2021, according to Morgan Stanley and industry consultant Luxe Consult. Nearly a third of this gain is attributable to changes in the product line, as Rolex sold more of its more expensive models such as Daytona chronographs or Day-Dates made from precious metals.
Rolex increased its prices in the UK by an average of 5% on September 1, a company spokesperson confirmed. The price rise follows a drop in the value of the pound against the US dollar below $1.15 and near its lowest levels since 1985.
Even ultra-luxury brands like H. Moser & Cie, known for its highly finished and mechanically complicated timepieces, are moving up the value chain. Moser’s average sale price rose from around 32,000 Swiss francs to 42,000 francs in three years.
“There is more demand for jewels, tourbillons and minute repeaters,” said CEO Edouard Meylan, referring to watches encrusted with jewels or featuring complex movement complications.
Frédérique Constant, a Swiss brand owned by Japanese Citizen Watch Co. and synonymous with mechanical dress watches at entry-level prices, is also making progress. The brand shifted gears after taking a hit to sales in 2020 when the early stages of the pandemic briefly halted retail sales and in-store production.
2022 has been “incredibly strong” for the company at the high end of its product range, which includes tourbillons and gold watches priced at more than 20,000 euros, said Niels Eggerding, CEO of the Geneva-based brand.
While Frédérique Constant prices start at around 500 euros, the brand is struggling to meet the demand for watches priced at 2,500 euros and above.
“The rich are getting richer, the poor are getting poorer and the mid-range is getting tighter. You have to adapt,” Eggerding said.
Getting the right price and owning a particular niche is important for watch brands, especially those with a loyal following. Cartier, for example, attempted to shift more of its portfolio into high-end watchmaking a few years ago, a move that won praise from die-hard watch enthusiasts but alienated some customers who were obsessed with it. come to appreciate the brand’s more affordable pieces like the Tank. model.
The arrival of the Apple Watch has also shaken up the scene as it has attracted buyers who would normally choose an entry-level piece like Maurice Lacroix, Baume & Mercier or Longines.
Watch industry executives gathered last week in Geneva for an industry event to take the temperature of the trade. One thing they all agreed on is that despite rising average prices, they have no plans to discontinue their entry-level models.
Indeed, according to them, the most affordable watches are essential to attract new customers to the brands. The trick then is to move those same customers up the value chain to more expensive models.
“We have always spoken to the normal man, the watch lover who is unwilling or unable to spend $10,000 on a watch and we will continue to do so,” said Studer of Oris. “It’s part of our philosophy.”
(Updates with Rolex raising UK prices in paragraph 6)
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