After recent years of strong watch industry growth, sales at many watch brands have slowed in 2024.
Following the pandemic, and amidst huge changes around the globe, from senseless wars to climate change to people being robbed of their prized wristwatches in broad daylight to the biggest corporations getting even bigger and thus controlling our lives that much more — the world is a far different place than it was just five years ago.
It’s also a presidential election year in the US, which historically tends to negatively affect the business cycle until the new president takes office. Not to mention, prices on everything from food to cars to housing and wristwatches are higher than ever.
Is it time for watch companies that want more market share to put a stake in the ground and offer consumers some pricing relief?
Perhaps the savviest of watch brands have already done this and are experiencing sales growth at a time when most of the competition is trying to figure out how to move the needle.
Rolex isn’t lowering prices but we have to remember that Rolex only raises prices incrementally most years, and crucially did not raise prices in the US in 2024 at all — aptly foreshadowing what the leading Swiss watchmaker projected 2024 watch demand to look like.
Rolex’s approach is particularly noteworthy, especially considering many major Swiss watchmakers have been tacking on significant price increases, often without improving the watches in any measurable way. When a pair of shoes goes from $80 to $120 that’s significant, but when a watch goes from $8,000 to $12,000 that’s absurd.
Still, due to pressure to always grow sales, many corporate-driven watch brands felt they had no choice due to lower unit sales volume (a trend in recent years) or merely seized the opportunity to raise prices because everyone in virtually every industry was doing just that.
The marketing problem is that while we as consumers might need that pair of shoes, and certainly need food and housing — we don’t need watches.
With a pricing strategy that’s seemingly backfiring at many of the Swiss brands, enter the shuffling of executives starting at LVMH in March, then Richemont in May, then again this month at Cartier and Van Cleef & Arpels, and yet again this week at LVMH.
Interestingly, no major executive changes at the Swatch Group have been announced despite the company showing weak sales results that accounted for a 70% drop in profit for the 1st half of 2024. This is perhaps simply a difference in corporate culture.
Whatever the culture at any given company or group, it’s hard to deny that the costs of doing business have increased everywhere, yet at the same time I’d wager few watch industry CEOs could honestly tell any of us that their watch prices in 2024 are commensurate with what they charged five years ago, even factoring in marginal annual price increases to offset inflation and exchange rate adjustments.
