premiumization the end of affordable luxury watches the Apple watch that's killing the regular watch Market are we doomed to a world where the only watches we can get cost 10 or5 or $20,000 is there any hope for those of us that just want a good 3,000 1,000 or even $500 watch you likely know the numbers the overall watch Market has been in decline in terms of volumes for more than 15 years watch makers are still making money because they've raised prices today you need to spend $8,000 to get an Omega speed master there was a time where you could get it for less than half that and the difference isn't just down to inflation So today we're going to walk through what has been happening in terms of the overarching trends of the watch industry and consumer Behavior why has this been happening will it continue and how have watch manufacturers adapted to these Trends finally we'll answer the question what is the result for us watch enthusiasts let's Dive In are there going to be any watches left worth buying I'm ignoring the current downturn in the market this slump that is basically a burst bubble that was the postco hype I'm ignoring it because the watch Market in general will like all other Industries have upticks and downturns in the short term even things on a general downward trajectory can sometimes go up and vice versa what I'm more interested in is the longer term Trend and that Trend hasn't necessarily been great actually it's been terrible in terms of volumes in 2011 Swiss watchmakers exported a massive 29. 8 million watches to the rest of the world in 2020 that number had dropped to less than half with only 13. 8 million watches exported that's a massive decline underlying that number the main decline has been for quartz Watchers in 2011 quartz Watchers made up almost 80% of Swiss watch exports in 2020 that ratio had dropped to 60% in that time period it was by far quartz that was taking the biggest hit fast forward to 2023 and there was an uptick because of Co both for mechanical and for quartz watches quartz was massively driven by the moon Swatch from Swatch but the numbers are still in terms of volume far below 2011 and even below the previous high of 2019 beneath this overall trend is the fact that a lot of watchmakers are actually making more money on the bottom line than they ever did before how have they been doing that well in 2017 7.
3 million mechanical watches generated an estimated 15 billion Swiss Franks of Revenue 6 years later those 6 million watches now were generating almost 21 billion in Revenue they've just literally sold more expensive watches customers have either chosen to buy more expensive models or the models on offer have just become more expensive in themselves either way the margins are much higher and despite selling far fewer watches as an industry the the industry as a whole is overall doing okay some Brands those under $4,000 and especially those under 1,500 are not doing well though as a segment there are a lot of different ways of categorizing watches by their price point but basically anything below premium has been under pressure unsurprisingly this is also why Swatch group have been having a hard time Swatch group is a broad spectrum conglomerate with a lot of sub 4K brands in their portfolio that and they've been really quite skilled at mismanaging Brands like Blanc pan and brega so overall Swatch has been impacted quite significantly as a group the brands that have been most Under Pressure are the ones like longine that in 2019 produced over 2. 1 million watches and now produce less than 1. 5 million Swatch up until the moon watch were on a massively declining trajectory TSO Hamilton and a lot of others have been feeding the pressure where Brands like Rolex aab gay hublo they've all increased to not only their revenue per watch but also their volumes generally the combination of being independent and highend have been a recipe for success in recent years why the decline there's more than one reason but the biggest one is likely the Apple watch the iPhone jam and priorities in the last 15 years you have not needed a watch anymore your phone could tell time the Apple watch in theory at least can do so much more although I do contend that 90% % of users use 10% of the functionality but that's beside the point since the Advent of the Apple watch and its competitors the sale of those kinds of watches have completely and utterly eclipsed the celles of regular watches quarts mechanical both of them last year the estimates put the total number of units of wearables sold at 186 million compared to 5.
