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Christmas will bring little cheer for watch brands

Christmas will bring little cheer for watch brands

Friday, 27 November 2009
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Fabrice Eschmann
Freelance journalist

“Don't believe all the quotes you read online!”

“In life as in watchmaking, it takes many encounters to make a story.”

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6 min read

Christmas is a critical period for watch brands, with some making up to 40% of their annual revenues over the holiday season. This year, the majority have put together strategies aimed at boosting declining sales.

Snow is falling at a thousand metres altitude. Pumpkins have disappeared from doorsteps and garlands are beginning to light up the streets. Christmas is with us again, a critical period for watch brands with some making up to 40% of their annual revenues over the holiday season. After sixteen months of plummeting sales and a disastrous Christmas 2008, a great deal is riding on this year’s festive season. And so brands are sharpening their spears: some are counting on new models; others are stepping up communication or improving their services. Yet the fact remains that while the European and Asian markets are sending out some positive signals, markets in the East and the US are still off the radar.


There was a time when watch companies would launch special Christmas models, draped in even more diamonds than usual. Those days are done. While brands traditionally export more over the last three months of the year, their main concern now is the still high level of stocks at retailers around the globe. After filling their cupboards to overflowing these past years, brands are now struggling to convince retailers to place new orders. Need we be reminded that watch exports lost 25.9% over the first three quarters of 2009? With Christmas around the corner, strategies are being put in place in a last-ditch attempt to make up some lost ground.

The crisis hasn’t changed the way we proceed.
Stéphane Belmont

Brands that accept to discuss this sensitive issue begin by emphasising how consistent their efforts have been since economic crisis kicked in. Strategically speaking though, not all expect to see in the new year in the same way. Some, such as Jaeger-LeCoultre which makes 40% of its sales in Switzerland over Christmas, haven’t given the question any particular thought. “The crisis hasn’t changed the way we proceed,” notes the brand’s marketing director Stéphane Belmont. “We still produce the best quality at the best price. Our business model remains valid whatever the situation.”

Move with the markets

This is, however, a minority view. Even if the torrent of pre-Christmas launches to which we had grown accustomed has diminished, the well isn’t completely dry. More sober, slightly less complicated and glowing with higher added value, such as a proprietary movement, they carry on the trend brought in by recession. Vulcain, which is launching models fitted with its new automatic Cricket V-21 calibre, has high hopes. Bernard Fleury, CEO, cuts to the chase: “We are counting on these new models to bolster our sales between now and December 31st. We’re making sure our points of sale are well-stocked at this time, and especially this year.”

Ulysse Nardin, meanwhile, is focusing its attention on the customer. “We know people tend to travel more at certain times of year in certain markets,” explains Susanne Hurni, director of marketing and communication. “When our target audience is away from home, we make sure we go with them. Similarly, Thanksgiving in late November is a key time for gift-buying in the United States, hence our points of sale present complete collections, we organise late-night and weekend shopping, and we send out personal invitations to our customers. We keep on adapting.”

Tough times in the East

However much effort brands make, benefits reaped will be greater in some markets than others. Although sales haven’t completely bottomed out in Switzerland, the market is still suffering from overstocking at retailers. “The orders I’d placed over the last two years were delivered this summer, so I won’t be needing to order new stock for Christmas,” comments Lionel Meylan, a high-end retailer in Vevey. Denis Asch, owner of L’Heure Asch in Geneva, is in the same situation: “It’s obvious brands want to push through their orders as quickly as possible. However, I’m somewhat sceptical about what Christmas holds.”

Things are not good, not good at all.
Alexandre Schwab

Outside Europe, the Asian market is picking up whereas Eastern countries are still trailing. “Things are not good, not good at all,” warns Alexandre Schwab, director of Forum Distribution which represents ten brands in the region. According to him, Russia, ordinarily the region’s biggest buyer of Swiss watches, is down 50% and Ukraine has dropped 80%. “I’ve offered retailers preferential payment terms. I’ve swapped 2008 models for 2009 models. I’ve kept up advertising for brands that no longer had the means to do so themselves. I’ve done everything a person could possibly do! But because it takes six to eight weeks for goods to get through Customs and into these markets, I can already tell you that this year is a dead loss.”

"Plant seeds where they will grow"

The story is little different over in the United States, where exports fell 42.3% in nine months. The situation is such that some brands, such as Hublot, have decided to ease off the pressure. “We’ll concentrate on cutting our losses,” exclaims CEO Jean-Claude Biver. “There’s no point stoking the engine when the train has run off the rails!” Even a brand such as Tissot, whose products are positioned in a segment less hard-hit than the high-end, has decided to hold back. Says Tissot President François Thiébaud: “We’re going ahead with operations that are already planned. There will be no cancellations, but there is no point investing in vain either. You have to plant seeds where they will grow, hence I’ve slightly refocused our communication.”

Christmas 2009 may bring watch companies more cheer than in 2008 but it won’t mark the beginning of an upturn, and this hasn’t escaped manufacturers’ notice. They are already looking ahead to the Orthodox Christmas in early January and, more importantly, the Chinese New Year one month later.

Article published in BIPH

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