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Trees still grow up to the sky
Point of View

Trees still grow up to the sky

Tuesday, 02 December 2014
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Franco Cologni
President of the FHH Cultural Council

“Talent demands effort, dedication and hours spent perfecting a gesture which, day by day, becomes a gift.”

An entrepreneur at heart, though a man of letters, Franco Cologni was quick to embark on a business career that would lead him to key roles within the Richemont Group.

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3 min read

The most effective forecast – at least for those of us who like to take a weekend break – isn’t, so it seems, statistics, curves and counter-curves but the farmer’s far more empirical method to look up at the sky, and let experience and knowledge do the rest. Move from precisions to predictions, and we find ourselves in even more dire straits: macroeconomic surveys have neither day nor night, sun nor clouds; nothing but endless disturbance.

Let’s try and make our deductions based on more reliable, factual data; the kind a barometer would indicate as “fair”: Swiss watchmaking continues to pulverise volumes and values, as the latest statistics show. We can therefore forget about Cassandra and Nostradamus, and take a closer look at our branch, to then give some indications for the year-end and, more importantly, for 2015.

In 2014, sales in volume and value terms exceeded, by a short head, those for 2013. This implies new record levels of 28.5 million watches and CHF 21 billion. And there is more: whereas sales have risen in the low-end segment (under CHF 1,500) as well as in the high-end segment, and have also increased in the fine watch segment, the mid-range bracket (CHF 1,500-3,000) is struggling.

There are more and more poor and the rich are as wealthy as ever.

It’s an interesting coincidence that increases in “poor” watches, for sake of a better name, and in “rich” watches correspond to statistical changes observed in the corresponding social classes. This seems to justify the belief that there are more and more poor, that the lower middle class has taken a tumble, and that the rich are as wealthy as ever.

What, then, can we expect for 2015? I don’t see any reversal in trend but rather confirmation of “consolidation” in the sector. But with a physiological variable: 2015 should prove to be a better year for the price range above CHF 6,000, with an increase of 2% to 3% on the year now ending.

But I’m no analyst and, like any good farmer, prefer to sniff the air, so let’s wait for the numbers that will confirm this point of view.

Money makes war and winners.

I’d like to end with this remark: export figures for volume and value represent sales to distributors, not the end customer. Hence why, in my opinion, we need to be looking at inventory in circulation at December 31st (or February 2015 and Chinese New Year).

I have faith in painless arrangements; we can eradicate discounts, sub-distributors and parallel markets, all the source of harmful confusion, not with an earthquake but through ongoing vigilance. There will be no turbulence, possibly just a few showers.

Conclusion: in an old French song, a butler tries to convince his employer that “Tout va très bien, Madame la marquise.” Madame la Marquise has nothing to worry about. Not everyone can say the same. Large groups and major brands still appear to be better equipped than smaller ones. Ethically and/or politically, it’s not the same fight for everyone. The age-old rule prevails: “Money makes war and winners.”

My very best wishes to you all.

P.S. An interesting piece of information about fine watches, i.e. those priced above CHF 6,000: mechanical watches take the lion’s share while quartz remains the exception that confirms the rule, and continues to prosper almost exclusively in women’s jewellery watches.

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