Wall Street Journal on trouble in Swiss watch industry

[lucevan le stelle]

Originally Posted by tyler1980

yeah i agree. Its not the big names that will disappear. Its the mid level and low end. Rolex is safe along with some others IMO

Yes, pretty much, unless you consider un-GS Seiko in the low end. Scarcity may be a positioning move to greater exclusivity and as such higher luxury status. 15k no-date Sub in the future?

[Bigblu10]

Originally Posted by TheVTCGuy

You know, I believe Rolex, and mechanical watches in general, will be around for AT LEAST another 50 years, but after that... Collectors will always want them, purists, WISes, etc, but for the GENERAL PUBLIC, I believe they will go the way of phone booths. You will see one now and then, and actually take notice didn't believing there were any left. It hurts me to express this opinion, because I have loved and will always love a fine mechanical timepiece, but the millennials, Gen Y, even Gen X, in GENERAL do not have the need or want for a mechanical timepiece like my generation. With cell phones, smart watches, smart RINGS (these are pretty cool, I have to admit) I just believe the mechanical wristwatch will be nothing more then a novelty... someday.

Someday? I would dare say these watches we love and spend thousands on are already a novelty. Time is everywhere in this day and age. Really no need to have it strapped around your wrist with 100+tiny parts gears, springs, etc. 50 years is an overly optimistic prediction. I am 55y.o. BTW

[rw2008]

Originally Posted by BillA

RW2008, according to the articles, hundreds of layoffs, watch companies buying back unsold inventory, removing the jewels, and melting them down.

This was written in the WSJ article.

Rolex, specifically, did this?

[Roger Lococco]

Any watch over $200 is jewelry.

[NativeTxn]

Originally Posted by MARGARITATIME

There is no doubt the popularity of an electronic watch has taken some sales away from buying a mechanical watch. It does offer more features, but it isn't a time piece. Some people never did or never will spend large amounts of money for a watch. I agree with the post about changing tastes. My gf's son is fresh out of college. She bought him a Rolex as his graduation present. He loves it to death and has gotten a few fellow workers in his first real job to get a Rolex. He even noted a couple songs about Rolex calling it a Rolly or something. The younger generations still want a luxury time piece, but they may not have the means to buy it yet. Prices have risen and great paying jobs aren't as plentiful. I have no fear that the main brands will go out of business. Sales may slow down, but they will eventually pick back up. Please keep in mind the old days of absolutely needing a watch to tell time are long and gone due to cell phones and computers. It is a fashion accessory that has a function now.

PS - If Rolex came out with a smart watch they would make millions. The problem is it may take sales away from the mechanical side and don't see them doing that.

They would likely make millions many times over. The article says Tag put their smartwatch out for $1,500 and sold 100,000 units.

But you’re probably right on the last part as Biver said his biggest surprise was the fact that they offered the option to trade the smartwatch for a mechanical and fewer than expected actually did that.




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[RolexNorth]

The young won't be buying watches. Most graduate owing $75,000 in student loans. Most have homeownership as a top priority on their list. A Rolex watch isn't even in the same country much less ballpark for them.

[RolexNorth]

Originally Posted by rw2008

Rolex, specifically, did this?

I think Richemont was the watch company that purchased back all of it's overstock and destroyed it.

[jfmiii]

the people who turn a blind eye to the shifting demographics are fooling themselves, imo. im 34, been into watches since i was a kid. i can count on one hand the number of my upper-middle class friends who wear any kind of non-smart watch. i work for a Wall Street firm and see very few peers my age wearing watches. im not sure why people assume once millenials (i technically am one) will magically start buying watches when they move up the economic ladder. this age group values experiences, not things. they like to travel places and post pictures of it on Instagram. they grew up during the Financial Crisis and, on average, save more than their Boomer parents. they dont see the value in living in a McMansion 50 miles from a city center like their Boomer parents when they can live in a city with restaurants, concerts, museums, etc. they dont see the automobile as an expression of freedom like their parents do. they are also less well off financially than their parents were at the same age. this is what demographic shifts look like. i think there will always be a place for mechanical watches but the mass desire to own a Rolex as a status symbol is nowhere near what it was for young people in the 1980s and 1990s. tastes change. when i was a kid, i remember seeing TT DJ on all my dad's friends' wrists. will anyone deny that Gold, and especially TT, jewelry is less popular today than it was 25-30 years ago? the numbers dont lie. the swiss watch industry, as a whole, is hurting. Rolex wont be immune to it. imo, the vintage market is in even more trouble bc, just like the Muscle Car market, it is inflated and it is dominated by older players whose collections will need to be sold when they pass away.

this forum is a subset of a very specific (fanatical? lol) group of people. our tastes arent indicative of the broader market, and certainly not indicative of the <35 market, imo.

[TheVTCGuy]

Originally Posted by Bigblu10

Someday? I would dare say these watches we love and spend thousands on are already a novelty. Time is everywhere in this day and age. Really no need to have it strapped around your wrist with 100+tiny parts gears, springs, etc. 50 years is an overly optimistic prediction. I am 55y.o. BTW

We’re the same age Jaime, Although people tell me I look MUCH younger... Like around 54.... ... ... and a half. Great minds think alike and you may be right, 50 could be optimistic.

[JacksonStone]

Originally Posted by rw2008

Rolex, specifically, did this?

Although the title implies the article is about the state of the Swiss watch industry, it's actually a write-up on the head of LVMH's watch division, Jean-Claude Biver. The article cites some industry statistics, and references a couple other conglomerates, but Rolex is never mentioned. The buyback reference links to a 2016 article focusing on Swatch and Richemont.

[AK797]

I've often wondered how Zenith, UN, Baume, Ebel etc are still in business now, let alone in a few years when I-tech will really bite into the industry. Even brands like Breguet and BP have expensive stores in many frontline cities and I don't know how they make their rent, hardly ever see anyone in them in London.

[Ichiran]

IIRC, the Swiss watch exports have grown in 2017 consecutively for a few quarters.

[5253Reynolds]

Rolex should maybe try and sell watches on their watch website. A novel concept I know!

[rw2008]

Originally Posted by JacksonStone

Although the title implies the article is about the state of the Swiss watch industry, it's actually a write-up on the head of LVMH's watch division, Jean-Claude Biver. The article cites some industry statistics, and references a couple other conglomerates, but Rolex is never mentioned. The buyback reference links to a 2016 article focusing on Swatch and Richemont.

Thanks.

I’ll start worrying when Rolex and Patek start to show symptoms.

[TimeToWatch]

I'm 29 and own 5 Rolexes and an AP. I've also flipped probably about 3 other Rolexes since I turned 22. I have a number of friends with similar collections.

What was this about millennials not liking watches again?

[soundserious]

75% of the brands need to be put to rest. Too much junk out there.

Swatch and Richemont are to blame of course.

[Derkuhlmann]

The Swiss watch industry is in a bad place as a whole. However, I would say Patek, AP and Rolex are pretty immune to some extent. Instagram and social media have made them more popular than probably ever. I’m 40 and growing up none of friends knew what AP or PP were and that’s a mix of social classes. Now lots kids know them along with Rolex.

However, the dress watch brands have real problems. VC, Breguet, JLC etc. the amount of people who have the $ and desire to buy those watches is very low outside China.

Also who says Rolex has to always sell 800,000 or so watches a year or die. AP basically has two models, sells 50,000 of them a year and does quite nicely. Rolex could discontinue the Cellini line, quit overproducing datejusts and do just fine with its bread and butter sports line + day dates plus the most popular ladies watches. That wouldn’t be so bad at all to me.

[Derkuhlmann]

Originally Posted by soundserious

75% of the brands need to be put to rest. Too much junk out there.

Swatch and Richemont are to blame of course.

Agree

[JacksonStone]

Originally Posted by soundserious

Too much junk out there.

Apparently that's going to continue. From the article:

"Mr. Biver is in talks with HBO to design a watch based on the show 'Game of Thrones' in time for the show’s last season next year, LVMH executives say. Negotiations are continuing."

[rallyx]

Mechanical watches are already obsolete since the invention of quartz watches and now smart watches. The reason they are still available now is because luxury mechanical watches are marketed as a status symbol. It's a piece of men's jewellery.

Let's face it, how many of us today buy a luxury watch just simply to tell the time? Whether this desire to own a luxury timepiece as a form of self actualisation will continue to the next generation, who knows?

[16610v]

watch is the only jewelry of men so this industry wont die.

[springer]

Originally Posted by S-F

You father might have bought one because the one he wanted was actually in the display case waiting to be purchased.

Very true. . .or he bought it because he could afford it.

Pricing has gone too far for a stainless steel watches.

[c41006]

As others have stated, mechanical watches have been obsolete for quite some time now. Watches in general have been really unnecessary for maybe a decade or more because everyone carries a phone around with them that tells the time. Obviously looking at a watch on your wrist is more convenient that pulling your phone out but now we have smart watches that can tell us the time and much more.

I work alongside a lot of young people. Most being in high school or college. A lot of them wear an Apple Watch. The question is how will luxury watch brands convince all these Apple Watch wearers of today to eventually give up all the functions that current smart watches and future smart watches provide and switch to a mechanical time piece that offers much less in terms of functions and features. I guess it depends a lot on how wearable technology progresses.

[Navarino]

I'm in my mid-late 20s and own multiple Rolex watches and an ALS. I'm also looking to add to my collection...been patiently waiting for the Daytona C for the past ~1.5 years and am considering a few others right while I wait. I've had the bug for a new watch for awhile now and becoming a more active poster on TRF has only exacerbated this "ailment" :-P

I agree to a certain extent that a lot of younger people just aren't interested in luxury watches these days -- you hear all about millennials valuing "experiences" more than material goods and it's true to a certain extent. All-time high levels of student loan debt also must be contributing to the problem to a slight extent. However, plenty of strong income earners around my age aren't spending their money on nice cars, expensive shoes/clothes, etc. but are very serious when it comes to travel and taking vacations overseas. I have a handful of friends who work in the same or similar fields who do exceptionally well for their age when it comes to income. Some of them are into watches like me, some have like a single Sub or GMT mainly for the sake of having a Rolex (i.e., they aren't the "watch guy"), and most are totally content with wearing an Apple Watch due to its functionality.

The biggest issue has already been highlighted. Most young people who develop some interest in a brand like Rolex have a tendency to want a SS sports watch. They want a Sub, a GMT, a Daytona. When they think about dropping ~$10K for the first time on a watch, they aren't doing it for the endless supply of DJs that are readily available. Instead, they experience the frustration of going to an AD and seeing nothing of interest available and maybe call a few stores before giving up. It's a supply issue, pure and simple. I think if more SS sports watches were available, you'd see more young people wearing them. Once they have one and are in the "club" it's only natural for them to start thinking down the road to add to their collection with a PM or actually view something like a DD as a desirable item to work for. Because of where supply is at today though -- things are all backwards...first timers are expected to pay up for these less popular non-Sports items to "earn the privilege" of buying a SS sports watch.

[jmrxtr]

in a sushi restaurant 2 weeks ago in calabasas. young kid sporting a Presidential. then another younger guy comes in - sporting a presidential. there will always be a market, just smaller and smaller.

[gullabaa]

My 25 year old son inherited my father's 2007 Rolex Sub 16613 when he passed. From that time, my son wear that watch everyday. I believe that the demand for luxury watch such as Rolex will remain strong. As the millenials ages, they will realize the value of having a good mechanical watch such as Rolex, Patek and Omega.

[jstan9]

Originally Posted by locutus49

Yet another doom and gloom prediction of the fall of mechanical watches. I am old, but I think Rolex will continue to thrive.

I hope you’re right. These little wrist machines are craft works of art!

The article’s research into the collapse of the Chinese consumer market a couple of years ago might indicate why Rolex has had trouble matching supply to demand. Perhaps they cut back too much when the market began to soften in 2015? That would mean that it should be rather easily solved. Unlike Tesla, for example, Rolex knows how to manufacture quality products at volume (and don’t get me wrong. I admire Tesla but they have no idea how to manufacture the much sought after model 3 at scale).

[Ignace Worang]

From my pov, the interest is also related to the location where one grows up and lives. For example, millenials in Asia are most likely to continue to have big interest in luxury wristwatch while in Europe are less so. I have compared my own daughters and nieces to reach this conclusion��.

[Onikage]

Originally Posted by JacksonStone

Apparently that's going to continue. From the article:

"Mr. Biver is in talks with HBO to design a watch based on the show 'Game of Thrones' in time for the show’s last season next year, LVMH executives say. Negotiations are continuing."

Very nice.

[hambone1983]

I don't think there are very many people agonizing over whether to buy an Apple electronic wrist gizmo or a Rolex. In fact, I think it's essentially none. There is virtually no overlap in markets, and nearly none in utility.

The Apple electronic wrist gizmo is purely a commodity; when the new version comes out the value of the obsolete ones rapidly declines. By the time it's 2 releases behind, it is worthless. The materials it is made from reflect this. It is made to be thrown away. Aesthetically, it is ugly AF.

My opinion is that Apple is training young people to have something cool on their wrist. Some percentage of them, when they've gotten too old to be sporting neck beards and blogging down at the local coffee shop, and become more affluent, will graduate to purchasing things of greater sophistication and refinement.