One reason is that there are few global hot spots at the moment. Swiss watch executives cite two: China and the U.S., both of which have growing economies. “Outside of that, there are not a lot of markets with real growth potential,” says Flavio Pellegrini, president of Europe and the Middle East for the Movado Group.
Nor is either of the hot spots exactly on fire, watch-wise. There is growing concern in some Swiss circles about China. The Chinese economy is slowing down, noted one Swiss watch executive, who requested anonymity. “Chinese consumers account for more than half the purchases of Swiss watches by value,” he said. “The Chinese government wants to repatriate that money. They want consumers to buy at home. That has hurt the watch business in Europe.” And in other markets where Chinese travel.
Pellegrini agrees. “Europe is still working on the China cylinder,” he told HODINKEE at the Movado Group Summit in Davos in March. “The last few years showed that the Chinese tourist is a very risky customer to bank on. Depending on the exchange rate, maybe they decide to go to Dubai or the U.S. or to the UK because the pound was down due to Brexit. So, it’s not a sustainable business for [local] retailers.”
As for the U.S., no sell-through data for the first quarter was available. However, most retailers HODINKEE talked to at Baselworld indicated that they were satisfied with first-quarter sales. The 2.6% rise in exports for the first quarter, against a very strong Q1 in 2018, indicated that the U.S. market was on track to expand after a strong 2018 (+8.2%). That was the first increase since 2014.