Geneva watch fair advances after years of sales boom

The 2024 Geneva watch fair opened on Tuesday amid weaker demand in China for elegant Swiss watches and timid consumer spending across the board on luxury goods.

At the Watches and Wonders show, which runs until April 15, 54 major watch brands will showcase their latest creations, including Rolex, Patek Philippe, Cartier, Chopard, Hermes and Chanel.

Brazilian supermodel Gisele Bundchen and Chinese actor Wang Yang were among the stars who viewed the watches on display at the flagship Swiss watchmaking event.

Last year, Swiss watch exports broke records for the third year in a row, reaching 26.7 billion Swiss francs ($29.5 billion).

The 2020 recession caused by the Covid-19 pandemic was quickly reversed by what financial analysts called revenge buying, in which consumers squandered savings accumulated during lockdowns.

However, the growth of Swiss watch exports has slowed: exports increased by 7.6 percent in 2023, 11 percent in 2022 and 31 percent in 2021.

'Back to reality'

“I don't want to say it's a bad time; it's a little calmer,” Thierry Stern, president of luxury watch maker Patek Philippe, told AFP.

“Maybe we're coming back to reality.”

Stern says he remains confident in the prospects of his own brand, which remains ever-popular with auction-room collectors.

A year, “I make 72,000 watches and almost all of them will be sold here in a week,” he added, with the show being an opportunity for retailers to stock their boutiques.

The show, previously reserved for players in the sector, attempts to seduce a new generation of buyers by allowing the public to enter for the last three days, with guided tours and an interactive zone focused on watchmaking of the future.

The average age of visitors during previous open days was 35, “which is very encouraging,” said Matthieu Humair, general director of the foundation that manages the show.

'More steel, less shine'

Jon Cox, financial services sector analyst at Kepler Cheuvreux, told AFP the mood in the room could be “calm” this year rather than “disheartened”.

“Given the environment, we may see a back-to-basics approach from watchmakers: more steel, less jewelry,” he said.

Cox predicts a “soft landing” for manufacturers this year with market growth of four percent.

However, Oliver Muller, founder of watch consultancy LuxeConsult, after touring the exhibitors, said: “I have been positively surprised by the new innovations. I expected much more caution.”

“I didn't see anything crazy, but I saw a lot of very nice things,” he told AFP.

This slowdown is not affecting all brands equally. More exclusive names, like Patek Philippe, rely on a very wealthy clientele that is not particularly exposed to the swings of the economy, meaning those brands have continued to grow.

According to a study by the American bank Morgan Stanley, models with prices above 25,000 francs account for 69 percent of the growth in the Swiss watch industry.

“We are seeing a general slowdown,” said Karine Szegedi, Swiss consumer industry leader at audit firm Deloitte.

“The situation is more difficult than expected for some players in the watch industry,” he told AFP.

“Customers are more cautious,” he said, as consumption in China and Hong Kong “has not returned to pre-Covid levels.”

He said revenge buying has peaked and that inflation, rising interest rates and even layoffs in the tech sector are affecting the luxury consumer base.

In an early sign of the slowdown, subcontractors supplying watch components saw their orders reduced or postponed, Szegedi said.