Swiss Luxury Watches: Ticking Down

China's anti extravagance measures, cooling economies take their toll

This year has been one to forget for Swiss watch makers, and the rest of it's not looking so hot. 

Retailers are holding high levels of inventories, according to a proprietary survey of retailers by Credit Suisse. Watch exports shrank 16 percent, the worst performance in 18 months, according to the Federation of the Swiss Watch Industry.

Calling Time on Luxury Swiss Watches

Watch exports may shrink further as struggling economies crimp demand for luxury goods

Source: Federation of the Swiss Watch Industry

And, a burst of demand isn't waiting on the horizon. A slowing economy and anti-extravagance measures have hurt sales in China and Hong Kong, terrorist attacks in Europe have kept tourists away, while a stronger dollar and nervousness about the presidential elections has weakened U.S. demand. Brexit torpedoed the market in Britain, with a huge 26 percent decline. 

To ride out the storm, Swiss brands need to embrace changing tastes. Investing in smart watches is sensible. LVMH's Tag Heuer can't keep up with demand for its $1,500 smartwatch, and will double production capacity. Cutting costs is also crucial, and while Richemont has got started Swatch's refusal to contain spending is puzzling.

Watch makers that don't recognize that times have changed face punishment from investors.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Andrea Felsted in London at

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