Growth in sales of watches is expected to slow down in 2012 after recovering in 2010. Watch sales had plunged by 10% in 2009, during the “Great Recession”. Consumers of all income levels were shaken up by the recession and took a break from buying discretionary items, such as watches. In 2010, upper income consumers began to feel more confident about the economic prospects and started to spend again on gifts and on themselves. In turn, the beginnings of an economic recovery and rising consumer confidence led to 9% value growth in 2010 and in 2011. Value sales of watches are projected to grow by a smaller 4% in 2012, as pent-up demand for watches during the economic downturn was released in 2010 and 2011. The 4% value growth rate is an improvement on the 1% review period average, which was negatively affected by declines in 2008 and 2009.
Competitive landscape.
Fossil Inc led sales in 2011, with a 19% value share, up from 17% in 2010. The company has been able to grow sales through a multi-brand philosophy. Instead of relying on just one brand, such as its eponymous Fossil, the company produces watches under numerous owned brands (Michele, Relic) as well as licensed brands, including Burberry, DKNY and Michael Kors. Fossil is focused on “fashion watches”. Its watches are for women who purchase a watch as a fashion accessory for their wardrobe, rather than a long-term investment. The company has launched numerous lines to appeal to different customers with different incomes. At the lower end, the Fossil line is priced at under US$250, and uses materials such as ceramic and crystals. At the higher end, some of its Michele watches feature multiple diamonds and are priced upwards of US$1,000.
Renewed confidence in the US economy is expected to lead to increased sales of watches over the forecast period. Consumer interest in luxury mechanical watches is also expected to lead to good demand for watches.(ref: Euromonitor.com).
For the first time since the study launched in 2004, China surpassed the USA as the country exhibiting the highest demand for luxury watches, representing 23% of all watch-related searches. Gaining the most attention in China is Omega (20.2% of searches there), followed by Longines (18.9%), and Rolex (10.5%).
Growth of global demand fueled by the East
In addition to the growth witnessed in China (+7.8 percentage points), countries such as Japan (+3.5 pp), India (+0.6 pp), and Russia (+0.5 pp) saw significant increases over last year. Most western markets remained stable or even saw market share drops, such as in the US (-9.2 pp), Germany (-1.7 pp), and Italy (-1 pp).
The demand for the two industry leaders shows that the gap Rolex held over Omega in the previous years is quickly closing in. This year’s study revealed the difference in demand between the two brands is by 2.3 percentage points, against 8.4 in 2009 – mainly explained by Omega gaining market share in China while Rolex reinforced its positioning in the stagnant West. Among the 1,300+ individual watch models tracked by the WorldWatchReport™, the top 3 models, Omega’s Seamaster, Rolex’s Submariner and Rolex’s Daytona, continue to hold their lead. Iconic brands such as TAG Heuer and Cartier saw their highly popular collections Carrera (4th) and Tank (9th) featured in the top 10 ranking of most-searched models – placing these brands in the leagues of the heavy-hitters. (ref: worldwatchreport.com).
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