Strange Times: How the luxury watch industry is coping
with Coronavirus

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    Strange Times: How the luxury watch industry is coping
    with Coronavirus

    In 2019, luxury watch brands were adapting to an increasingly complex global situation, including market paralysis in Hong Kong and strict regulations in countries such as Russia and Turkey. The Coronavirus epidemic emerging in China towards the end of the year was just one challenge among many. Overall, however, Swiss watch exports exceeded an already strong 2018, with luxury brands leading the growth in value. Mechanical, precious metal and bimetal wristwatches with an export value over CHF 3000 (£2,500) performed well, counteracting the decline in lower price segments, particularly quartz and steel watches. In general, the mood was optimistic. After several years of steady growth, the sector demonstrated an ability to absorb economic and political challenges, and the Federation of the Swiss Watch Industry predicted a year of “high-level consolidation” in 2020.

    Fast-forward to the first quarter of 2020, and the epidemic in China had become a global pandemic and a fully-fledged economic crisis. By the end of March, Boston Consulting Group predicted that the fashion and luxury sector would be hit harder by Coronavirus than it was by the 2008 recession. Why the gloom? They argue that the pandemic has delivered a financial shock akin to 2008, but that it also brings with it greater market uncertainty, with prolonged store closures and widespread disruption to manufacturing.

    In March, Switzerland’s watch industry effectively ground to a halt, with manufacturers including Rolex and Patek Philippe taking the decision to suspend production. Rolex chief executive Jean-Frederique Dufour told workers that the factories would close for 10 days, however this has been extended indefinitely. In a statement issued on 29 April, Rolex alluded to “a gradual opening in the near future” but offered no firm plans. With such a significant hiatus, and the prospect of reduced production capacity when the facilities do re-open, the company will struggle to match the 1 million watches it produced in 2019.

    While Rolex has ruled out any new product launches this year, vintage Rolexes continue to shine. A stainless steel 1971 Rolex Paul Newman ‘Panda’ Daytona was the star of a Sotheby’s online sale in March. The auction house is running weekly online auctions, each featuring a curated list of watches, and reports strong results for iconic brands such as Rolex and Audemars Piguet.

    In 2019, luxury watch brands were adapting to an increasingly complex global situation, including market paralysis in Hong Kong and strict regulations in countries such as Russia and Turkey. The Coronavirus epidemic emerging in China towards the end of the year was just one challenge among many. Overall, however, Swiss watch exports exceeded an already strong 2018, with luxury brands leading the growth in value. Mechanical, precious metal and bimetal wristwatches with an export value over CHF 3000 (£2,500) performed well, counteracting the decline in lower price segments, particularly quartz and steel watches. In general, the mood was optimistic. After several years of steady growth, the sector demonstrated an ability to absorb economic and political challenges, and the Federation of the Swiss Watch Industry predicted a year of “high-level consolidation” in 2020.

    Fast-forward to the first quarter of 2020, and the epidemic in China had become a global pandemic and a fully-fledged economic crisis. By the end of March, Boston Consulting Group predicted that the fashion and luxury sector would be hit harder by Coronavirus than it was by the 2008 recession. Why the gloom? They argue that the pandemic has delivered a financial shock akin to 2008, but that it also brings with it greater market uncertainty, with prolonged store closures and widespread disruption to manufacturing.

    Rolex Paul Newman ‘Panda’
    Daytona Stainless Steel
    Chronograph Wristwatch
    With Bracelet Circa 1971

    In March, Rolex closed its factories, suspending production and ruling out any new product launches this year. Vintage Rolexes, however, continue to shine at auction as demand for this iconic brand stays strong. A stainless steel 1971 Rolex Paul Newman ‘Panda’ Daytona was the star of a Sotheby’s online sale in March. This classic timepiece sold for 162,500 CHF (£135,000), smashing its high estimate of 120,000 CHF.

    Patek Philippe Annual
    Calendar Chronograph
    Special Series

    While Patek Philippe has announced that it will not present any new products this year, the luxury Swiss watchmaker still managed to make headlines in May. It’s thanks to the sale of a limited edition watch to Mixed Martial Arts star Conor McGregor. Just 25 pieces of the Irish green Annual Calendar Chronograph were made for the 150th anniversary of Dublin jeweller, Weir & Sons, one of which was snapped up by the Irish fighter.

    Piaget Altiplano
    Ultimate Concept

    Piaget’s Altiplano Ultimate Concept was the standout launch from this year’s Watches & Wonders fair, which was held online in April. This ultra-slimline watch was presented as just a concept in 2018, but, following two years of development, it is now a fully realised timepiece. The world’s thinnest mechanical watch is a mere 2mm thick, with a case and movements made up of 167 microscopic individual parts.

    Breitling Chronomat B01
    42 18k Red Gold Anthracite

    In a series of online ‘summits’ this spring, Breitling has introduced its new collections, including the latest incarnation of its quintessential Chronomat. The aviation-inspired collection is a timely tribute to the model that saved the ailing brand when it was launched in 1984. In these turbulent times, the company will doubtless be hoping its trademark piece can help it weather the storm.

    Some brands are starting to fire up their factories again. After a 5-week suspension, Patek Philippe announced the reopening of its production facilities in Geneva on 27 April. This is subject to limitations, based on Swiss Government recommendations, of reduced working hours and numbers of staff on site. Like Rolex, it has announced that it will not present any new products until next year. It has, however, made headlines today thanks to the sale of a limited edition watch to Mixed Martial Arts star Conor McGregor. Just 25 pieces of the Irish green Annual Calendar Chronograph were made for the 150th anniversary of Dublin jeweller, Weir & Sons, one of which was snapped up by the Irish fighter.

    Rolex and Patek Philippe are not the only watchmakers to withhold launches this year. Many of the year’s product introductions would take place at the industry’s two most important fairs: Baselworld and Watches & Wonders, in Basel and Geneva, respectively. The biggest show, Baselworld, was due to be held in the beginning of May. It was initially postponed until January 2021, however the organisers have announced it has now been cancelled altogether. The smaller Watches & Wonders has proved itself more agile and adapted the show to its digital portal at the end of April, where 30 brands presented their latest watches.

    Arguably the standout launch was Piaget’s Altiplano Ultimate Concept. This ultra-slimline watch was presented as just a concept in 2018, but, following two years of development, it is now a fully realised timepiece. The world’s thinnest mechanical watch is a mere 2mm thick, with a case and movements made up of 167 microscopic individual parts.

    Some brands, such as Breitling, have made the move to host their own online launches. In a series of online ‘summits’, Breitling has introduced its new collections, including the latest incarnation of its quintessential Chronomat. The aviation-inspired collection is a timely tribute to the model that saved the ailing brand when it was launched in 1984. In these turbulent times, the company will doubtless be hoping its trademark piece can help it weather the storm.

    Looking to the immediate future, brands would be well advised to take a leaf out of Breitling’s book and shift focus to their own digital channels. Brands like Omega, IWC and Zenith are already increasing their activity on social media in an effort to keep customers engaged, but when it comes to sales, the sector has remained heavily reliant on bricks and mortar. According to a Financial Times Special report, published this month, just 5% of new watch sales are made online. Analysts are predicting consumers will be nervous about returning to stores as lockdowns are eased around the world, so cracking ecommerce is likely to be crucial to the industry’s recovery.

    Some brands are starting to fire up their factories again. After a 5-week suspension, Patek Philippe announced the reopening of its production facilities in Geneva on 27 April. This is subject to limitations, based on Swiss Government recommendations, of reduced working hours and numbers of staff on site. Like Rolex, it has announced that it will not present any new products until next year. It has, however, made headlines today thanks to the sale of a limited edition watch to Mixed Martial Arts star Conor McGregor. Just 25 pieces of the Irish green Annual Calendar Chronograph were made for the 150th anniversary of Dublin jeweller, Weir & Sons, one of which was snapped up by the Irish fighter.

    Rolex and Patek Philippe are not the only watchmakers to withhold launches this year. Many of the year’s product introductions would take place at the industry’s two most important fairs: Baselworld and Watches & Wonders, in Basel and Geneva, respectively. The biggest show, Baselworld, was due to be held in the beginning of May. It was initially postponed until January 2021, however the organisers have announced it has now been cancelled altogether. The smaller Watches & Wonders has proved itself more agile and adapted the show to its digital portal at the end of April, where 30 brands presented their latest watches.

    Arguably the standout launch was Piaget’s Altiplano Ultimate Concept. This ultra-slimline watch was presented as just a concept in 2018, but, following two years of development, it is now a fully realised timepiece. The world’s thinnest mechanical watch is a mere 2mm thick, with a case and movements made up of 167 microscopic individual parts.

    Some brands, such as Breitling, have made the move to host their own online launches. In a series of online ‘summits’, Breitling has introduced its new collections, including the latest incarnation of its quintessential Chronomat. The aviation-inspired collection is a timely tribute to the model that saved the ailing brand when it was launched in 1984. In these turbulent times, the company will doubtless be hoping its trademark piece can help it weather the storm.

    Looking to the immediate future, brands would be well advised to take a leaf out of Breitling’s book and shift focus to their own digital channels. Brands like Omega, IWC and Zenith are already increasing their activity on social media in an effort to keep customers engaged, but when it comes to sales, the sector has remained heavily reliant on bricks and mortar. According to a Financial Times Special report, published this month, just 5% of new watch sales are made online. Analysts are predicting consumers will be nervous about returning to stores as lockdowns are eased around the world, so cracking ecommerce is likely to be crucial to the industry’s recovery.