Watch Executives, Expecting a Tough Year, Bet on Women, Brand Expertise

GENEVA — After three sunny post-pandemic years, the watchmaking industry congregated for the latest edition of the Watches and Wonders fair as storm clouds continued to gather across the luxury sector.

Although high-end watches, the focus of the showcase which ran April 9 to 13 at the Palexpo exhibition center in Geneva, had until then defied turbulence thanks to sustained demand from the U.S. and the return of Chinese consumers, watchmakers braced for a bumpy year.

The sector put on a brave face and showed up, with a 20 percent leap in attendance in the first two days open to professionals and guests of the brands, according to Matthieu Humair, chief executive officer of the Watches and Wonders Foundation that organizes the fair. The final tally came to 49,000 visitors, up 14 percent from last year.

And the organization’s chairman, Jean-Frédéric Dufour, who is also the CEO of Rolex, called out the recent free-trade deal — after 16 years of negotiation — between India and the European Free Trade Association, including Switzerland, Iceland, Liechtenstein and Norway.

Although it is expected to ease the entry of luxury exports to the vast Indian market, which is currently close to being among the top 20 watch markets, the deal has yet to go through the Swiss parliamentary approval process — which won’t happen before 2025, the body said in its announcement.

“Hold your breath,” said Montblanc’s global managing director of watches Laurent Lecamp, talking about the 43-mm Iced Sea 0 Oxygen Deep 4810 deep-sea diving watch that could descend 4,810 meters under water — the same depth as the height of the brand’s namesake alpine peak.

But this motto could also serve as the throughline of an edition where brands big and small favored coherence with their heritage and deepening of their expertise over new case shapes, and reached for precious metals, in particular rose gold.

“Whatever happens in the world, we should focus clearly on something that is logical with our roots as [that’s how] we will keep on growing. If you’re just trying to find opportunities, it is the best way to fall down,” said Lecamp.

“What people expect from brands like ours is more consistency and a true commitment to maintaining an identity,” said Van Cleef & Arpels president and CEO Nicolas Bos. “So what we try to do year after year is find different expressions that form a continuity.” 

The house expressed its jeweler chops through Lady Arpels timepieces such as the Jour Nuit with a dial depicting the sun and moon’s cycle in a 24-hour rotation, and the Jour Enchanté, which used a patented façonné enamel technique to create three-dimensional sculpted flowers.

Bos also said a strong presence disconnected from the immediate commercial climate built up company resilience.

“It’s very important that you remain a kind of reference in your field, even for people that will not necessarily be able to afford your products or services,” he said. “And the other aspect is to make sure we continue to identify and train the next generation of craftspeople to make sure this industry will continue to exist.”

Chopard too was intent on sticking to its roots — craftsmanship and sustainability, according to copresident and artistic director Caroline Scheufele. “Products presented from all the houses have much more depths — [in] the mechanics, the finishing, the craftsmanship — not flamboyance. That’s the general message of luxury now. Not just ‘less is more’ but also buy one piece rather than five pieces,” she said.

The jeweler presented a raft of L.U.C timepieces, such as the COSC-certified XPS Forest Green and the Quattro Spirit 25, marking its manufacturer’s quarter century with a jumping-hour movement with a Poinçon de Genève hallmark.

But there were also the gem-set Alpine Eagle 41 XP Frozen Summit and its smaller sibling, the Alpine Eagle Frozen 33-mm Automatic.

These weren’t a play toward a particular gender for Scheufele. “There’s no more men’s or women’s watch; I think it’s unisex,” she continued. “More and more women are actually into mechanical movements — moon phases, tourbillons.”

The reverse is also true. No longer timekeeping tools of necessity, watches have evolved into artistic objects for Jaeger-LeCoultre CEO Catherine Rénier.

“Watches have opened to an even wider audience, male or female, but also people who may not care about a chronograph but love the work on a lacquer dial,” she said.

This idea of artistry was also behind the Vacheron Constantin concept watch collaboration between couturier Yiqing Yin and perfumer Dominique Ropion, with a pleating effect on the mother-of-pearl dial of a one-of-a-kind Égérie watch as well as a strap with a fragrance encapsulated in the material.

“More brands should also pay attention to the ‘middle ground’ and offer something that can be worn by a man or woman,” concurred Cameron Barr, founder of vintage and pre-owned dealer Craft & Tailored. “I don’t think the women collectors and enthusiasts are really being served at all. Not every woman wants a pavé dial or gem-set piece.”

Companies can’t afford to ignore a segment that accounted for 54.4 percent of the overall luxury watch market in 2019 and represented $23.7 billion in sales. It is expected to reach $26.7 billion by 2027.

“The industry has been underserving her and we’re going to serve her in a very big way going into the next few years,” said Jeffrey Cohen, president of Citizen Watch America, which owns watchmaker Frédérique Constant.

Women account for 50 percent of Frédérique Constant’s business, and Cohen expects its accessible luxury positioning to propel growth and attract younger consumers to mechanical watches.

“Everybody’s going up, up, up. We’re coming underneath and have a great value proposition in the $1,000 to $60,000 range [that’s] been a really sweet spot for us,” he said.

For Cohen, the dismal landscape offered by Swiss watch export figures — a 16.1 and 6.3 percent year-on-year slump for March and the first quarter respectively — could be attributed to “the over-demand that the high-end [brands] created during the pandemic.”

“People think they can continue to just keep raising prices and coming out of production,” he continued. “That’s going to have a dramatic effect on your business 24 to 36 months down the line.”

In addition to a cautious and mostly male consumer putting off watch purchases due to macroeconomic uncertainties, Mario Ortelli, managing partner of strategic luxury advisory company Ortelli & Co., said the watch industry’s cloudy outlook for 2024 also resulted from the secondhand market bubble bursting.

“The end to the strong demand of watches to flip pulled down the whole market, not just the secondary one,” he told WWD. “Consumers who ended up buying other brands are starting to find pieces [from their initial target label]. Without the urgency and rush to buy, it’s going back to normal.”

Hence also the rise in women-oriented watches this year in Geneva. “The bubble bursting last year was really about the men’s, never the women’s market, so that message was heard loud and clear by every single brand,” said Chanel‘s president of watches and jewelry Frédéric Grangié.

While some viewed the women’s market as safer territory, Grangié described it as the house’s natural one as it mined its couture heritage, with cartoon Coco Chanel figures, pincushion pendants and even a striking watch bangle shaped like a giant bejeweled bobbin.

Ditto for Hermès, which tapped into the competitive mechanical sports watch segment, underexploited for women, with the Cut collection. Priced between $6,725 for steel on a rubber bracelet and up to $21,900 for a bi-metallic version with a diamond-set bezel, it arrived in stores as the fair began.

More than a play toward women, who already account for 80 percent of its watch market owing to long-standing popular female-oriented quartz models such as the Cape Cod, the new collection is about cementing its presence in Swiss-made mechanical watches, said Guillaume de Seynes, vice president of Hermès International.

“We see that [Swiss] watch exports are less flamboyant and hear about a number of tensions, but we remain confident in our creativity dynamic,” said the executive, without elaborating further as the company prepares to report first-quarter results on Thursday. “We have the H08 which is establishing itself well and still has a lot of potential in our opinion. And we want to capitalize on the novelty of the year, an everyday sport watch that is a very complete line for women in four versions [including] the metallic bracelet that doesn’t exist much at Hermès.”

The French luxury brand will forge ahead with its plans to extend production capacity by 2026 in its second site in Noirmont, Switzerland, where its dials and cases are made, said de Seynes.

Although he did not detail other extension plans, a potential move to shore up and secure its supply chain could be by purchasing movement manufacturer Vaucher Manufacture Fleurier, in which Hermès already owns a 25 percent stake.

According to recent press reports, Vaucher’s majority owner Sandoz Family Foundation may be seeking to sell the companies under its watchmaking division, which in addition to Vaucher includes several component makers and watch brand Parmigiani Fleurier.

Confidence and a steady hand was also the message at Ulysse Nardin, which unveiled the Freak S “Nomad” evolution of its central flying carousel movement, this time with a double oscillator with silicon balance wheels, escapements coated in diamond-coated silicon and a diamond guilloché hour disc.

“It’s a year of consolidation — not only this calendar year, it actually started last year,” said CEO Patrick Pruniaux. “The watch industry, particularly the high-end, goes through cycles but the overall trend is upwards.”

But few believe the skyrocketing curve of previous years is in the cards for 2024.

At a conference on first-quarter results on April 16, LVMH chief financial officer Jean-Jacques Guiony said the luxury conglomerate does not expect its watch brands to perform well this year, after its watches and jewelry division reported a 2 percent decline in like-for-like sales in the first quarter.

“We are not particularly optimistic. I mean, we don’t expect a catastrophe, but the messages that we got from the clients at Watches and Wonders were the same as the one that our competitors got,” he said in response to an analyst’s question. “So we don’t expect a fabulous year — not necessarily a bad one either, but not a great year.”

Despite this, a return to normal was to be seen in light of three effervescent years. “We still have acceptable numbers, if you put in perspective our pre-COVID record of 2019,” said Ricardo Guadalupe, CEO of LVMH-owned Hublot. “And the mood [of the fair] is rather positive, more than I thought, even if some retailers are suffering more than others.”

Balance was a key idea for the brand, with novelties that ran from the striking Big Bang MP-11 Water Blue Sapphire, with a sculptural 7-barrel movement and 14-day power reserve, to diamond-adorned 29-mm Classic Fusion models.

It was also the market approach Guadalupe fleshed out. “We are quite balanced, which allows us to be relatively unscathed. Even if China is complicated at the moment, we remain strong in Japan, in Southeast Asia, in the Middle East, in Europe,” he said. “The U.S. had a complicated moment in late 2022, early 2023, but it’s better now and South America, is very strong for us, notably in Mexico.”

India and Southeast Asia were top of mind for executives including Cartier CEO Cyrille Vigneron, who described the former as “an opportunity that starts from low” in a country with the world’s fifth-largest GDP and noted that the Thai market had grown tremendously in the past five years thanks to local consumers.

“The elephant in the room is China,” said Ortelli. “When the first watch-consuming nationality in the world is not splurging so much on your product, all the other geographies should push at full speed and that is not the case.” 

Ting Zhou, dean of the Yaok Institute, a luxury research and consulting organization in China, said that while growth would slow significantly, it will continue. “According to our data, the watch market is expected to grow at 7 percent, which is lower than the luxury industry’s growth rate of 15 percent,” she told WWD.

“It’s just that retail distribution channels and methods will become more diversified and downwardly mobile, traditional store sales will be challenged in the near future, and tier 4 and 5 cities will become the focus of development for many brands,” she continued.

The recent drop in Swiss watch exports to China was the result of inventory pressure but also related to the operational strategies of a number of brands, she noted. “Since the second half of last year, many brands have been withdrawing from wholesale, and the reduction in the number of wholesale agents and their uncertainty about the future are also important reasons for the decrease in the number of end-of-line shipments.”

Both analysts estimated that the winners would be market leaders, albeit not achieving banner years, but that most brands would face challenging trading conditions.

As a result, Ortelli also expected brands to be restrained in their price increase strategy, to avoid pricing out consumers. “When you go on more aspirational products that are not so differentiating or have innovations that are not groundbreaking, [consumers] are cautious with the price,” he added. 

Even in the high-end segment, that is increasingly seen as an argument.

“What we hear more and more in our retail network is that you get a lot of watch for the money,” said Zenith CEO Benoît de Clerck.

Although the brand launched its latest Defy Skyline range at the fair, the best example in his opinion was the Chronomaster Original Triple Calendar launched in January, priced at 12,900 Swiss francs. “Only three or four brands produce a triple calendar, and they sell that watch for 100 or 150 percent more. This is how we managed to get collectors on board,” he continued.