The Swiss watchmaking industry is the most pessimistic about the economic outlook in four years, according to a survey by consulting firm Deloitte. Smart watches, the strong franc and a drop in demand from China were the main causes of concern.
The report, released on Tuesdayexternal link, found that 41% of executives were negative about 12-month prospects, while 14% were positive. This is the first time pessimism has beaten optimism since the annual survey started in 2012.
“The Swiss watch industry is at a turning point,” the survey said.
Overall, the strength of the Swiss franc – the Swiss National Bank removed the currency cap on the euro in January 2015 - was perceived as the greatest risk (69% of watch executives).
Deloitte noted that in the past the Swiss watch industry had coped well with the strong Swiss franc as it could pass on increases in prices, especially in the high-end segment.
“… but a critical point now seems to have been reached, especially in the low-to mid-price range segments of the market”.
Another important concern was weaker foreign demand, especially in Hong Kong and China. This was due to lower rates of growth in these economics, but also the anti-corruption and anti-kick-back legislation in China, leading to a fall in sales of luxury products.
Smartwatches were considered an increasing competitive threat by 25% of respondents, up from 11% in 2014. 39% of executives surveyed said that, following the release of the Apple Watch, they were more aware of the challenge from this product category.
Meanwhile the the survey also found that consumer interest was significantly higher in China (61%), Italy (48%) and France (35%), than in Switzerland, where only 17% of consumers expressed interest.
Swiss brands have rushed to add electronic functions to their products, following the arrival of the Apple Watch in Swiss stores in June. Cie. Financiere Richemont SA’s Montblanc brand introduced an "e- Strap," while Swatch Group and Mondaine have also announced smart devices. Apple is also looking to add a touch of luxury to its smartwatch, as seen through its collaboration with Hermes to produce bands for the Apple Watch.
The study was based on an online survey and discussion with executives (51 participating). The consumer survey reached 3,000 people.
swissinfo.ch and agencies