Geneva Watch Show opens on a quieter note after three years of record-breaking events

After three years of impressive growth, the Geneva Watch Show opened on Tuesday in a more subdued atmosphere, reflecting declining consumption in China and a more subdued demand for luxury goods in general.

The event, known as Watches & Wonders, is the pinnacle of the watch industry. Through Monday, 54 famous brands including Rolex, Patek Philippe, Cartier, Chopard, Hermès and Chanel will showcase their latest innovations.

Starting on Saturday, the show, where professionals gather to finalize their purchases, will open its doors to the public for three days, offering various events and social media content in an effort to attract a new generation of buyers.

Mathieu Humair, director of the organizing foundation, expressed optimism about the increase in the average age of visitors during the public event days: "35 years old, which is nothing short of encouraging."

Last year, Swiss watch exports reached a record high for the third consecutive year, totaling 26.7 billion Swiss francs (27.2 billion euros).

The slump seen in 2020 due to the Covid-19 pandemic was quickly overcome, largely due to what financial analysts called "revenge shopping." Many consumers used their savings accumulated during the isolation period to indulge in luxury shopping after months of confinement.

A return to reality

Growth in the watch market has slowed recently and shoppers have become somewhat cautious, as Karin Szegedi, head of consumer sector at Swiss audit firm Deloitte, noted in a conversation with AFP.

Chinese consumption has not yet recovered to pre-crisis levels and the surge in shopping sprees has died down, Szegedi said. In addition, factors such as inflation, rising interest rates and layoffs in the technology sector are impacting some segments of luxury buyers.

This slowdown is beginning to affect subcontractors supplying watch components. Orders are being delayed or reduced in quantity. Moreover, for brands that are still performing well, the shortening of delivery times is becoming apparent due to a decrease in orders from other brands, notes Szegedi.

Thierry Stern, head of Patek Philippe, acknowledged that the current subdued environment indicates a return to reality. However, he remains optimistic about his brand's prospects, emphasizing that all 72 000 watches produced annually will find buyers at the show, as it serves as a meeting point with retailers who will subsequently sell watches in their stores.

The impact of the slowdown varies from brand to brand. Premium brands such as Patek Philippe cater to an affluent clientele that is less sensitive to economic fluctuations, allowing them to sustain growth. According to a Morgan Stanley study, watches priced over 25 000 Swiss francs alone account for 69% of Swiss watchmaking growth.

While many analysts expected the atmosphere at the show to be more subdued, they noted that watchmakers were not discouraged. John Cox, an analyst at Kepler Cheuvreux, predicted a "soft landing" with watch export growth slowing to 4% in 2024.

Oliver Muller, founder of watch consulting firm LuxeConsult, expressed positive surprise at the news, emphasizing that while nothing extraordinary happened, there were many impressive offerings at the event.