Interesting article on watch from Deloitte
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  1. #1
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    Interesting article on watch from Deloitte

    Here's an interesting article from Deloitte on the watch industry

    The Deloitte Swiss Watch Industry Study | Luxury goods

    The key findings are:
    - Despite slower export growth, demand from emerging markets and N America is expected to grow.
    - High end watches (>CHF$5k) will be the fastest growth segment
    - Vertical integration will continue in manufacturing (due to Swatch actions on ETA) and distribution (mono brand shops like Tourbillon)
    - Alternatives to ETA will be difficult to source resulting in small brands in the low to mid price range to disappear
    - Smart watch unlikely to be a threat

    Assuming that the findings are correct, the impact for consumers are (i) watch price will continue to increase due to increased demand but maybe not at a pace as before, (ii) shift to mono brand or flagship stores will reduce discounts to consumers as these stores seldom discount (more pricing power to watch manufacturers), and (iii) fewer independent brands in the $1k to $5k price range (Anonimo, Ball, Bell & Ross, Fortis, Oris, Glycine, UTS, Sinn, Muhle are at risk).

    Your thoughts or other implications for consumers?
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  2. #2
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    Re: Interesting article on watch from Deloitte

    And the beat goes on. No end in sight to the run up in pricing.

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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by fjblair View Post
    And the beat goes on. No end in sight to the run up in pricing.
    I strongly support price increases in the luxury sector. If you dont increase the price, then your average Joe will start having Rolexes.
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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by hawkeyes View Post
    Here's an interesting article from Deloitte on the watch industry

    The Deloitte Swiss Watch Industry Study | Luxury goods

    The key findings are:
    - Despite slower export growth, demand from emerging markets and N America is expected to grow.
    - High end watches (>CHF$5k) will be the fastest growth segment
    - Vertical integration will continue in manufacturing (due to Swatch actions on ETA) and distribution (mono brand shops like Tourbillon)
    - Alternatives to ETA will be difficult to source resulting in small brands in the low to mid price range to disappear
    - Smart watch unlikely to be a threat

    Assuming that the findings are correct, the impact for consumers are (i) watch price will continue to increase due to increased demand but maybe not at a pace as before, (ii) shift to mono brand or flagship stores will reduce discounts to consumers as these stores seldom discount (more pricing power to watch manufacturers), and (iii) fewer independent brands in the $1k to $5k price range (Anonimo, Ball, Bell & Ross, Fortis, Oris, Glycine, UTS, Sinn, Muhle are at risk).

    Your thoughts or other implications for consumers?
    Yes, it's interesting that the grey market -- so often derided here on WUS -- and the competitive landscape wasn't even listed as a factor for concern/risk. Fakes also seem not to bother the industry's leaders anywhere near as much as they bother folks on WUS. I think both of those things are positive and hopefully WUS members will factor some of that perspective into their thinking. Specifically with regard to the grey market, the fact is that they make high end products accessible to more people and/or they make the price points more amenable to people looking at items priced at or above what's otherwise beyond their willingness to spend, despite their having the ability to do so. Quite simply, grey market sellers are responsible for much of the increases and growth in high end watch sales.

    For all those folks who seem inspired to "invest" in watches, now seems like a good time to buy stock in the small watchmakers who seem good targets for acquisition. It's not at all surprising that the watch industry, like nearly every other one, is consolidating. That's exactly what happens when a few large concerns, all managed by MBAs, dominate the marketplace. Banking saw it, consumer products saw it, chemicals, oil, aircraft and defense manufacturing, and textiles have seen it. It'd be either naive or myopic not to recognize that now that major industries have consolidated as much as possible that the same tactics won't be applied to smaller industries that yet offer opportunities for meaningful profits.

    TY for posting.
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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by hawkeyes View Post
    Here's an interesting article from Deloitte on the watch industry

    The Deloitte Swiss Watch Industry Study | Luxury goods

    The key findings are:
    - Despite slower export growth, demand from emerging markets and N America is expected to grow.
    - High end watches (>CHF$5k) will be the fastest growth segment
    What's interesting to me, as someone who studied economics, is how the North American economy is growing very slowly....and yet, the projections are for luxury segment to be the fastest source of growth. One reason this is especially interesting, is that it jives with lots of material I've been reading on the growth of income inequality, and the explosion of the wealth at the very top....including the [now cliche] 1%ers.

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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by zhan View Post
    I strongly support price increases in the luxury sector. If you dont increase the price, then your average Joe will start having Rolexes.
    Not sure if you are serious or not but the average joe with a little dough has been buying Rolex for years. Nothing is is more conspicuously mainstream than Rolex.
    R.Palace likes this.

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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by fjblair View Post
    Not sure if you are serious or not but the average joe with a little dough has been buying Rolex for years. Nothing is is more conspicuously mainstream than Rolex.
    Yup. Average Joe buys Rolex. The 1% buys Patek.
    loiidol likes this.

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    Re: Interesting article on watch from Deloitte

    Quote Originally Posted by dspaulson View Post
    What's interesting to me, as someone who studied economics, is how the North American economy is growing very slowly....and yet, the projections are for luxury segment to be the fastest source of growth. One reason this is especially interesting, is that it jives with lots of material I've been reading on the growth of income inequality, and the explosion of the wealth at the very top....including the [now cliche] 1%ers.
    My thoughts as well, though despite all of their metrics, the whole situation screams "bubble" to me. The price of luxury watches has grossly outpaced inflation (with no significant material/technological improvements to justify some of it) and watches are less "iconic" than they once were. With a shrinking upper-middle class and a culture of casual among successful young entrepreneurs (think Zuckerburg), its hard to see where significant growth is coming from (from the NA sector at least).

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    Re: Interesting article on watch from Deloitte

    I think part of the increase in N America is going to be driven by the improvement in the economy and pent up demand from a few years of low economic growth. Another driver is that the culture of watch is coming back despite the culture of casualness because it is partly fashionable, partly jewelry, partly exclusivity and becoming cool again. Here's an article (although dated) that speaks to this.

    http://www.nytimes.com/2011/07/07/fa...pagewanted=all

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    Re: Interesting article on watch from Deloitte

    thanks for posting this.
    newb watch collector/high-end watch admirer

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