so here's a question, basic supply and demand:
with current economic conditions, do you think mid range watch prices are sustainable? I think that the cheap and cheerful end like Timex, Seiko and others are reasonably well protected as thats what the bulk of the non-WIS population go for. I also think the high end like your Pateks and APs are reasonably well protected due to foreign and local businessmen & bankers splashing out.
But what of the mid range such as Tag, Oris and others? Even with the bank base rate dropping, LIBOR is increasing, and high street banks are actually rasing mortgage rates in some cases, or withdrawing their better deals in others. Oil/gas/petrol and energy prices are increasing, taking more free cash flow out of hoesholds, and prices of essential goods are rising by more than inflation.
Means the vast majority of the general public arent splashing out extra on luxuries, they're still buying them, but are going for a £500 TV rather than a £1000 one. I have one or two friends who are trying to sell cars at the moment and are finding it really difficult because no one wants to pay the (fair) asking price. Not because they dont think that it's fair, just buyers have less willingness to pay.
Do you think this applies to the watch industry too? and do you think that the above are going to have any effect on prices, or do you think prices will remain the same and the likes of Tag/Oris will just take a hit to their turnover?
It is always the case that in times of belt-tightening the luxury/non-essential items take a back seat. Yet there are always people with money. This current crisis is not the worst we've known and it won't last forever. As long as the watch companies keep a weather eye on their target market segment then I don't see any lasting problems.
No clue! And not something I've even considered .. although, I admit, it's both interesting & thought provoking .. these brands have survived the troubles (economic & technological) in the past & are still going strong. I'd imagine that their CEO's are aware of the current market & have plans in place.
/vince ..
Doesn't seem to be putting off the big High street brands.
Rolex just increasd their prices by approx 10% in March, Breitling are next on May 1 with a minimum 10% across the range and I hear that Omega will likely follow suit!! :cry:
I used to work on a trading floor and it wasn't unusual to see whole trading desks - six or more guys - with exactly the same Rolex. Some of those guys will lose their jobs in this mess but most will not. There are still plenty of people out there whose disposable income far exceeds their knowledge of (and interest in) watches. And they will still be buying Rolex, Breitling and Tag by the bucketload.
Some thoughts:
- Manufacturers in the range from about 500 to 5,000 Euro watches have in tendency more problems than those with cheap or very expensive watches.
- Referring to Swiss watch industry, in 2007 in comparison with 2006 the total number of watches has decreased a bit while the total value has risen because the average price of each watch has risen. The strategy is to manufacture more very expensive watches, because this market sector is growing and more robust.
- (Western) Europe is still a quite important market, but not the most important. Moreover it's importance will decline in future. The focused markets are Asian countries, even though the stock markets broke in in the last month, their economies and population will grow further. On the other side even things would go well, there will be no fundamental growth in Europe anymore, and rather few in the US.
So IMO European situation will not have much effect on the manufacturers pricing.
But one should mention the last increase in price was about five years or so ago. Many competitors have increased their prices more excessive.Originally Posted by spogehead
/ Hal
Not here in the UK, their prices last went up in 06
But one should mention the last increase in price was about five years or so ago. Many competitors have increased their prices more excessive.
/ Hal
I've looked up catalogues and price lists back to 2002. The prices were stable here at least from 2002 (that's the oldest catalogue I have) to end of 2006.Not here in the UK, their prices last went up in 06But one should mention the last increase in price was about five years or so ago.
Per 01.01. 2007 our beloved German government has lifted VAT from 16 to 19 % (actually the biggest tax increase in Germany's history, BTW), so every manufacturer has adapted prices.
The current prices are stable since beginning of 2007.
Of course one can compare only models without (significant) modifications.
E. g. Rolex has changed and improved the bracelets and clasps in between, Submariner no date now comes with C.O.S.C. certification (which is at least a small expense factor), GMT II has an improved movement and a ceramic bezel insert and so on.
As I mentioned it's not my part to advocate Rolex, but IMO in comparison (!) to the market Rolex prices and price increase are IMO quite reasonable nowadays.
Perhaps it has to do with your wise decision not to join the Euro ... :wink: duck and run ...
Actually AFAIK the net prices (without VAT) for Rolex are nearly the same within the Euro zone. Even Swiss list prices are more or less the same, but as a result of risen Euro exchange rate the net price of Rolex watches in Switzerland are now above the German net list prices. Including VAT they are still less expensive because of 7.4 VAT in Switzerland and 19 % governmental robbery in Germany.
One last annotation: A friend of mine was keen on a Rolex Sea-Dweller for several month. In Feb. 2007 he has bought one in Dubai for about (converted) 3,500 Euro and was proud on his cleverness. Of course he didn't pay import turnover tax, which would have been around 670 Euro. If he would have bought the SD here regularly till end of 2006, he would have paid 3,820 Euro list price. So he has saved about 300 Euro - including tax criminal offence and Dubai documents. Moreover the watch he bought was an old version without the Rolex writing on the rehaut. Not a good deal IMHO. Sometimes the straight way is perhaps the better one ... . But I didn't comment it but congratulated him to the watch.
/ Hal
For many of the high-middle and top-end makers Russia is also a very good market.
The division between the rich and the poor is widening, right across the planet and we will see this division in the watch trade ... I feel we are already seeing it.
john
THIN is the new BLACK
Baselworld and the Geneva show have seen record sales and orders this year both in volume and value. But there is a very strong shift, North American customers have spent less, while Asia, Eastern Europe and Western Europe have had strong increases. These are trade customers buying from the manufacteres, which is an indication of the market this year. Also the very highest end has seen very strong growth. The Richemont Group too is very pleased with both the average price per watch sale increased and the numbers sold. Overall most manufacteres are very positive, the order books are full. Hublot for example has seen record growth and demand that they can't even fullfil. Average waiting time for their products is 14 months now.
so general consensus is that midrange may struggle in N America and europe, but high end will prosper in Russia and Asia?
I mean I have no idea what's going to happen to the watch market, I spend all my time looking at the oil market! I was just intrigued as to what peoples oppinions were on it! I wonder what happens....!?
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