an interesting view on the watch industry in times of economic crisis

Here's an excellent opinion piece by Christophe Roulet on the watch industry during the current meltdown.

The article was first published here

"Anne, sister Anne, do you see nobody coming?" 

When watchmaking took its summer break this year, skies were blue, seas were smooth and ambitious projects were on the way. A few months down the line, and dark clouds have gathered, budgets have been axed, and holidays are just an irresponsible dream. The US subprime crisis has taken its toll. Lehman Brothers has filed for bankruptcy, UBS held on by the skin of its teeth, central banks have poured billions into the system… and the list goes on. The financial markets have exploded, and the real economy looks set to implode.

The most surprising thing in this unprecedented sequence of events is just how quick the volte-face has been. The watch industry was humming with good news and projects a go-go, new buildings were going up and product lines were expanding. Now belts are being tightened and ambitions reeled in. "THE" crisis is on everyone’s mind and everyone’s lips. It is dictating the austerity measures that are already in place in the sector. There’s a sense of déjà vu as we cast our minds back to the quartz tidal wave that shook the industry to its core.

But is this a fair comparison? Granted, some markets are feeling the strain, beginning with the United States and Japan, as well as certain European countries. Granted, export figures don’t reflect a world that is collapsing around our ears. Granted, visibility is such that the sector is almost having to feel its way. But after five years during which watch collectors and connoisseurs fuelled their addiction, today’s reactions might reasonably be described as just a little OTT. To listen to the sector right now, we’re heading straight for the wall.

Fortunately, not everyone is taking a fatalistic view. Economic cycles are something businesses have always had to work around. And if some should fall by the wayside, it’s because not every fly on the cake was meant to survive. This is nothing new, and yet it’s as though some dreadful truth has just dawned. Remember: if one company goes down, it doesn’t mean every other business will sink with it. Panic-mongering won’t help. ■

Christophe Roulet

© 2008 All rights reserved
Watch industry could use some thinning of the herd....
12/03/2008 - 18:05
As the writer alludes to, the market may need to correct itself from a period of excess.  Watch brands that distinguish themselves by cosmetics alone should fear extinction!
I would echo Dean's sentiments...
12/04/2008 - 01:19
I truly believe that there is really too much of everything in the watch industry as everyone has tried to cash in on the success of the last 10 years.  As I have said, "there is too much money and not enough sense".  While the coming consolidation will cause pain for all sectors, I think that the industry will become stronger for the long term.  I foresee fewer brands, a reduction in retailers and even the disappearance of certain media outlets, both in electronic and print formats.  Finally, there will be a decline in buyers/collectors as those who thought that they would make a fortune by buying watches will realize that these were mostly foolish investments. I hope that what remains are the quality brands, reliable and service oriented retailers and a higher percentage of buyers who are truly passionate about watches and fewer of the speculators. Recently, I was talking with a brand CEO and while he was concerned about the impending pain for the industry, he felt that the long term effects will give us a stronger industry with higher quality players.  Survival of the fittest in the watch industry... Just my 2 cents worth... Duncan
Lately too many "collectors" come in buying up
12/04/2008 - 03:48
everything from latest collections of Patek & AP for investments. They are nothing but flippers, trying to make extra money from these watches. As such, the prices kept going up especially in 2ndary market. I have met many like these people and quite turned off as those who have truly genuine passion for watches can only feel the pinch as the prices went up. It's true that these flippers have lots of money to play around with... Hope with this recession, it'll separate the true brands from the fake ones (those who are only joining the bandwagon trying to make money with no passion) and I sincerely hope the flippers will go away from this hobby. 
Re: Lately too many "collectors" come in buying up
12/04/2008 - 04:25
Hi Rei, In talking with the brands and others in the industry, I think that the consensus is that a certain amount of traders/flippers are acceptable as they help to establish value and perception of success in the industry but the current market sees far too much of this activity. Personally, I have nothing against making money but what really aggravates me is when so-called "collectors" say that they really love such and such watch and how it would be the perfect addition to their collection so as to persuade the brand or AD to sell them a watch, only to have them turn around and sell it shortly thereafter.  I have seen this far too often and quite frankly, I feel these dishonest folks deserve exposure of their activities. I think we both are looking forward to a weeding out process in the industry and community. Cheers, Duncan
I agree with you on this Duncan
12/04/2008 - 16:27
And i hope to see only the "genuine" brands of haute horlogerie still standing after all the weeding out has come and gone... Cheers Stephen
Not just yours my friend
12/04/2008 - 16:29

But mine too, as i would feel it is much better for everyone if there are only true collectors out there, not flippers who have denied me the chance to own many pieces that i have coverted for. Cheers Stephen

Re: Not just yours my friend
12/06/2008 - 00:59
Hi Stephen, Well, as all experienced collectors know, it really comes down to relationships.  A good, strong relationship with an AD is the best way to gain access to the harder to find pieces.  Of course, these things don't happen over night and it does take some time, patience and yes, some money too. Good luck and hopefully you will find better results next year. Cheers, Duncan
Re: an interesting view on the watch industry in times of economic crisis
12/04/2008 - 07:54
Alex, thanks for sharing this article. I agree with my colleagues thoughts. As far as what's happening on the street here in the US - we are being offered greater discounts to complete a sale. AD's are feeling the crunch as they sit on heavy inventories during the holiday shopping season. This will take time to resolve and it may be a few years with our current recession. Best regards, Matt
History tells us that these things happens.
12/04/2008 - 18:51
We who has some years under our belts has lived through similar episodes several times. Now I, personally think it's very psychological, which it's always is, but even more than before. In some time it will be forgotten and things becomes normal again. It's the "little man" who is the looser now, the big guys makes money instead of loosing! This is not a crisis like the quartz period, when the industry was on the edge of the abyss Look forward, not at the passed unbelievable, continously hausse, it sooner or later had to break, in this case later! Doc
This is the normal cleansing process
12/06/2008 - 05:22
The true players will stay despite the dire economic situation. During the difficult period, there is always an opportunity for the wise one to capitalise on it.  This could be the golden opportunity for some.  I am sure.  Regards Ling