Luxury Watch Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)
The global luxury watch market was valued at USD 23.623 billion in 2020, registering a CAGR of 3.25% during the forecat period, 2021-2026.
As the COVID-19 pandemic affected America and other major countries in Europe and Asia, which were the major consumers of luxury watches, the market has seen decreased demand and slowed growth because of various restrictions imposed on movement and cautious spending habits of people. In 2020, the Swiss watch shipment fell by around 22% in value terms while it declined by 33% in volume terms. In February, the export declined by around 9%, which further escalated during the second quarter, as it declined by over 61%. With situations improving, there was a gradual slowdown in export declines. In the last quarter of the year, there was a decline of 4% only due to ease on the lockdown measure and various other factors.
Globally, the growing consumer preference for high-quality, premium watches, on account of watches being perceived as status symbols, is the major driving factor for the luxury watches market. Consumers are interested in using quality products made with extremely advanced production technologies, materials, and methods.
The use of accessories to improve one's looks is a common fashion trend. This factor is, therefore, contributing toward the growth of the luxury watch market. The use of various advertising and marketing strategies by the market players has also augmented the expectations of consumers from watches, resulting in market growth.
The use of high-quality, premium materials, like steel, bi-metallics, and precious metals, attract more consumers. These are available in various price ranges. Some of the countries producing and exporting luxury watches include Switzerland, Hong Kong, China, France, and Germany. These watches are distributed globally via trade and different retail channels.
Rising Demand for Luxury Goods
The preference for luxury goods, including watches, mostly among men, has created a surge in the Swiss watch industry. Although the luxury market for watches is mature, any brand may experience sudden growth. The increase in brand awareness, the influence of the western world, and the inherent need for exclusivity are some of the factors that contribute to the increased demand for luxury watches. Switzerland continues to be a worldwide leader in watch production, backed by the strength of its luxury watch business. In Asia, Japan and Singapore are the key markets for Swiss watches. Garmin expanded its presence in India by launching its premium luxury watch collection, called the Marq. There are preloaded features in these watches, such as built-in storage for music, Garmin Pay integration, smart notifications, and daily activity tracking. They also feature wrist-based heart rate and Pulse Ox2 sensors.
A new trend among collectors is purchasing stylish timepieces that do not work, prioritizing style over substance. As per Retail Dive, in August 2017, at Heathrow Airport, USD 5 million was spent on Rolex watches. The sales in the luxury watches and jewelry category increased by a staggering 74%. Thus, the growing preference for luxury goods is anticipated to drive market growth during the study period.
Asia-Pacific Emerged as the Largest Consumer of Luxury Watches
Globally, China is one of the most competitive markets, as it offers huge potential for the manufacturers of luxury watches to acquire and compete. Rolex, Omega, Patek Philippe, Cartier, Channel, Longines, Tissot, Rado, Blancpain, and Piaget are some of the prominent luxury watch manufacturers. According to the Federation of the Swiss Watch Industry, the most recent figures show exports of Swiss watches to mainland China totaled 2.1 billion Swiss francs (USD 2.39 billion) from January to November 2020, an increase of 17.1 percent from the same period in 2019. Whereas in countries like India, the luxury watch market was initially targeted solely at men. However, with the increasing rate of female participation in the workforce, the demand for female and unisex luxury watches increased. Sensing the demand and the growing market, in 2017 the Switzerland-based watch manufacturer, Frederique Constant, introduced the newest addition to the most feminine collection of the brand, Art Deco, in India. The timepiece reflects a perfect blend of elegance and style, with elaborate decoration, thereby widely supporting the market penetration.
The global luxury watch market is highly competitive, with the presence of both global and domestic players. The major players in the market include Rolex SA, The Swatch Group Ltd, Compagnie Financiere Richemont SA, Patek Philippe SA, Audemars Piguet, and Richard Mille. Key players are now also focusing on social media platforms and online distribution channels for the online marketing and branding of their products to attract more customers. For instance, In November 2020, Alibaba, Richemont, and Farfetch announced a strategic partnership to accelerate the digitization of the global luxury industry and to give luxury brands better access into the Chinese market. As per the deal, Alibaba and Richemont are to invest USD 300 million each in the luxury e-commerce platform Farfetch.