Record rush to buy Rolex or Patek Philippe over

The biggest ever boom in Swiss luxury watches is coming to an end.

For three years, the industry enjoyed a surge of renewed interest that kicked off during the pandemic, when wealthy – and cash-flush – consumers stuck at home began drooling over luxury mechanical wristwear from iconic Swiss brands, Bloomberg reports.

That turbocharged demand for timepieces from Audemars Piguet, Rolex and others, boosting Swiss watch exports to record levels — almost 25 billion francs ($28.5 billion) in 2022.  

But now, a reckoning is coming as multiple pressures take their toll. Some — higher interest rates and shaky economic growth — are outside the industry’s control. The blame for others — aggressive price hikes and increased production — lies within. But ultimately, it’s all hitting the mindset of once carefree spenders and their willingness to splash out.

Watch manufacturers have seen demand cool in recent months, while prices on secondary markets have tumbled. And executives — from those leading historic brands to upstarts who thrived during the recent frenzy — have started to accept that things are rapidly downshifting.

The slowdown joins mounting tales of weakness across the broader luxury goods sector, where companies from LVMH to Gucci owner Kering SA have seen sales dented by inflation and recession worries. If that continues, it will undermine pricing power and put downward pressure on margins and profits.

Swiss watch exports declined in July for the first time in more than two years and average growth in recent months has fallen far short of the first-half pace.

Industry giant Rolex, which makes more than a million watches a year with sales estimated in excess of 9 billion francs, raised prices twice in 2022. It moved once in January, when it traditionally increases the cost of its models, and again in September in the UK and November in European markets to offset the weak pound and euro. Rolex hiked again in January this year in the US and UK.

Swatch Group brands Omega, Longines and Tissot boosted prices in Europe and the UK in February. Omega raised prices by 8% in the US in July in a move analysts at Morgan Stanley said could hurt sales.