President of Fondation de la Haute Horologerie on his expectations of the luxury watch market in 2012
Franco Cologni, President of FHH shares his outlook for the luxury watch market in 2012. He looks at to 2012 with cautious optimism. ”While we have yet to see the final results for the year ending last December 31st, on the basis of figures published by the Federation of the Swiss Watch Industry, I expect exports will easily reach CHF 18 billion, an increase of some 20% on 2010. So it’s smiles all round. In particular for the companies and brands whose business is luxury watches and fine watches.
Looking at these results, one could almost believe that the turbulence on everyone’s mind hasn’t troubled Switzerland’s blue skies. Export sales are clearly not the same as sales to the end customer. Hence we must wait and see how inventory weighs on the market at the end of the year; in other words, how many watches go unsold. This, of course, will depend on the end customer, their resources, and how financially and psychologically ready they are to invest in a new fine watch.
Experts are taking no risks in their predictions for 2012, and prefer to temper moderate optimism with recommendations to err on the side of caution. Personally, I would be happy if this new year brought physiological growth in the region of 5%. Not something to shout from the rooftops but reassuring. I have deliberately avoided any mention of deflation or recession, as forecasts are for showers rather than torrential rain.
The Asian markets, and China above all, will continue to buy. In fact Asia’s growing importance might somewhat overshadow traditional markets such as Europe and the United States. Japan is resisting and will continue to weigh in the balance, as the aftermath of the tsunami and nuclear disaster has already been absorbed. The United Arab Emirates, meanwhile, will consolidate their position.
In Europe, the risk of stagnation or even falling sales remains high. The socio-economic difficulties in this part of the world have been well documented. However, we must also add to the equation a rarely cited psychological issue: on the one hand we are witnessing a weakening of the middle classes and, on the other, "rich bashing" which means the affluent are beginning to be afraid to show their wealth. And the watch is, of course, an eloquent accessory that is meant to be seen.
Fortunately Asia and its double-digit growth in sales will plug the gaps. Let us hope the Asians will continue to travel, and that the yuan will maintain a favourable exchange rate.
My wish is that a call for prudence and optimism, however modest it may be, should enjoy a better outcome. And that this outcome prove positive for all those who, day after day, fight the battle of excellence and innovation: people who truly deserve to prosper and grow, even in times of crisis.”