Retail in Asia

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Hard times for luxury watch dealers in Hong Kong

Luxury Watch - Retail in Asia

Luxury watches are losing much of their luster. Blame a sluggish global economy and changing consumer tastes.

Hong Kong, the top market for Swiss-watch exports, has been particularly hard hit. Luxury-watch sales have been so slow here that the makers of Cartier, Tag Heuer and other luxury brands are buying back possibly thousands of timepieces from dealers, analysts estimate.

Worldwide, Swiss watch exports dropped 16.1% in June from the year before. But exports to Hong Kong plummeted 29%, which retailers say is largely the result of a strong Hong Kong dollar and the Chinese government’s crackdown on gifting.

SEE ALSO: Cartier watches lose their sparkle in China

A few years ago, lines of China mainland tourists eager to take advantage of Hong Kong’s tax-free sales policy formed outside luxury watch and jewelry shops. Now, high-end watch stores in the city sit empty for much of the day.

“I don’t need another luxury watch,” said David Werner, a Hong Kong resident who owns four luxury watches—two Dunhills, a Chopard and a Movado. “The ones I have will last a long time.”

Smartwatches are also emerging as another threat to sales of high-end timepieces.

Meanwhile, middle-income consumers “have adjusted downward their ambitions and buy cheaper watches because they have less money in their pockets,” said Luca Solca, a luxury goods analyst at Exane BNP Paribas.

Against this backdrop, luxury brands are buying back up to thousands of watches from dealers to make room for newer—and often lower-priced—high-end models, said Erwan Rambourg, global co-head of consumer and retail for HSBC.