The slowdown first began with China’s anti-corruption drive and its crackdown on luxury gift giving, coupled with the country’s economic slide. Indeed, exports to Hong Kong alone, a major hub for Swiss watches, dropped 22.9 percent, according to the Federation of Swiss Watches. The soaring Swiss franc, drop in oil prices, along with global political and economic volatility have all played a hand, hitting sales in the top watch-buying markets of Asia, Russia, and the Middle East.
At the same time, smart watches, once regarded by Switzerland as little more than a sideshow, have become a serious factor – particularly for those looking to spend under USD1 500. According to the Deloitte study, a year ago, just 11 percent of watch executives viewed smart watches as a competitive threat, this year, 25 percent do.
Among the many issues rattling the industry, however there’s another, less openly talked about reason for the downturn: the tremendous glut of inventory. The robust sales of recent years created a hyped-up market, spurring manufacturers to increase production.