Our competitive advantage

the Luxury Watch market has a strong track record

The luxury watch industry is well protected with high barriers to entry and a track record of consistent long-term growth, underpinned by sustained investment and elevated innovation.

The Group estimates global retail sales of luxury watches were approximately £50.8 billion in calendar year 2023.  This is based on the estimated retail value of Swiss luxury watches (Swiss exports and the Swiss market), repairs and services and the contribution from non-Swiss luxury watch brands.

Luxury watches have continued to be supported by long-term increases in prices, with the average selling price (ASP) of Swiss watch exports (wholesale) generating a 23-year CAGR of +5.5% (2023 vs 2000).

Watches at the luxury end of the market have outperformed lower priced segments and represent 94% of the value of global Swiss watch exports in 2023.

In recent years the US market has been leading in terms of Swiss watch exports growth.  The UK market has seen a slight decline in the first four months of 2024, but is significantly up on a two-year basis.

disciplined distribution management through Selective DISTRIBUTION agreements

Distribution of luxury watches takes place under Selective Distribution Agreements, strict legally binding contracts entered into with brands on a point-of-sale basis.  These are ordinarily limited by geography and ensure retailers maintain strict presentation standards.  Selective Distribution Agreements enable brands to manage the number of points of sale and qualitative criteria on retailer approval.  Product presentation and client experience are closely monitored by the brand owners.

Globally, the retail market for luxury watches is predominantly comprised of a large volume of small retailers.

global BRANDS HAVE SUPPLY DRIVEN GROWTH

For the total luxury watch industry, demand has increased at a faster rate than production, in part reflecting the labour-intensive nature of watchmaking and its dependence on highly skilled watchmakers in Switzerland.  Long-term growth has been underpinned by increased average selling price (ASP), positive mix effects and limited volume increases.  

Luxury watch brand owners are made up of major independents, large groups and smaller independents.  Our Group provides the largest selection of luxury watches covering a wide range of prices and consumer preferences, including the largest and best-known brands alongside smaller independent brands.

We stock confidently which provides our clients with a greater width and depth of availability.

loyal, Diverse, multi-generational cLIENT base

Luxury watches attract a set of shoppers, who can become repeat clients, spanning age, income groups and genders.  The internet has, over the years, had an increasingly positive impact on digital and social media appealing to a younger market.

Our showroom design, location, marketing and the Group's unique client service appeal to a broad demographic audience.

Market trends have benefitted more recently from price increases and consumer trends towards higher price point products.

continuous PRODUCT INNOVATION and advancement

Luxury watches are characterised by a focus on product innovation and advancement which are normally introduced at prestigious watch fairs in Switzerland.  In the UK and the US, there is a strong preference for sports models with the key brands consistently investing to ensure the highest degree of technical specifications.

This year we attended Watches and Wonders 2024, the largest watchmaking gathering ever to take place in Geneva, where exciting new products were launched, accompanied by relevant marketing support.

Watchmakers are making greater use of strap and dial combinations to increase consumer interest.

The luxury watch industry is benefiting from greater flexibility over production and reduce product development timeframes due to the advancements in 3D printing.

geogrpahical markets

The Group operates in the UK and US markets, two of the major Swiss Watch markets.  

On a per capita basis, the UK market has outperformed the US market and all major European markets since 2000.  The UK market has the highest per capital retail spend by domestic clients on luxury watches; we believe the differential to other markets reflects retail investment, not consumer behaviour, creating an opportunity to successfully replicate our model in other geographies and building on the success we have delivered in the US to date.

the UK market

The UK is the fifth largest market on a global basis for Swiss luxury watch exports.  The Group estimates retail sales of luxury watches amounted to £3.4 billion in calendar year 2023. 

The UK market remains a well invested multi-channel market and highly engaged and sophisticated domestic clientele which has typically had a preference for the sports luxury watch category.  

In the period 2000 to 2023, Swiss watch exports to the UK increased by a CAGR of +7.8%.  2024 has started slower, with UK Swiss watch exports -1% year-on-year to April 2024.

The UK market is made up of national groups, independent jewellers, luxury department stores and boutiques directly operated by the brands.

The UK market is led by Rolex, with strong market positions of Patek Philippe, OMEGA, Cartier, Breitling, TAG Heuer and TUDOR.

the US market

After a period of under-investment in the market leading up to 2018, the US has started to perform strongly and is today the largest global market for Swiss watch exports, overtaking China in 2021.  The Group estimates retail sales of luxury watches reached $9.9 billion in 2023. 

The US market is led by Rolex, with strong market positions of Cartier, Patek Philippe, Audemars Piguet, OMEGA, TUDOR, Breitling, Officine Panerai and TAG Heuer.  Additionally, there are also relatively strong market positions for smaller independent brands such as MB&F, Bovet and H. Moser & Cie.

US retail distribution is in the process of consolidation towards larger showroom formats in major shopping centres and retail investment from the Watches of Switzerland Group and others has increased.  The US market is predominantly domestic, although domestic tourism (e.g. to Florida or Las Vegas) is significant. In recent years Rolex, Patek Philippe and other brands have been rationalising distribution, reducing the number of agencies to a smaller number of higher quality retailers.

pre-owned watcH market

We believe the pre-owned market is a positive development for the retail market. It provides liquidity and value preservation for luxury watches.  This is a growing sector due to the supply of certain products being inadequate to meet demand in the first hand market and for collectors given 95% of watches are no longer in production (Source: BCG March 2023).  The pre-owned market today has a dependence on product sold at prices above retail due to unavailability and scarcity.

The market is made up of pre-owned (purchase or trade-in watches to sell on) and online market place players.

In FY24, Rolex launched the Rolex Certified Pre-Owned programme offering the opportunity to purchase from its official authorised retailers pre-owned watches that are certified as authentic and provide a Rolex-backed two-year international guarantee.  This has opened the pre-owned market up to a customer who may have previously been concerned about purchasing pre-owned items.  We see Rolex Certified Pre-Owned as a significant opportunity for the Group.

The pre-owned watch market contributes to the circular economy.

luxury jewellery

Our luxury watch business is complemented a strong luxury jewellery offering.

The US and UK markets are among the largest globally on a per capita basis for luxury jewellery (Source: World Gold Council).

The US is the strongest market in the Western world for luxury jewellery per capita.

The global jewellery market has seen global trends towards the branded component of the market.  Luxury branded jewellery typically has a higher ASP and frequency of purchase, leading it to be less promotional and less cyclical than commodity jewellery.  We see this as a significant area of growth for the Group going forward, where we can apply our expertise gained in luxury watches to the luxury branded jewellery sector.

Robert Coin Inc. is a major player in the US luxury branded jewellery market.  

The acquisition of Roberto Coin Inc., the exclusive distributor of Roberto Coin in North America, on 8 May 2024, further develops the Group's opportunities within the luxury branded jewellery market.  Roberto Coin is the sixth largest jewellery brand (by retail sales) in the US, competing with other top 10 industry leading brands such as Cartier, Tiffany, Van Cleef & Arpels, BVLGARI and David Yurman.

AFTER-SALES and SERVICING

The Group believes after-sales and servicing complements the first-hand market for luxury watches and is critical in protecting and prolonging the life of the products. 

The market is primarily supported by traditional multiple and independent retailers and brand in-house resources. The Group estimates after-sales and servicing represents approximately 5% of the market and is very important in terms of providing a luxury customer experience.

Repairs and servicing has not kept pace with the growth in new watch sales.  The Group continues to invest in expanding its capacity to repair and service timepieces in both the UK and US.