To say that luxury watch sales are down in these difficult economic times is obvious, but the picture is not that simple. Some areas are actually doing quite well, while others are more or less not effected by the economic situation. For the higher end watches, a lot of people see the slow down in sales as a psychological reaction in the minds of wealthy buyers to not wanting to spend so much when the economy is down. Thus, the most effected segment of the market are roughly those watches in the $2000 - $50,000 range. Yes this is a big range, but across the board this segment is suffering - in two ways. First, people are going down a notch in price points when purchasing. If they would have spent $10,000 on a watch a few years ago, today they are spending $2,000 - $5,000. Alternatively people aren't buying watches at all in this segment, and waiting until things get better to buy.
One segment that is doing remarkably well is the $100 - $500 segment. Typically not really considered part of the luxury watch group, watches in this range are gaining a lot of momentum.. Buyers are looking to decrease the amount of money spent on watches, but still want to buy watches, which is why this segment is doing remarkably well. A major point of this finding is that people will always want watches, and the demand is still there. Although retailers are typically loathe to offer these lower margin watches, the economic reality of today is forcing them to amend their points of view on this price segment.
While there is little formal documentation on this, sources indicate to me that the ultra luxury watch segment (prices of $100,000 and up) is not effected much by the economic situation. Buyers of these watches are typically not as effected by the economy, having vast pools of wealth, and appetites for luxury watches. This segment is going strong compared to other less expensive areas. While some mainstream watch makers are dedicated to offering lower priced watches, others are refocusing on ultra-expensive, ultra exclusive-watches that do well for the right companies who understand this market well.
The overall message to watch makers is that times will be tough until the economy starts to bounce back. Most companies should focus on lower priced models, unless they want to discount their large unsold inventories (which most companies will not do). The good news is that consumers will always want to buy watches, but spending habits change with the times, and watch makers must learn not to be so optimistic when times look good, and saturate the market with inventory that may never reach a consumer's wrist.
Via National Jeweler
Ariel Adams publishes the popular watch review site