Are watches resistant to COVID-19? Luxury watch demand steadily recovering heading into 2021

Watch Journalist Yasuhito Shibuya's Useful Watch Industry Chat

As with every industry, 2020 has been a difficult and challenging year, unlike anything the watch industry has ever experienced. A prime example of this is Baselworld, the world's largest watch and jewelry fair, which was forced to cancel for the first time since World War II due to measures to prevent the spread of COVID-19, and then was eventually canceled after a dispute between watch brands and the fair's organizers over the refund of exhibition fees. However, with 2021 just around the corner, demand for luxury watches appears to be steadily recovering. Here's some positive news as 2020 comes to a close.

Swiss watch exports suffer worst ever decline

　In March 2020, lockdowns were implemented in countries including Switzerland, Germany, France, Italy, and the UK, leading to a sharp decline in Swiss watch exports from April to the present. We will have to wait until the end of January 2021 for an official announcement from the Federation of the Swiss Watch Industry (FH) to determine how much total exports for 2020 will fall compared to the previous year, but as of the end of July 2020, the association is predicting a decline of 25-30%.

　The latest figures from the association, released in November 2020, show that the year-on-year decline has bottomed out. However, an eventual decline of more than 25% is still expected. This would be the worst decline in history, surpassing the recession following the Lehman Shock, which was triggered by the bankruptcy of the US investment bank Lehman Brothers Holdings on September 15, 2008.

　However, this is perhaps unavoidable given the situation in Europe, including Switzerland, and in Japan, where the infection is once again spreading.

　Watches & Wonders Geneva 2021, the world's largest watch fair that replaced Baselworld and was scheduled to be held in April 2021, has already been canceled. It has already been announced that it will be held digitally as an online fair, following on from 2020.

　A vaccine for the new coronavirus has been developed, and vaccinations have begun for the elderly and medical personnel who are at high risk around the world, but 2021, like 2020, is likely to be a year without physical watch fairs.

However, demand for luxury watches remains strong and is set to make a comeback.

　However, it's not all doom and gloom. Compared to other luxury items, which are reportedly still experiencing a 40% year-on-year decline, the watch industry has been hit less hard. There is also encouraging news for the future coming from various corners of the watch industry.

　Let's end the year by bringing you this good news at the end of 2020.

　First, although I apologize for not being able to provide concrete figures, there has been a steady recovery in demand for luxury watches, driven by China. The Federation of the Swiss Watch Industry announced that in November 2020, exports of Swiss watches to China, which has "successfully contained" the COVID-11 virus, increased by a staggering 69.5% compared to the previous year, followed by the UK at 21.8% and Taiwan at 18.5%. Japan also saw an increase of 2.4%.

According to the interim financial results announcement by Seiko Holdings, which owns Seiko Watch, the parent company of several world-renowned watch brands including Grand Seiko, sales fell sharply in the first quarter of the fiscal year ending March 2021 (down 38.8% from the previous year), which included the period of self-restraint from going out, but sales have been gradually recovering since June. Furthermore, overseas sales, mainly for Grand Seiko, are said to be higher than the same period last year.

　In fact, when we research sales situations among managers at major watch stores and sales executives at watch brands, we often hear comments such as, excluding the disappearance of inbound demand, "sales have been almost at the same level as last year since around October 2020," and "product shipments have returned to nearly the same level as last year."

　While unprecedented monetary easing has been implemented in response to the COVID-19 pandemic, the lack of promising investment opportunities has undoubtedly led to a "money bubble" in the stock market in Japan, just like in the United States. While this does not mean we should be overly optimistic, demand for luxury watches and jewelry is beginning to return to normal levels. It appears certain that domestic demand, particularly in the high-end sector, is almost back to normal levels.

　Data from various research organizations shows that sales of other luxury items generally fell by at least 40% in 2020 compared to the previous year. In contrast, watches and jewelry have remained strong worldwide, even amid the COVID-19 crisis. This proves that there is strong demand for them.

　With all large-scale in-person watch fairs canceled, the release dates for new watches in 2020 varied by brand. However, looking at all brands objectively, there were many attractive models that offered "value beyond their price" and were also reasonably priced. In that sense, this year can be called a "good year for new watches" for anyone considering buying a watch.

　Although lockdowns to prevent the spread of COVID-19 have been implemented again, many watch brands are continuing to work hard in difficult circumstances to overcome this crisis.

　In 2021, watch brands will undoubtedly be releasing new watches that are even more attractive than those released in 2020, as they strive for survival and revival.

　This is good news for watch fans and enthusiasts. Travel to and interviews in Switzerland, the kingdom of watches, are still not possible, and most brands will likely be announcing their new watches online, but we can't wait for the announcements of their new watches for 2021.

Shibuya Yasuhito/Shibuya Yasuhito

As an editor of a product information magazine, he began covering Geneva and Basel in 1995. As an editor and writer, he has been there 25 times since then. He is currently planning, covering, editing, and writing about not only smartwatches but also all kinds of things and events other than watches.