Luxury timepieces are finally holding their ground against smartwatches with demand for their digital counterparts, including the top-selling Apple Watch, plateauing.
While smartwatches are still outselling Swiss watches, their sales were down 17% year-over-year in Q4. Meanwhile, Apple, which sells more watches in one quarter than the Swiss watch industry in a year, also saw a 16% decline in sales.
Amidst declining demand for smartwatches, the luxury watch segment has benefitted from shifting its focus on high-end watches and raising prices, which has helped make up for an overall decline in volume, according to a Morgan Stanley report.
“Overall, going forward, we think the incremental negative impact of smartwatches on the Swiss watches industry will now be relatively immaterial, with the exception of some brands such as Tissot, Rado,” said Edouard Aubin from Morgan Stanley, who led the research.
The research findings indicate that the compound annual growth rate in the Swiss watch industry will likely inch toward 7% in some time, much like the rest of the personal luxury goods segment.
A key factor fueling this momentum is newfound demand for mechanical timepieces, especially in the U.S., with 2022 exports registering an 11.8% growth to $28 billion.
And this year, export volumes are expected to rise by up to 1 million units. However, the bulk of this increase will be driven by Swatch Group’s MoonSwatch, a massively successful collaboration between Omega and Swatch.