The luxury watch market - France (2023)

1.2 A robust global market

The luxury watch market was valued at $** billion in ****, registering a CAGR (***) of *. **% over the ****-**** forecast period.

The global luxury watch market France, ****, in billions of euros Source: ****

globally, consumers' growing preference for high-end, high-quality watches, which are perceived as status symbols, is the main driver of the luxury watch market. Consumers want to use quality products made with highly advanced technologies, materials and production methods.

1.3 The French market recomposes itself after the crisis

The market is growing, rising from *.*** billion euros in **** to *.*** billion euros in ****. The French watch market has therefore still not recovered its **** level of *.*** billion euros. By ****, it is estimated that the jewelry and watch sector will have increased its sales by **% [***]! We can therefore estimate that in ****, watch sales will be around *,*** million euros.

There are two main reasons for this significant decrease in ****. Firstly, the absence of foreign customers has had a major impact on the market, as has the closure of boutiques for three months. Fortunately, business picked up significantly after each confinement, especially in December when sales rose by **% compared with December ****. [***]

The French watch market in **** France, ****, ****, value in millions of euros Francéclat Observatory

We can also look at the ****-**** period, when the market collapsed due to the wave of terrorist attacks in November ****, which led to a decline in tourist numbers in the Hexagon, directly impacting luxury watch sales. In terms of volume, watch sales were lower than in ****, but in terms of value, sales rose, with units over *,*** euros, up *% year-on-year, contributing to **.*% of total sales in the watch market.

1.4 Foreign trade in Swiss watches

In ****, Swiss watch exports rebounded by **.*% following a **. *% contraction in ****. They have thus exceeded not only their pre-pandemic level, but also their all-time high of ****. And in January and February, they rose by a further **.*%, according to statistics from the watchmaking federation. [***]

While Europe bore the full brunt of the strict containment measures imposed in spring ****, the share of Swiss watch exports to China more than doubled to **% in the second quarter, so that by the end of ****, China had become the leading export market for Swiss watchmaking, as the graph below shows.

While the share of exports to China has since fallen, it remains five percentage points higher than in ****. Even before the pandemic, China was one of the three most important markets for Swiss watches, with the export share doubling since ****. Hong Kong's dominance as the main export market has been receding for over a decade: between **** and today, the share of exports to the Pearl of the Orient has fallen from **% to around **%.

Market share of Swiss watch exports to selected countries World, ****, % (***) Source: ****

Categories Results **** Watch exports **.cHF * billion Growth versus **** +**.*% compared to **** Wristwatches **.cHF * billion Number of pieces **.* million pieces volume growth +*.*% vs. **** Main price segments Increase ...

2.1 Determinants of global demand for luxury watches

The major watch brands are struggling to keep up with demand after the spectacular recovery in luxury goods, to the point of having to delay the launch of some collections in the face of production capacity pressures. [***] La Montre Hermès, which came to present its new collections at the Haute Horlogerie trade show in Geneva, posted the strongest growth of all the products from the famous house on the Faubourg Saint-Honoré in Paris. In ****, sales of watches made in Switzerland jumped **%.

How has your attitude towards owning a watch changed over the last five years? Worldwide, ****, % Source: ****

The above graph shows that owning a watch is becoming less and less important for the older generations (***). However, luxury watches are very popular with Millenials and Generation Z, who both show a positive balance, attesting to their willingness to acquire luxury watches.

are you prepared to pay more than CHF *,*** for a watch? World, ****, % Source: Deloitte Study **** - Page ** - Graph ** The graph above shows that a large number of consumers would be prepared to spend more than CHF *,*** on a watch. In China, over **% of the population would be prepared to invest such a sum, compared with **% in France and *% in ...

2.2 Foreign tourist arrivals in France boost demand

The current health crisis, particularly in Asian countries and the United States, has led to a decline in visa applications for France since the start of ****.

In fact, the number of visas issued fell by **% year-on-year in the first three months of the year before being virtually nil during the *ᵉʳ containment. Restrictive measures, including the closure of the EU's external borders and the suspension of international flights, led to a massive reduction in foreign tourist arrivals in France.

Foreign tourist arrivals in France France, **** - ****, in million arrivals DGE

The evolving health situation in France, one of the countries most affected by the epidemic, has deterred many people from visiting the country. Foreign tourist arrivals in France fell by more than **% in ****, pulling down demand for luxury watches. In ****, foreign tourist arrivals are still **.*% lower than in ****. In ****, the number of trips is almost equal to its **** level (***).

2.3 Booming demand for luxury watches online and in e-commerce

On average, most respondents(***) prefer to buy watches in-store. Nearly half of Chinese consumers prefer to shop online, while almost half prefer to shop in traditional stores. France, Japan, Switzerland and Italy have a clear preference for in-store shopping.

When buying a new watch, where are you most likely to make your purchase? World, ****, % Source: ****

When you buy a new watch, where are you most likely to make your purchase? France, ****, in Deloitte **** Baby boomers are the generation most likely to make their purchases in physical stores. The order of preference for all age categories is : physical store > multi-brand platform/marketplace > online with a brand > other, except for Generation Z, who prefer to buy online directly from a brand rather than from a marketplace or multi-brand platform.

2.4 The rise of second-hand luxury watches

The second-hand watch market, which is booming thanks to millennials and Generation Z, could be worth ** billion Swiss francs (***) by ****, according to a study by Deloitte. [***]

How likely are you to buy a second-hand luxury wristwatch in the next ** months? World, ****, % Source: ****

Luxury goods are seen as good investments in times of uncertainty, and this was confirmed during the pandemic: watch auctions have been hugely successful in recent years. In ****, online auctions became more frequent and offered opportunities for enthusiasts to acquire rare and collectible timepieces. In ****, more than half of all auctions took place online, bringing in a new and often younger clientele. The vast majority of the biggest buyers now come from Asia, a number of whom are under ** and are particularly active in the "superstar" watch category ranging from US$* million to US$* million.

How actively do you manage the value of your watches on the secondary/second-hand market? Worldwide, ****, % Source: ****

In ****, the two most popular ways to manage the active value of your watch are sell-in/sell-out programs and production level management.

Perception of the secondary market France, ****-****, in Deloitte survey ****

Overall, the secondary market is seen as having a positive influence. It is perceived as ...

3.1 Simplified diagram of market structure

3.2 Watch production in France

The number of companies specializing in watch manufacturing fell by almost **% between **** and ****, as several manufacturers struggled to remain competitive with foreign competitors. In addition, the shutdown of various factories and sales outlets, considered non-essential during periods of confinement, contributed to the decline in French luxury watch production. By ****, this number had fallen by just two.

Population of watch manufacturing establishments France, **** - ****, in number of establishments

Number of employees in watch manufacturing France, ****-****, in units URSSAF

In addition to finished products, French luxury jewelry manufacturing also involves the manufacture of watch components and accessories (***). Production of finished watches accounts for less than a third of their total production in value.

The French watchmaking industry is undertaking an industrial reconquest, underlined by the government's initiative to relocalize the manufacture of everyday objects, including watches. With only *% of watches sold produced locally, a study in the Doubs region of France assesses the industry's development prospects. Although Swiss watches remain dominant, an opportunity has been identified in the *,*** to *,*** euro range. The covid crisis has heightened interest in "made in France" among the younger generation, paving the way for investment and reindustrialization. SMEs such as Pequignet and Humbert-Droz are assembling movements in ...

3.3 Distribution channels for luxury watches

French watchmakers mainly manufacture watch components and accessories, such as dials, cases, hands, bracelets, etc. Finished products such as watches account for less than a third of their total production by value.In luxury watch distribution, there is a concentration of distribution channels, since the network is currently almost entirely represented by multi-brand boutiques, such as Royal Quartz, Dubail, Wempe and Kronometry ****.

In addition, the major luxury groups have developed their own distribution network for their watches: they have stores dedicated to their flagship brands. These stores are often located in the more affluent districts of cities catering for a wealthy, tourist clientele, notably in Paris, in high-end ski resorts or on the Côte d'Azur.

We could therefore summarize the various distribution channels for luxury watches in the following list:

Jewelry and specialty stores Duty-free jewelry stores Distance selling Food superstores Other channels

high-end jewelry stores (**%

represent **.*%

the online market is being cannibalized by the connected watch market

"intermediate" brands

Retail distribution of luxury watches France, ****, in Source: ****

In ****, the big winner in distribution channels, as in many sectors in **** and ****, is distance selling. Companies that have positioned themselves in online commerce have made the right strategic choice.

This ...

4.1 Offer typology

There is a wide variety of luxury watch models, but we can draw up the following non-exhaustive list:

Classic watches such as the Montblanc Tradition Automatic Date; Products with horological complications, such as the Piaget Emperador Coussin; Antique watches such as the Patek "Asprey "; Military watches like theHamilton Khaki Field Auto or pilot watches like the Hamilton Khaki Pilot Auto Day Date; Ladies' watches such as the Bvlgari Bvlgari Bvlgari; Connected watches such as the TAG Heuer Connected Modular.

The ** top-selling luxury watch brands worldwide:

[***]

4.2 Pricing strategies at the heart of luxury watch offerings

In ****, the average price of a watch will be €***, compared with €*** in ****. Watch sales account for **. *% of the watch and jewelry sector.

In recent years, a strategy of lowering prices has been implemented throughout the luxury watch market. luxury watch market, in particular to stimulate sales volumes (***). The major companies have developed more accessible models, with watches starting at *** euros, thus stimulating demand from the middle classes, since luxury watches, meeting personal and social needs, are a symbol of success.

Prices are also falling in the mid- and high-end segments (***), thanks to product innovations, particularly in materials. The duopoly of steel and gold is being challenged by titanium, carbon and other materials, some of them less expensive, which are profoundly changing the way watches function and look. Silicon, from the field of microprocessors, increases the precision and reliability of movements. In the field of watch cases, carbon fiber has long been unaffordable due to its high-tech nature and complexity, but in the space of five years it has undergone price reductions of a factor of ten.

the price ranges are very wide, starting at around $*** for the Swatch Group's Tissot brand, and reaching up to over $**,*** for the Patek Philippe ...

4.3 The arrival of connected watches disrupts the luxury watch landscape

The connected watch segment is becoming increasingly important, attracting a wide range of players. Indeed, in addition to the big tech players - Apple, Samsung, Google among others - the traditional players in the watch sector areoffering connected watches.having long ignored the competition from these connected watches, it now appears that the traditional watch segment has undergone a profound change, with a gradual decline in sales volume.

The graph below shows the evolution of Swiss watch sales worldwide. As can be seen, the decline in sales volume appears to be structural: in ****, **.* million Swiss watches were sold, compared with **.* million in ****.

Part of this gradual decline can be explained by competition from connected watches. For example, since Apple entered the market with its Apple Watch in ****, the leading market segment for Swiss watches with a retail price below *** Swiss francs (***). At the same time, the Californian giant leapt like a devil from its box. This year, it should have sold around **.* million of its Apple Watches. Five million more than in ****. And **.* million more than five years ago, when it wasn't selling anything that could claim to be a watch. In ****, this gap continues to widen quite significantly.

Apple Watch ...

5.1 Counterfeiting at the heart of regulations governing luxury watches

Luxury watches are particularly affected by counterfeiting and smuggling. The Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (***) is the authority in charge of fighting these frauds, as specified in the Code de la Propriété Intellectuelle and article L. ***-**. * of the French Consumer Code.

Furthermore, article L***-* of the French Intellectual Property Code provides for :

Four years' imprisonment and a fine of ***,*** euros for any person, with a view to selling, supplying, offering for sale or renting goods presented under a counterfeit trademark:

Importing, exporting, re-exporting or transshipping goods bearing a counterfeit trademark Industrially produce goods bearing a counterfeit trademark Industrially produce goods bearing a counterfeit trademark Giving instructions or orders for the commission of the acts referred to in a and b above

The purchase of counterfeit watches presents a number of important challenges, both for consumers and for the original brands. By illegally using a brand's intellectual property rights, counterfeiters can seriously damage the reputation and finances of the genuine brand. Poor-quality reproduction, common in counterfeit watches, can lead to a drop in sales and tarnish the brand's image.

Counterfeit watches are often made from low-quality materials, ...

5.2 Legislation governing the jewelry and metal trade

Jewelry sales in France are strictly regulated and reserved for professionals. The main points to bear in mind regarding these regulations are as follows:

Declaration of Existence: Before starting a business involving precious metals, jewelry professionals must file a declaration of existence with the relevant guarantee office. This declaration is subject to supporting documents such as registration with the Chamber of Trades, a K extract, or a Kbis extract for companies. Legal titles and hallmarks : Legal titles: Jewelry must comply with the legal titles for gold, silver and platinum. Hallmarks: All gold, silver and platinum jewelry must be marked with two hallmarks: the manufacturer's (***) hallmark and the guarantee hallmark. Some items are exempt from hallmarking, but must comply with legal titles. Obtaining the hallmarks : Manufacturer's hallmark: Registered with the warranty office, it identifies the professional. Guarantee hallmark: affixed by the professional, the guarantee office or an approved inspection body. Professional hallmarking: The professional can affix the guarantee hallmark after obtaining an accreditation agreement. Obligations, including compliance with specifications and guarantee of title, are imposed on the professional. Hallmarking by the office of guarantee : The office of guarantee can perform the stamping for a fee. Police book : Professionals must keep a register ...

6.1 Segmentation

• Swatch Group
• Rolex
• Richemont Group
• Michel Herbelin
• Patek Philippe
• Audemars Piguet
• Frederique Constant Alpina
• Dubail
• Kronometry 1999
• Wempe
• Cresus
• Collector Square
• La Cote des Montres
• Berenger
• Pierre Lannier
• Aion Group
• Fleurus Groupe
• Jean Rousseau Manufacture
• LVMH Montres et Joaillerie
• Bucherer (Rolex groupe)
• Vacheron Constantin (Richemont Groupe)
• Tudor (Rolex Group)
• TAG Heuer (LVMH Groupe)
• Seiko
• Richard Mille
• Rado (Swatch Group)
• Parmigiani Fleurier
• Panerai (Richemont Groupe)
• Omega (Swatch Groupe)
• Longines (Swatch Groupe)
• Jaeger-LeCoultre (Richemont Groupe)
• Jacob & Co
• IWC Schaffhausen (Richemont Groupe)
• Hublot (LVMH Groupe)
• Girard-Perregaux
• Breitling
• Breguet (Swatch Groupe)
• Blancpain (Swatch Groupe)
• Bell & Ross
• A. Lange & Söhne (Richemont Groupe)
• Pequignet Horlogerie
• SBM Lip Horlogerie
• Utinam
• Yema
• SIS Maroquinerie Groupe
• Perrin Créations Maroquinier
• L'Epée 1839
• Société des montres bisontines (SMB) - Lip Montres