What effects does Covid-19 have on the watch industry?
Events are being called off one after the other, schools and daycare centers are being closed and public life is being dramatically restricted. The Coronavirus Disease 2019 (Covid-19) is currently keeping the whole world in check. What apparently has its origin in Wuhan (Hubei province, China) is now shaking the construct of our global economy. Where and how the infection actually started has not yet been finally clarified. What is certain, however, is that the consequences have already become more than clearly noticeable worldwide. The effects of coronavirus disease on the watchmaking world have been leaving an enormous damage trail since the beginning of the crisis. But to what extent is the watch industry actually affected by the coronavirus?
Corona's impact on the world of watchmaking
Cancellation of jewelry and watch fairsIt was already in the balance at the beginning of the year whether major events could still take place because of the new coronavirus or whether they should be canceled for safety reasons. First of all, the organizers of Watches and Wonders Geneva (formerly SIHH) decided against hosting the fair in order to prevent the spread of infections. Shortly after, Baselworld 2020 was canceled as well and postponed to January 2021.
In response, some watch manufacturers launched the Geneva Watch Days as a kind of rescue parachute. This is a new type of fair that distributes the exhibitions to different hotels in Geneva, thus ensuring and maintaining hygiene standards. In addition, many luxury watch manufacturers do not miss the opportunity to showcase their latest timepieces apart from the fairs, and therefore present them online without delay. Given the current situation, the new products can not be seen at elaborately designed exhibition stands now, but on the manufacturers' websites.
Production stops and short-time work in the watch industryWhat does the spread of the coronavirus mean in terms of the production of luxury watches? Not only are international trade fairs gradually being canceled, but production facilities are also being temporarily closed. Industry giant Rolex, for example, has announced that its factories will be closed for the time from March 17 to 27, 2020. Now Rolex's production stop has been extended and the factories will remain closed until further notice. In an official statement, Rolex says that the company is trying to protect its employees and their families as much as possible from the corona pandemic virus. As stated on the company’s website, Rolex employs up to 6,000 people, although exact figures are not given, which leads to the assumption that a similar number of employees is sent on compulsory leave. The Swatch Group, Audemars Piguet, Patek Philippe, and Hublot, among others, followed with similar temporary concepts.
Switzerland, the Mecca of Haute Horlogerie, is thus experiencing a severe economic setback due to the pandemic. However, this step is necessary as companies such as Rolex employ many people from abroad who cross the border between work and their homes every day which could lead to a transmission of a possible infection across national borders.
Bucherer, the world's largest luxury watch retailer, is also facing the effects of the virus. In the past year, the number of luxury watches sold to customers in China already dropped by over 20%. Given the current situation, this figure is likely to rise further. At the beginning of March, Bucherer already switched to short-time working in the Swiss cities of Lucerne and Interlaken. In mid-March, Bucherer finally decided to close all remaining stores in Germany, Austria, the UK, France and Denmark. In addition, a number of branches of the jeweler, such as the Rolex showroom in the London district of Knightsbridge, are currently closed. However, Bucherer customers were informed of this in time through the jeweler's newsletter.
Loss of value and price drop for luxury watches?After all the unpleasant news, the idea of whether the entire luxury watch market will fluctuate or even collapse during the corona crisis needs to be discussed here. Many people are already talking about a "burst of the Rolex bubble" and some collectors are thinking about quickly turning their watch collection into cash. Are those concerns justified due to the current situation or are they just premature actions? Do we really have to expect a loss of value for luxury watches?
A survey conducted by the YouTube channel "TenPastTen" questioned around 1,300 watch collectors in this regard and subsequently had the results scientifically evaluated by Prof. Dr. Christian Rieck from the Frankfurt University of Applied Sciences. The result: Only a few collectors are seriously concerned about a decline in the value of their collection due to the current ongoing corona crisis. Nevertheless, prices on the grey market could fall dramatically due to the sudden desire of some collectors to sell their watches. All that is needed is for supply to exceed the demand and prices could fall.
Will the same be the case with new watches? If demand does decline, the watch industry will react with reduced quantities and different delivery times in order to maintain the exclusivity of the models offered. However, this is one of the most unlikely scenarios at the moment. More realistic is a short-supply of watches due to the already mentioned production stops and a slight increase in prices to be expected. Moreover, in the past major brands have already bought up excess stocks from dealers or even the grey market in order to control supply and keep prices stable.
Watchmaster stays at your disposal
At this point, we would therefore like to reassure you and advise against quick sales from your watch collection. If you would like to expand, reduce or change your collection regardless of current developments, our Watchmaster staff will help you in these difficult times and is happy to assist you in buying or selling your luxury watch.
Our employees follow the necessary hygiene regulations and make every effort to process all orders as quickly as possible. Our shipping partner UPS has also officially confirmed that there are currently no delays in pickups and deliveries. Stay healthy and take care of your loved ones!