You should simply stop raising prices if you want the Swiss watch industry to survive. And your focus should be on improving quality, no longer on increasing production. I believe we have hit a ceiling in the global market demand when it comes to volume production in Switzerland. So, the focus must be on quality. But the way too many brands operate right now, I think Swiss watchmaking is in danger. Why? Because too many brands have aggressively raised their prices. Most watches are 50–100 percent more expensive than five-six years ago, but these new prices are not always paired with higher quality. Sometimes the brands blame tariffs, sometimes the rising costs of materials, and sometimes they use technical improvements on movements as a reason why. But somehow, they forget to mention that these technical innovations will reduce their cost of production, assembly, and future servicing once the R&D costs are recuperated.
Raised prices are concerning for average buyers. And mid-size brands are suffering the hardest, while the Crown is increasing its market share. No wonder. If average mid-size brands have come to cost as much as a Rolex – but without the same value increase expectations – what will the customers choose to invest in?
When you scrutinize the movements of many recent pieces from mid-size brands the quality of the finishes didn’t improve, and in some case it’s lower than it was five years ago. Since you can buy some beautiful new old stock ten-year-old model with strong price reductions, why should you buy a new one?
In the last 40 years we saw a race to increase the inhouse component production. Many brands created wonderful manufacturing sites, achieving extraordinary results in terms of skills. But since the global volume demand might not increase in the future, this inhouse desire could be overkill. Unless you are a huge brand with almost limitless resources (very few of them exist right now) you’d be better off reconsidering the impact of production costs that comes with a manufacture, not to mention potential consequences on the quality and service.
Why not reconsider the balance between inhouse capacities and outsourcing to suppliers? This will also increase the resilience of the important Swiss industrial network, its savoir-faire and jobs. Suppliers are very high-skilled, they are relevant employers, and they grant a good level of flexibility.
When this balance is in check, I think it will be easier to return back to a focus on product, quality, and unique designs.
So, many mid-sized brands, the belly of the Swiss watch industry, must up their act before it is too late in an increasing global competition. Perhaps we can learn from some brands that are able to raise the levels of quality and design with moderate increasing of their retail prices. For instance, Breitling owned by venture capitalists Partner Group, or some microbrands with an impressively good value for price. This goes to show that crazy raisings of prices are not necessary to survive. Au contraire, this will lead to an early grave.
