How to compete with Apple Watch?

 The mid-to-low-end demand is squeezed by smart wearable devices, and the Swiss watch industry has shifted its focus to high-end products.

According to data from the Swiss Watch Industry Federation, the Swiss watch industry will achieve its best record in 2021, with revenue reaching 21.2 billion Swiss francs (about 21.5 billion US dollars), an increase of about one-third year-on-year. Sales in the U.S. market rose 28 percent.

Meanwhile, sales are falling. Swiss watchmakers sold 15.7 million watches last year, half of what they were a decade ago. The association said the decline in sales was mainly due to the direct competition between budget watches and smartwatches made by Apple.

An overall boom in luxury goods has fueled a recovery in demand for high-end watches as the pandemic subsides.

As for smart wearables on the rise, the association said that while some analysts predict that classic mechanical watches will soon be "swept out" by smartwatches, demand for higher-priced models shows that consumers' interest in traditional watches is enduring. decline.

Georges Kern, chief executive of Breitling SA, believes that an expensive watch is more like a collectible jewelry, and the traditional low functionality is not a hindrance, but the core of its appeal:

"People want to balance the overkill of the digital age."

"I don't know of anyone who keeps an iPhone or a watch — there's no emotion in it, it's disposable."

Other brands have also seen this trend and have started adding high-end styles to their product lines.

Hermès International SCA recently reported an increase in watch sales, which analysts attribute to the luxury company's move away from relatively affordable products to target affluent clientele. The company recently launched a pocket watch with a T-Rex pattern in leather, worth 300,000 euros, or about $315,000.

However, not all watch manufacturers are embracing this trend. Excessive price increases could make Swiss watches too elitist, said Rolf Studer, chief executive of watchmaker Oris SA.

Analysts are also sounding the alarm, with Oliver Müller, founder of Swiss consultancy LuxeConsult, noting that many other watch brands are struggling to grow and that relying on watches that sell in small numbers but at high prices could jeopardize the industry structure:

"It's a risky game: they have to be very careful not to make it too small, too exclusive."

There are currently around 350 Swiss watch brands, according to Morgan Stanley estimates, but four independent watchmakers — Audemars Piguet Holding AG, Patek Philippe AG, Richard Mille Watch Company and Rolex AG — dominate the industry by 2021 61% of the annual profit of CHF 8.5 billion.

Müller also said there is a danger in making Swiss watches too elitist: When sales drop to a critical level, suppliers will start to fail, triggering a chain of smaller brands that can't get parts.