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Analysis
06 May 2019

Market Research of SWISS Made Elegant Watches

Over the centuries watches have been used as a status symbol by those who wear them.
The precision, elegance, and convenience are just some of the attributes that a watch represents.
Often, they are bought purely for their aesthetic look and at other times, they are bought because
of their technical features, like being precise to the last second or even millisecond. This is what
makes watches such a desirable collectible primarily, secondarily in some cases, they can
command high sums of money.
Market share of the leading Swiss watch brands worldwide in 2017

In the past, most Swiss brands were independent, but most of them have for various practical
and financial reasons been purchased by major corporations, corporate groups and
conglomerates. Only a tiny and minuscule minority of the Swiss wristwatch brands – the higher
end, intermediate range and lower end luxury brands – are truly independent. The main
manufacturers and owners of the Swiss watch industry are as follows:
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 Swatch Group (Swiss corporate group)

 Richemont Group (Swiss conglomerate)
 LVMH Group (French corporate group/conglomerate – owns several Swiss brands)
 Franck Muller Group
 Kering Group
 Movado Group
 Festina Group
 The Independent Brands.
The Swiss watch industry is dominated by these few influential industrial giants, corporate
groups and conglomerates mentioned directly above. The independence of a Swiss watch brand
is nowadays an extreme rarity. The most dominant and influential of all the manufacturers,
owners and corporate groups of the Swiss watchmaking industry, is of course the famous Swatch
Group, which currently owns 18 wristwatch brands. In addition to owning and manufacturing the
largest number of commercial wristwatch brands (Swiss and non-Swiss), Swatch Group
also owns ETA and Valjoux – the largest manufacturers of Swiss watch movements.
Approximately 80% of all movements manufactured in Switzerland are ETA movements –
manufactured by ETA, which is owned by Swatch Group. These movements are used by almost
all Swiss brands – even by those that aren’t owned by Swatch Group. Since Swatch Group is so
dominant in the Swiss watch industry, I think it’s a pretty fair and honest statement that the
Swiss watch industry stands and falls with Swatch Group.
To make it concise and succinct: if there is no Swatch Group, then there is no Swiss
watchmaking industry! Yes indeed, there are still a few exceptional and outstanding independent
brands such as Rolex, Breitling, Audemars Piguet and Patek Philippe, but the Swiss watch
industry at large relies on Swatch Group’s manufacture and production.
Swatch Group owns these movement manufacturers and production companies:
 ETA. ETA makes 80% of all the movements used by Swiss watches and Swiss brands.
ETA also owns Valjoux – another Swiss movement manufacturer. Since Swatch Group
owns ETA, and since ETA owns Valjoux, it means ultimately that Swatch Group owns
Valjoux as well.
 Valjoux – owned by ETA/Swatch Group.
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 Nivarox – owned by Swatch Group. Nivarox is absolutely essential to the

Swiss watchmaking industry since it makes escapements, hairsprings and balance wheels
– tiny mechanical components that you can’t see with your eyes since these tiny
mechanical components are hidden inside the encased movement. These tiny mechanical
components power and regulate the movements of most Swiss luxury wristwatch brands
– both the brands that are owned by Swatch Group and those that aren’t owned by
Swatch Group. Even non-ETA movements, or movements that aren’t manufactured by
Swatch Group, might actually contain movement technology from Nivarox. The Swiss
watchmaking industry stands and falls with Nivarox.

There are however both advantages and disadvantages of being a truly independent Swiss
watchmaker, or of being a subsidiary.
The advantages of independent brands and manufacturers are that they have the
unique privilege of defining their brand identity and setting the tone, strategy, course and
direction of their company. Independent brands determine their research, organization, strategy,
marketing and manufacturing techniques.
The disadvantages might involve lack of industrial and financial muscles and greater
vulnerability when facing competition.
Like I said earlier, the independence of a Swiss watchmaker or brand, usually entails
greater prestige, but there are in fact many cases where extreme luxury brands in fact function
as subsidiaries.
The reasons for independent Swiss brands or manufacturers becoming subsidiaries, would
involve for example: bankruptcy, scarce financial and industrial resources, tough competition,
inability to develop, invent or manufacture a particular technology, inability to adapt to the
market, lack of ideas and creativity etc.
There are many reasons that can be accounted for, but the originally independent Swiss
watchmakers obviously saw some advantages with becoming subsidiaries.
The advantage of being a subsidiary Swiss brand is that the subsidiaries may use the financial
and industrial muscles of the parent company, and the subsidiaries enjoy greater financial
security when facing competition. The subsidiary knows that the parent company and the other
subsidiaries will back them up in times of hardship and competition.
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A subsidiary can and indeed is encouraged to use the movements, the technology and
the manufacturing infrastructure of the parent company or corporate group.
The disadvantages are of course that the subsidiary Swiss watch brand might lose their unique
brand identity and they might lose the ability to set the course of their strategy, direction and
approach to watchmaking.
However, like I mentioned earlier, the overwhelming majority of Swiss luxury wristwatch brands
are subsidiaries, and it appears that the Swiss watchmaking industry will look like that for many
years and decades to come.
SWATCH SWOT ANALYSIS
Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of Swatch.
Strengths:

 Swatch watches have a distinct identity with its body and vibrant colours
 Swatch has several designs and diverse product lines in the type of watches offered
 Part of the Swatch group that has 30,000 employees across 50 countries operating 900
boutiques around the world
 Associated with sporting competitions has strengthened its brand image
 Swatch is a top-of-the-mind popular brand across the world
 Excellent advertising and brand image of the watch company
 Swatch has been associated with several celebrities as brand ambassadors
 Sponsorship of global events, sports teams etc have helped the brand connect well with
customers

Weaknesses:
Here are the weaknesses of Swatch:

 Fake imitations and replicas affect the brand image and sales of Swatch
 Intense competition means limited market share of the brand

Opportunities:
Following are the Opportunities of Swatch:
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 Emerging markets in Asia like India and China can be the primary targets for its
distribution expansion strategy
 Swatch can use its positioning as a young brand to diversify in different product
categories
 The company can utilize ecommerce and other services to sell luxury watches

Threats:

The threats of Swatch are as mentioned:

 High manufacturing cost associated with Swiss brands can lead to switching to lower cost
brands
 Competition from other youth watch brands with a trendy and youthful positioning

Competitors:

Below are the 16 main Swatch competitors:

Breguet, TAG Heuer, Cartier, Omega, Longines, Rado, Tissot, Hublot, Patek Philippe, Rolex,
Chopard, Breitling, Seiko, Richemont, Panerai, Ulysse Nardin
Swatch Group officially has one of the best reputations in the business, according to a new
survey.
The Reputation Institute of the Swiss Market Index is the biggest reputation study in Switzerland
and analyses ‘emotional bond’ of the general public with the company, with trust, admiration,
appreciation all being taken into consideration.
The results for 2018 saw Swatch Group in second place, just behind Geberit, with Richemont
ranking a close third.
According to the report Global Watch Market 2017-2021, the global watch market is expected
to grow at a CAGR of 7.87% during the period 2017-2021. Approximately the same number is
found in a different source, in a report, Global Watch Market - Market Analysis 2015-2019,
where it’s stated that the high demand for Swiss luxury watches is boosting sales and the market
is expected to reach CAGR of more than 7.6% during the 2015-2019 period. Manufacturers are
also entering the e-commerce segment by setting up their own e-boutiques. Online sales of
watches have witnessed considerable growth and the trend is expected to continue during the
forecasted period.
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According to Forbes’s article from January to July 2016, Swiss watch exports declined by 27%
in Hong Kong, by 17% in France, and 10% in the US, a fairly mature market for luxury watches.
In Canada and some Middle East markets, sales have increased. In addition to this information,
Forbes published an article to explain which factors have influenced the decline in the luxury
watches sales: the strong Swiss franc, China’s crackdown on luxury gift-giving, tumbling oil
prices, currency turbulence in Russia, uncertainty associated with the U.S. election or terror
attacks in France, where tourism has slumped. In Europe, sales have only increased in the UK,
particularly following the Brexit vote, which weakened the pound and thus lowering the price of
luxury watches.
Average Price of exported Watches

Switzerland- Switzerland’s watch production rate is one watch against fifty produced in the
entire world, according to the article Business – Analysis of the Swiss watchmaking industry in
2014 published on the monochrome-watches.com’s website. Taken the figures into
consideration, this small country is also responsible for more than half of the overall value
created – 57, 5% to be precise. Of all watch manufacturers and brands present in Switzerland, the
Swatch Group is by far the most famous Swiss manufacturer of watches, along with the vast
portfolio of brands they manage. They are even the leading company in the country with 35% of
retail value sales according to the Watches in Switzerland report. The group manufactures a
plethora of timepieces, but the 3 brands that have the most demanded products and are the most
recognizable are the Rolex, Omega, and Cartier brands, with over 780,000, 720,000 and 620,000
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pieces of watches sold in the year of 2014. A point worth stressing out is that those watches were
priced over $4,000.
Conclusion
In Europe, the biggest manufacturer and retailer is without a doubt Switzerland. Having over
1,200,000,000 units of watches produced and being accounted for over 57% of the overall value
created. Although incomparable, the German watch industry managed to manufacture over 3, 6
million luxurious timepieces which brought about $618 million in profits. In contrast to
Switzerland and Germany is the French watch market, which has experienced sales fall of
approximately 6% in 2016 followed by volume sales drop of 12% in the high-end luxurious
watches category as well. In Asia, the biggest market for the Swiss watches, China, has
experienced a stable growth over 11%, translated into figures is $125,342,900. On the back end
is the Hong Kong market, which received the most negative reviews. A total of 33% decline in
Swiss watch exports was recorded in 2015 on the Hong Kong watch market, the Chinese
political occurrences might have influenced the market negatively. The Japanese luxury watch
market seems to have been affected the least by the global watch industry afflictions, with a
minuscule Swiss watch export decline of 3, 9%. The U.S.A. is currently leading the smart watch
market, but it also has a meaningful participation in the mechanical luxury watch market. Just in
2015 U.S.A. was accountable for 336,000,000 watches sold, of which 67,000,000 were luxurious
Swiss-made. In the Middle East the United Arab Emirates and Saudi watch markets despite the
economic slowdowns in 2016, still managed to raise the volume sales by 5%. They are also held
responsible for about 6% of the total Swiss Watch exports globally.
The general estimations for the global watch market are that the market is expected to grow at a
CAGR of 7, 8% in the years following up to 2021. There has been a total of 1.200.000.000
timepieces sold worldwide, of which 29.200.000 are Swiss Watches. This underlines the value
perceived in the Swiss watches and brands, where Switzerland holds 54% of the global watch
market share. Even though the Swiss Watch Industry faced some difficulties, mainly in the
export segment where the Swiss watches export reached their lowest point since 2011, the Swiss
watches are still one of the most popular, owned and requested brands. This is further
emphasized by the fact that over 54% of the watch market share is held by Switzerland alone.
China has established itself as the largest exporter of Swiss products in the watch industry, not
only in the Asia and Pacific Region, but worldwide.