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The Swiss market has doubled in ten years
Economy

The Swiss market has doubled in ten years

Thursday, 14 March 2013
By Quentin Simonet
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Quentin Simonet

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4 min read
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With Swiss retailers largely benefiting from tourist spending, new outlets are springing up at major tourist destinations.

Suddenly the Swiss market has entered a whole other dimension. Until recently, watch brands had a tendency to neglect their home turf, put off by its modest size, barely that of a small Chinese city. Now Switzerland has become a hot spot for watch sales, to such an extent that in places like Lucerne, Interlaken, Geneva and Zurich, entire streets are being transformed by the multiplication in the number of stores selling prestige timepieces and fine watches.

Zurich’s Bahnhofstrasse is a case in point. This autumn, the twenty-ninth watch and jewellery retailer will open on the Swiss equivalent of the Champs-Elysées. The name above the door will be Jaeger-LeCoultre; the brand already has stores in Geneva and Lucerne. Other Richemont group Maisons are already well-represented. Cartier, IWC, Piaget and Montblanc each operates its own store or has a franchise on Switzerland’s most prestigious thoroughfare. As do many other names in the segment.

The Bahnhofstrasse is a must-see for groups of Chinese visitors.

However, local customers are only a small part of the attraction for these brands. Their sights are trained far more on the tourists that travel to Switzerland from Asia. The Bahnhofstrasse is a must-see for groups of Chinese visitors, for example, eager to satisfy their appetite for all things horological. Jaeger-LeCoultre estimates that six out of ten sales at its new Zurich store will be made to Asians, with Swiss customers accounting for the rest. At the manufacture’s Lucerne boutique, this proportion rises to almost seven out of ten. At tourist spots such as Interlaken, retailers make virtually their entire turnover from sales to watchmaking’s foreign fans.

A market worth over CHF 2 billion

This buying spree of course extends to the Swiss market as a whole. While there are no official figures – the Federation of the Swiss Watch Industry publishes data for export markets only – industry observers estimate that the Swiss market has doubled over the past ten years. Sales are believed to be worth between CHF 2 and 2.5 billion compared with CHF 1 billion in the early 2000s. These estimates were recently corroborated by Jérome Lambert, Chief Executive of Jaeger-LeCoultre, and by the manager of watch retailer Beyer Chronométrie in Zurich.

This growth in the Swiss market should be weighed against the boom in Chinese tourists visiting the country. In 2012, visitors from China and Hong Kong combined spent 835,700 nights in Switzerland compared with the 134,000 Chinese who made the trip five years ago. What’s more, this influx of Asian tourists should continue over the coming years. The Swiss Tourist Office has already done its sums: “We realistically anticipate that the number of Chinese visitors will quadruple over the next years. Our country enjoys a very positive image in China.” In other words, soon no fewer than two and a half million Chinese tourists will be adding Switzerland to their European itinerary.

So the watch segment can go on rubbing its hands, all the more so as this windfall for Swiss retailers goes some way towards smoothing the effects of dwindling demand within China itself. Switzerland has become a nerve centre for the branch. “It’s our largest European market and one of the top five at global level,” reveals Jérôme Lambert.

Tourists want to indulge their love of timepieces in Switzerland.
I bought it in Switzerland

Purchasing a Swiss watch in Switzerland is a high priority for many Chinese tourists, who are proud to exhibit a receipt brought back from the home of watchmaking. “Buying an excellent Barolo in Australia or a Bordeaux Premier Cru in the United States doesn’t have the same charm. It’s the same for watches. Tourists want to indulge their love of timepieces in Switzerland,” confides the boss of a leading brand. In his view, even if China were to lower import duties on luxury goods, the desire to purchase Swiss watches on Swiss soil would be as strong as ever.

For the moment though, Chinese customs levy a luxury tax of between 20% and 25% on watches valued over CHF 1,500 in addition to the 12.5% tax which applies to all imports. Theoretically then, Swiss timepieces sell for some 40% more in China compared with the retail price in Switzerland. This represents a significant competitive advantage that will no doubt continue to benefit Swiss retailers and brands, proving that, for watches at least, there really is no place like home.

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