Transcription
The watch industry is in a weird place right now. We have seen consumers spending less on luxury goods for a host of reasons, which we will get into. But it's been notable enough that these last 12 months have been deemed the great luxury slowdown.
I am a watch channel, so I specifically want to look at the impact this is having on the luxury watch industry. How brands are reacting to this slowdown and what strategy I think is going to come out on top. If you're new here, my name is Britney, and on this channel, we just talk all things watches. I started this YouTube channel as an enthusiast, and that remains the soul of this channel. I find the business of watches and luxury goods in general fascinating. It's the push-pull nature of making something beautiful, artisanal, high-quality, but also prioritizing profit.
Watches are usually pretty meaningful items to people. They are expensive, often take years of saving up for. Some are hard to get. Maybe you bought a fancy watch to mark a big milestone in life, or it was a meaningful item passed down to you from someone you love. A watch usually means a lot more than telling the time. With that said, these are brands that run for profit. Bernard Arnault famously said, "Luxury goods are the only area in which it is possible to make luxury margins."
The watch industry is entering a really interesting era, and it's hard to predict what is going to happen next. You're not crazy if you've caught yourself thinking, "Wow, that watch is a lot more expensive than I remember it being, even from brands that I normally associate with value for money." In 2025, Seiko increased prices approximately 5 to 10%, depending on model. Grand Seiko 7 to 14%. And if you're in the US, you will be feeling it even harder with brands increasing their prices in line with tariffs. Omega saw an eight to 15% swell, and Patek Philippe adding 15%.
It feels like watch brands are taking two very different approaches to the luxury slowdown. One, premiumization, so leaning into the luxury side. "Isn't this so nice, so fancy, so artisanal, give me so much money." Or two, value maximization. "Look at all the specs we can cram in for the price point." And this is where we see a lot of microbrands rising to the top. I think there's merit to both of these strategies, and there's far smarter people than me at the helm of these brands deciding what moves they're going to make next and how they're going to weather this specific time.
If we look at the data, premiumization seems to be the way forward. Since the pandemic, we have seen a widening gulf between the ultra-high-end luxury brands and the more affordable brands, with Richard Mille, Audemars Piguet, and Rolex on the rise, and Longines, Tissot, Swatch, even Tudor declining. The 2024 Morgan Stanley Swiss Watch Report showed the industry faced a 3% decline in exports. But the high-end luxury, so watches priced over 50,000 Swiss Francs, experienced growth and represents 33.5% of the entire market value.
Now, I should say, some of this decline was expected. 2021, 2022 were record years following the pandemic and change in consumer habits. But there has been a much less expected separation between the mid-range and the higher end, or the higher tier, or the perceived higher tier. Four brands represent almost half of the entire Swiss watch market share. So Rolex, Patek Philippe, Audemars Piguet, and Richard Mille account for 47% of the Swiss watch market share. In 2019, these brands represented 36.8%.
I think a lot of brands are seeing this and thinking, "Hey, we have a lot of brand power. We have a rich watchmaking heritage. We make high-end watches. Maybe we should raise our prices as well to show our premiumness and capture those high-end buyers." Also, that's a gross oversimplification. Brands like Zenith come to mind, but the problem is they don't have the brand power to sell their watches at the price they're asking for. And don't get me wrong, I think these are incredible brands. I love their watches, but I know when I see their prices, when I see their retail prices, I think... but I have some thoughts. I've spent a good amount of time overthinking this. And here's what I submit to you.
When we look at these Morgan Stanley reports, it's all year-on-year data and a really short-term look at the overall state of the Swiss watch industry. I think the short-term winners will be those who take the premiumization course, and the long-term winners will be those who prioritize value maximization. Brands that focus on long-term growth and reputation and making strategic decisions to gain market value over time will be the winners. Right now, we're seeing the mid-tier and entry-level suffer, but I think this will be short-term pain for long-term gain if they can weather this specific season of economic uncertainty. When consumer confidence returns, I think these brands will have a lot to show for it.
I once read this book, and I can't remember for the life of me what it's called, so I'm so sorry I can't reference it, but there was a portion of it that stuck with me, and it was all about Japanese consumer habits in the 1990s. I know it's very niche, but stick with me here. So, this was a time of economic stagnation and deflation after the collapse of the asset bubble in the late 1980s. And economists noticed when times were lean, it was the otaku culture, or the nerd culture, that continued to buy expensive niche high-end products. So, who's buying a fancy computer when times are lean? Technology nerds. Or who's buying American denim? The otaku. Who's buying watches right now or paying attention to watches? We are the nerds. And what do we care about? Good value, attention to craftsmanship, a good movement, and good specifications. The brands that prioritize these things, right now, when times are tough, it will pay off in the long run.
Nearly everything gets more expensive over time, but the increases have felt pretty drastic. Watches are a huge industry, representing 7% of Swiss exports and billions of Swiss Francs of revenue for the country. Watches getting more expensive isn't down to a single reason. It's a variety of things coming to a head.
Also, really quick plug here. I recently started a podcast with my good friend Adrien Barker, The Movement Podcast, where we make episodes a lot like this, entire hour-long episodes, but they're even better because Adrien's there and he's awesome. So, if you like this, I highly recommend checking it out. I'll put the link down below. Only click after you watch the entirety of this video, of course. Or if you don't want to listen, that's okay, too. You can just stay here.
Let's talk about why watches are so expensive. Watches are incredibly labor-intensive. From the procurement of steel, gold, platinum, and melting it down to the watchmakers, designers, strap makers, it takes a lot of people to get this product on your wrist, and that's expensive. The price of materials are up. Gold is having a massive surge, as it usually does during weak economic times, but it's at an all-time high. Wages in Switzerland are quite high, if we're keeping it to Swiss watches. And then we have R&D, the designers, marketing. There's a lot of expense going in and needs to be factored into the price, but once again, they're not running at a loss.
I think everyone watching this video will know that the US has imposed huge tariffs on most countries, with Switzerland receiving the harshest tariff in Europe at 39%. We won't hang out here too long. I'm not American, nor Swiss, nor am I an expert in tariffs or international trade, but it is a factor affecting the watch industry, so I think it's worth talking about. Tariffs exist to protect domestic economies by making foreign products more expensive, incentivizing people to buy domestically. Whenever I talk about the imposed tariffs, I always receive comments saying, "Yeah, but President Trump wanted to slam their pharmaceutical goods, and the watch industry is unfortunately catching strays." But to be clear, you can set different tariffs for different goods. For example, the US tariff on Chinese syringes and needles is set at 245%. Laptops have a 20% tariff, and children's books have a 0% tariff. But this is not what we have seen with Switzerland. The idea that the US could produce the level of craftsmanship and the watchmaking expertise that Switzerland has domestically is a bit of a fantasy. Watchmaking requires really specific skill sets, knowledge. And while the US does have some good watchmaking chops, most of the industry is centered around Switzerland, Japan, and to a smaller degree, Germany. The States have already seen price increases from Swatch Group, Patek Philippe, and Cartier. And I think it's fair to say that more will come.
For a daily wear watch, a lot of people prefer something that will also track their fitness, measure heart rates, and sleep patterns. And these styles of watches have captured a lot of consumers. Apple, unsurprisingly, has the largest smartwatch market share of about 21%, with Samsung, Huawei, and others on the rise. Where I live in Bristol, a smaller city in the UK, I see a lot of Garmins, a lot of Apple watches, and a lot of vintage-style Casios.
I've put some thought into this, probably too much, but I would say there are three different types of watch purchasers. So, for one, the everyman. A person who wants a watch to literally just tell them the time and maybe serve a function. It could be a $20 Casio watch or an Apple Watch. The Apple Watch is cool because then you can also read emails and do work, whatever people do with that as well. It doesn't appeal to me, but apparently it appeals to a lot of people. For two, the one nice watch person. This does what it says on the tin. It's a purchaser who isn't really into watches. They're not going to be starting a watch Instagram page, but they want to maybe spend their bonus to finally get that Rolex. Or they've been saving a while, heard the Seamaster is a nice watch, and they're finally going to take the plunge. They have one or two nice watches that they might break out for a wedding or a nice function. And three, the identity purchaser. If you're watching this video, this is probably you. If you know who Abraham-Louis Breguet is, or if you know just a little bit too much about Spring Drive, this section is probably about you. For the identity purchaser, watches are a hobby. They read articles, listen to podcasts. This is a minority of watch buyers, but still a meaningful amount.
As smartwatches and fitness watches grow in popularity, they are cutting into the everyman market. So, those who want to spend $200 to $500 on a watch they can wear everyday. And I think that's a large contributing factor to the mid-tier and entry-level watch brackets struggling.
I feel like we've gone way off course here. This is why I need to script better than I do. What I'm trying to say is the watch industry has entered choppy waters. This time of uncertainty and difficulty for the luxury sector, and we see different brands taking different approaches during this time. For now, we have to wait and see what is the right strategy. And once again, they have far smarter people than myself helping them assess these things. As I said, I think it's all about the value maximization, building a great brand reputation right now, and being known for fantastic products. I don't know. That's just my thoughts. Time will tell.
I'd love to know. What are your thoughts? Let me know in the comments down below. Thank you so much for your viewership. Once again, if you want to check out my podcast, that would be awesome. I mean, we'd love to see you over there. I'll link it down below. And uh, PopTier patrons, come on now. Get their names on the screen. Hello, PopTier patrons. I love making these styles of videos. I love doing like brand analysis, looking at the industry and and how we got to where we are right now. I think watch reviews are my favorite videos to make, but I I really like ones like this as well. I hope you enjoyed it. Thank you so much for supporting my weird little channel. I hope you keep enjoying the work we do here. I mean, I love making videos. I hope you keep loving them. Um, and I I should say I know that we're in these times of financial uncertainty. So, if there's ever a time where you can't support the channel anymore, that's totally fine. Thank you so much for supporting it. Now, all tiers of patrons, thank you so much for financially supporting this channel. That's amazing. Um, I'd love it if you stayed on board. It makes this work possible. But I'm rambling. What I'm trying to say is thank you. I hope you keep enjoying this channel. And even if you even if you don't, I hope you keep enjoying watches forever. You're awesome. Thanks guys.