Currency Crisis or Celebration?

A few days ago the Swiss national bank removed the cap of 1.20,- per euro. Resulting in quite some chaos in the financial markets worldwide and overall Swiss export industry, as well for the other sectors like tourism. The Swiss central bank estimates that the Swiss franc will balance out in approximately six months, providing a more accurate and current value of the Swiss currency.

Currency Crisis or Celebration?

In other words. Should we be crying  or should we be happy regarding the new developments with the Swiss franc? First, let’s go back a few years to the time the Swiss watch industry had another decision to make.  Back in the 1970ies the “quartz crisis” almost brought the Swiss watch industry to an end. It was a time when brands had to work together form alliances but most of all make decisions. Not that back then making decisions was not an everyday thing.  But it where make or break kind of decisions for some brands.

The Quartz watch was and always will be more reliable, easier  to fix but most of all cheaper. Back then these where very important selling points for most watch brands. It where these developments that shook the entire watch industry to the point they either had to alter their key selling points so they could continue the “costly” watchmaking tradition. Or go with the flow and start making Quartz watches. As in many cases some succeeded where others failed.

Design, Technical know-how, Prices, brand reputation/equity and marketing saved, or actually made brands  like Rolex and Patek Phillipe thrive within their industry. With Advertising like “leaders of the world wear Rolex” or “you never really own a Patek, your merely look after it for the next generation”  they swept quite some consumers off their feet over the past decades. And will continue to do so for many years to come.

Since the focus of selling watches is still done the way as mentioned above. Prices are not that important anymore. And like most luxury consumer goods, prices are just another way to differentiate yourself from your competitors. Combined with the fact that most watch brands are based in Switzerland  thus having the same “problem” it is not a mayor issue for most brands hence the fact everybody has to deal with the problem. The smaller independent brands will probably have to deal with less sales due to the fact their watches become too expensive/risky to buy for the retailers who will have to take the risk in investing in these brands. Brands like Rolex and Patek Phillipe will become even more expensive. And dealers will continue to buy and sell them. Or perhaps  the brands will start opening more boutiques and sell them directly to the customer. Something that is already upcoming and trending for most big brands.

“The customer will/has to pay the price”

A happy note: Since prices for new watches will rise, so will prices for used watches. So most high-end watches you already own could rise in even more value over the coming months or years. And let’s be honest with each other that is something we all like. And even for some the sole reason they buy high-end watches.  

And for the decisions to made by some brands? The strong will survive or even thrive. It will be the smaller independent brands that suffer the most and have to find a way to deal with current situations. A good example and amusing to read is an open letter by the CEO of H. Moser & Cie Edouard Meylan. And for those who like to do some heavy reading a very informative and strong research article about the Swiss watch industry.

Kind regards,