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Discussion Starter #1
Here's an interesting article from Deloitte on the watch industry

The Deloitte Swiss Watch Industry Study | Luxury goods

The key findings are:
- Despite slower export growth, demand from emerging markets and N America is expected to grow.
- High end watches (>CHF$5k) will be the fastest growth segment
- Vertical integration will continue in manufacturing (due to Swatch actions on ETA) and distribution (mono brand shops like Tourbillon)
- Alternatives to ETA will be difficult to source resulting in small brands in the low to mid price range to disappear
- Smart watch unlikely to be a threat

Assuming that the findings are correct, the impact for consumers are (i) watch price will continue to increase due to increased demand but maybe not at a pace as before, (ii) shift to mono brand or flagship stores will reduce discounts to consumers as these stores seldom discount (more pricing power to watch manufacturers), and (iii) fewer independent brands in the $1k to $5k price range (Anonimo, Ball, Bell & Ross, Fortis, Oris, Glycine, UTS, Sinn, Muhle are at risk).

Your thoughts or other implications for consumers?
 

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And the beat goes on. No end in sight to the run up in pricing.
I strongly support price increases in the luxury sector. If you dont increase the price, then your average Joe will start having Rolexes.
 

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Here's an interesting article from Deloitte on the watch industry

The Deloitte Swiss Watch Industry Study | Luxury goods

The key findings are:
- Despite slower export growth, demand from emerging markets and N America is expected to grow.
- High end watches (>CHF$5k) will be the fastest growth segment
- Vertical integration will continue in manufacturing (due to Swatch actions on ETA) and distribution (mono brand shops like Tourbillon)
- Alternatives to ETA will be difficult to source resulting in small brands in the low to mid price range to disappear
- Smart watch unlikely to be a threat

Assuming that the findings are correct, the impact for consumers are (i) watch price will continue to increase due to increased demand but maybe not at a pace as before, (ii) shift to mono brand or flagship stores will reduce discounts to consumers as these stores seldom discount (more pricing power to watch manufacturers), and (iii) fewer independent brands in the $1k to $5k price range (Anonimo, Ball, Bell & Ross, Fortis, Oris, Glycine, UTS, Sinn, Muhle are at risk).

Your thoughts or other implications for consumers?
Yes, it's interesting that the grey market -- so often derided here on WUS -- and the competitive landscape wasn't even listed as a factor for concern/risk. Fakes also seem not to bother the industry's leaders anywhere near as much as they bother folks on WUS. I think both of those things are positive and hopefully WUS members will factor some of that perspective into their thinking. Specifically with regard to the grey market, the fact is that they make high end products accessible to more people and/or they make the price points more amenable to people looking at items priced at or above what's otherwise beyond their willingness to spend, despite their having the ability to do so. Quite simply, grey market sellers are responsible for much of the increases and growth in high end watch sales.

For all those folks who seem inspired to "invest" in watches, now seems like a good time to buy stock in the small watchmakers who seem good targets for acquisition. It's not at all surprising that the watch industry, like nearly every other one, is consolidating. That's exactly what happens when a few large concerns, all managed by MBAs, dominate the marketplace. Banking saw it, consumer products saw it, chemicals, oil, aircraft and defense manufacturing, and textiles have seen it. It'd be either naive or myopic not to recognize that now that major industries have consolidated as much as possible that the same tactics won't be applied to smaller industries that yet offer opportunities for meaningful profits.

TY for posting.
 

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Here's an interesting article from Deloitte on the watch industry

The Deloitte Swiss Watch Industry Study | Luxury goods

The key findings are:
- Despite slower export growth, demand from emerging markets and N America is expected to grow.
- High end watches (>CHF$5k) will be the fastest growth segment
What's interesting to me, as someone who studied economics, is how the North American economy is growing very slowly....and yet, the projections are for luxury segment to be the fastest source of growth. One reason this is especially interesting, is that it jives with lots of material I've been reading on the growth of income inequality, and the explosion of the wealth at the very top....including the [now cliche] 1%ers.
 

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I strongly support price increases in the luxury sector. If you dont increase the price, then your average Joe will start having Rolexes.
Not sure if you are serious or not but the average joe with a little dough has been buying Rolex for years. Nothing is is more conspicuously mainstream than Rolex.
 

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What's interesting to me, as someone who studied economics, is how the North American economy is growing very slowly....and yet, the projections are for luxury segment to be the fastest source of growth. One reason this is especially interesting, is that it jives with lots of material I've been reading on the growth of income inequality, and the explosion of the wealth at the very top....including the [now cliche] 1%ers.
My thoughts as well, though despite all of their metrics, the whole situation screams "bubble" to me. The price of luxury watches has grossly outpaced inflation (with no significant material/technological improvements to justify some of it) and watches are less "iconic" than they once were. With a shrinking upper-middle class and a culture of casual among successful young entrepreneurs (think Zuckerburg), its hard to see where significant growth is coming from (from the NA sector at least).
 

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Discussion Starter #9
I think part of the increase in N America is going to be driven by the improvement in the economy and pent up demand from a few years of low economic growth. Another driver is that the culture of watch is coming back despite the culture of casualness because it is partly fashionable, partly jewelry, partly exclusivity and becoming cool again. Here's an article (although dated) that speaks to this.

http://www.nytimes.com/2011/07/07/fashion/watches-are-rediscovered-by-the-cellphone-generation.html?pagewanted=all
 

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Not sure if you are serious or not but the average joe with a little dough has been buying Rolex for years. Nothing is is more conspicuously mainstream than Rolex.
I get the point you are making in general. Personally, I really don't see how a family of three or four living on the US median income ($51K in 2012) in any metropolitan area can possibly buy a $4K-$5K watch as a matter of course. I know that some can and will, and I know there are ways to make it happen, but I know too that most such folks are far more sensible about their purchases. Yes, there's not a shortage of professional 20-30-somethings living in cities who get a kick out of "keeping up with the Joneses" (that's part of being young and having a good job; it's normal), and going to bars and clubs and seeing those folks may skew one's view quite easily. But then those folks, though one couldn't call them wealthy aren't raising kids, paying any number of large bills, and saving (outside their 401K) money if they are buying pricey watches. That's their choice, and I'm okay with it and have nothing to say about them so choosing, but I know better than to think that's what most folks, common Joe folks, are doing.

The only places I can think where my refutation might be routinely wrong are the few places where people are almost compelled to keep up appearances.
-Greater Los Angeles - it's movie town. Everything out there is smoke and mirrors until you find out for sure there's good reason to believe otherwise.
-DC Metro - It's the nature of politics. Also there's a lot of economic stability in DC and salaries are on par with NYC while the cost of living is lower.
-NYC Metro - International politics, theatre, high finance, high fashion, high rises and old money names everywhere; it's just the nature of the place.
-Dallas - the US city whose residents out-shop all others more than all others. (I assume out of boredom. I know Dallas bores the hell out of me.)

U.S. median household income up 4% at end of 2011
Household Income - The 2012 Statistical Abstract - U.S. Census Bureau

Take a look at this and tell me where $4500 for a new Rolex comes from? Personally, I don't know many folks like this (the average) who give up much of what's in this picture to wear a pricey watch.



Now, in fairness to your claim, I can see how it might seem like average Joes are buying pricey watches. The number of people making above average salaries (arbitrarily I'll just say having individual salaries of $140K+ is considerably higher than it used to be. Those people seem average in that they don't appear to be clearly, and solidly rich. Their numbers will make one, especially one who lives in a fairly urban and prosperous part of the US (or the four areas I mentioned above), perceive that "average Joes" are buying expensive time pieces. Also, if one isn't rich, one tends to think of oneself and one's friends as average Joe people. If one, or one's friends have dear watches, one may conclude that all manners of average Joes are buying them too. The more likely reality is one of three things: (1) one and ones friends are in fact at least a little more blessed economically than an average Joe, (2) one is spending and living at the very limit of one's means, or (3) one is buying luxury goods when one's money might well be spent better on other things.

PS
I don't need to hear anyone's one-off story of how they bought this or that used watch, or got this or that great deal. I'm talking about regular people who live regular lives and who will, unlike a great many WISs, will buy new from the grey market or from an AD.
 

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My new coworker is from Dallas and she misses Texas! She said she loved the southern charm and hospitality of Texas. When a Bugatti pulled up outside of our restaurant she asked if we were shocked and wanted to see it and we all laughed. I asked her why she cared, and said there's money in Texas. She said we were all nuts Dallas is nothing like the OC people here are fake and push spending to the limit... Our valet is like a car show each night, but I'm still shocked that 80% of watches i see are just boring Rolexes and Cartier. Hublot is a distant third. I do think most of the middle class average Joes here can afford a Rolex, but opt to spend their money on other things.
I do believe that 20/30 somethings are bringing back watch culture here in America because its fascinating
 

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Now, in fairness to your claim, I can see how it might seem like average Joes are buying pricey watches. The number of people making above average salaries (arbitrarily I'll just say having individual salaries of $140K+ is considerably higher than it used to be. Those people seem average in that they don't appear to be clearly, and solidly rich. Their numbers will make one, especially one who lives in a fairly urban and prosperous part of the US (or the four areas I mentioned above), perceive that "average Joes" are buying expensive time pieces. Also, if one isn't rich, one tends to think of oneself and one's friends as average Joe people. If one, or one's friends have dear watches, one may conclude that all manners of average Joes are buying them too. The more likely reality is one of three things: (1) one and ones friends are in fact at least a little more blessed economically than an average Joe, (2) one is spending and living at the very limit of one's means, or (3) one is buying luxury goods when one's money might well be spent better on other things.
This is what I was getting at in my earlier post regarding income distribution and the growth in inequality thereof. In addition to the superrich 1%ers everyone talks about, you have a segment of the population that is vastly outpacing inflation with family incomes growing well into the 100k's (single income) and 200k's. In cities like metro area Washington DC, this doesn't seem like a lot of money, but compared to the rest of the country [in absolute terms] it is. I think this is where that growth is predicted to happen....thus I wouldn't call the Defense contractor driving to work at the Pentagon in his 535i wearing his GMT Master II an "average Joe".

Furthermore, I would simply take a look at where marketing for these products takes place. For example, how often do you see advertisements for Rolex in a magazine like the Economist or National Geographic? All the time....and that's because of the demographic of readers they have. As much as I would love to believe the "average Joe" in America is a dedicated reader of the Economist
 

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I strongly support price increases in the luxury sector. If you dont increase the price, then your average Joe will start having Rolexes.
On the one hand, enjoying watches for what they are.
On the other, using watches as signifiers for social stratification.
 

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This is what I was getting at in my earlier post regarding income distribution and the growth in inequality thereof. In addition to the superrich 1%ers everyone talks about, you have a segment of the population that is vastly outpacing inflation with family incomes growing well into the 100k's (single income) and 200k's. In cities like metro area Washington DC, this doesn't seem like a lot of money, but compared to the rest of the country [in absolute terms] it is. I think this is where that growth is predicted to happen....thus I wouldn't call the Defense contractor driving to work at the Pentagon in his 535i wearing his GMT Master II an "average Joe".

Furthermore, I would simply take a look at where marketing for these products takes place. For example, how often do you see advertisements for Rolex in a magazine like the Economist or National Geographic? All the time....and that's because of the demographic of readers they have. As much as I would love to believe the "average Joe" in America is a dedicated reader of the Economist
Isn't Geneva ridiculously expense? It sure seemed that way when I was there!!! And it does depend where one lives. 535 with GMT is avg Joe in many high profile cities. Rolls Royce Phantom with patek perpetual calendar is something totally different.
 

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Isn't Geneva ridiculously expense? It sure seemed that way when I was there!!! And it does depend where one lives. 535 with GMT is avg Joe in many high profile cities. Rolls Royce Phantom with patek perpetual calendar is something totally different.
Haha, yeah....it's crazy expensive here, and me and my family do ok, but even by U.S. standards, we still fall outside the 1%. I'm also not negatively judging the individuals within that highest group, since many of my good friends are quite well off and have worked hard to earn that level of wealth. Now, the economist in me questions how sustainable the growing income inequality is from a social and political point of view, but that's a bit off topic.

You might be right in thinking that the BMW/GMT dude is "typical" in many large cities (I lived in Washington DC for a long time, so know exactly where the impression comes from) but I like to look at numbers on a national scale to keep it real. Otherwise, what's "normal" can be what it means to live inside a bubble.
 

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Haha, yeah....it's crazy expensive here, and me and my family do ok, but even by U.S. standards, we still fall outside the 1%. I'm also not negatively judging the individuals within that highest group, since many of my good friends are quite well off and have worked hard to earn that level of wealth. Now, the economist in me questions how sustainable the growing income inequality is from a social and political point of view, but that's a bit off topic.

You might be right in thinking that the BMW/GMT dude is "typical" in many large cities (I lived in Washington DC for a long time, so know exactly where the impression comes from) but I like to look at numbers on a national scale to keep it real. Otherwise, what's "normal" can be what it means to live inside a bubble.
i think you hit how watch companies stay ahead of inflation right on he head. Higher end brands know their target audience and even if they don't advertise like Rolex they still get included in conversation. And I guarantee you advertising departments aren't looking at America as a whole nor is a company such as Rolex trying o appeal to the 1%ers only.
To the economist at some point your going to have to look towards places where watches sell and see if those parts of the country are doing well enough to propel watch sales. The answer is yes!
Dspaulson I don't want to sound like a ....., but for most people on this forum the guy driving the BMW is the norm. I have lived all across America and know that there are more Rolexs here in the OC/LA than in most states, but the metro is also more populated than most states.
Its getting late here and I'm starting to lose my train of thinking so I hope you got my point.
 

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i think you hit how watch companies stay ahead of inflation right on he head. Higher end brands know their target audience and even if they don't advertise like Rolex they still get included in conversation. And I guarantee you advertising departments aren't looking at America as a whole nor is a company such as Rolex trying o appeal to the 1%ers only.
To the economist at some point your going to have to look towards places where watches sell and see if those parts of the country are doing well enough to propel watch sales. The answer is yes!
Dspaulson I don't want to sound like a ....., but for most people on this forum the guy driving the BMW is the norm. I have lived all across America and know that there are more Rolexs here in the OC/LA than in most states, but the metro is also more populated than most states.
Its getting late here and I'm starting to lose my train of thinking so I hope you got my point.
I think we're in agreement, in that I don't disagree with what you're saying. I suppose my original commentary was primarily in observation of the fact that growth in luxury watch sales are seemingly projected to outpace the greater economy.....and then what that implies.
 
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