BASEL (Reuters) - Luxury watchmakers are well positioned to escape a possible slowdown in consumer spending as they target wealthy customers who are increasingly willing to splash out on extravagant and unique watches.
Swiss watchmaker Romain Jerome’s “Day&Night” watch -- which does not tell the time, only whether it is night or day -- sold out within 48 hours of its launch earlier this year as watch fanatics snapped up the $300,000 timepiece.
“When you ask people what is the ultimate luxury, 80 percent answer ‘time’. Then when you look at other studies, 67 percent don’t look at their watch to tell what time it is,” Chief Executive Yvan Arpa told Reuters on Friday at Baselworld, the watch and jewellery industry’s largest annual trade fair.
“Why do people buy expensive watches? To have a trophy. A watch (costing) $9 gives the time as well as a watch at $500,000, so they really buy a trophy,” Arpa said.
The “Day&Night” watch uses the complicated Tourbillon movement -- invented to overcome earth’s gravity which used to affect the accuracy of watches -- which lures watch connoisseurs as well as fashion aficionados.
The Geneva-based company, founded in 2004, also has an order backlog of up to two-and-a-half years for its “Titanic DNA” watch, which is made from steel and coal from the Titanic and can cost as much as $500,000.
“If you do something that is different, which is interesting, it pays,” Arpa said.
Luxury watchmakers are also banking on buoyant demand from emerging markets, such as Asia and the Middle East to offset a slowdown in the United States.
“The first quarter of the year has been very good -- following the same trend as last year and last year was a record year for the watch industry and for the major luxury companies in general,” Philippe Mougenot, president of Chanel’s fine jewellery and watches division, told Reuters.
“Now we are a bit on the look out to see what consumption will be (like) within the next months in the States ... There is a lot of psychologically negative talk through the press and this may have some impact,” Mougenot said.
“But the big difference now (compared) with 10 years ago is that we have new markets that were not existing at that time,” he said.
Chanel has seen its high-end watch and jewellery products selling “astonishingly well”. One its most pricey pieces is the “J12 18 place Vendome” watch, costing 550,000 euros ($864,100).
And the head of Swiss watchmaker La Montre Hermes, part of French luxury group Hermes International, has also seen strong sales.
“During a crisis, people have another level of consciousness. It doesn’t mean that they will not buy, it is just that they are looking more carefully at what they buy,” La Montre Hermes CEO Emmanuel Raffner told Reuters.
Additional reporting by Francois Schott; Editing by Douwe Miedema and Quentin Bryar