Consumer Discretionary

Will the Apple Watch call time on Swiss sales?

Are Swiss watchmakers afraid of Apple?

The swathe of smart watches entering the market led by Apple's Watch has dented sales of Swiss-made timepieces and looks set to continue weighing on the sector.

Swiss watch exports slowed sharply in the year to September, data published this week showed, with their value sinking around 8 percent compared to September 2014, with Asia and U.S. shouldering the brunt of the decline.

Demand dropped off the most in the lower end of the market, with watches that export for below 500 Swiss francs ($520) being hit the hardest, data from the Federation of the Swiss Watch Industry showed.

Alternatives to the luxury watches, such as the Apple Watch, have made retailers nervous of stocking cheaper Swiss watches as technological advances are likely to make them "obsolete," luxury analysts warn.

September represents the sixth consecutive month of decline for Swiss watch exports which suggests "very little positive takeaways" for the industry, according to luxury analyst at RBC Capital Markets, Rogerio Fujimori. One of the biggest concerns, he added, is the softness illustrated in the U.S. which recorded the steepest decline in the past five years in this market.

Swiss watchmaker Tag Heuer's CEO Jean-Claude Biver gestures during a press conference at the company’s headquarters in La Chaux-de-Fonds, Western Switzerland.
Apple’s luxury watch will become obsolete: Tag Heuer CEO

"The data points are interesting when you look at the last 12 months. The rolling average of the last 12 months shows a market of watches that is subdued. It is especially subdued in the cheaper quality," senior research analyst for luxury goods at Sanford Bernstein, Mario Ortelli told CNBC.

"Alternative products to the Swiss watch, the Apple watch as well as smart watches in general are making wholesalers more cautious of stocking these (cheaper) products, because technological advances can make these obsolete."

The Apple Watch is particularly to blame for the slowdown seen in U.S. sales Ortelli added, combined with the strong dollar which has meant shoppers from emerging markets are no longer as keen to pick up a Swiss watch when travelling.

Samsung launches smartwatch in Apple fightback

Swiss watch maker Tag Heuer recently revealed plans to launch its $1,800 Android powered smartwatch next month in its attempt to take on the Apple Watch, which offers a mid-level range that costs a maximum amount of $1,099.

The president of LVMH's watch division and CEO of Tag Heuer, Jean-Claude Biver, told CNBC earlier this month that Apple is "big competition."

Samsung also unveiled its latest smartwatch – the Gear S2 in September as it looks to find a winning product to take on Apple in the rapidly growing wearables market.

"There is no a clear single data that shows us that the consumption of Swiss watches will bounce back and the wholesaler will start an aggressive re-stocking policy. So at the moment, we have a (Swiss watch) market where we can expect to growth in low single digits," Ortelli said.

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