The time when Germany was nicknamed the ‘sick old man’ by European economists finally seems to be over. The most powerful economy, and the largest market, in Europe is no longer carrying the red lantern of a train’s last wagon; it has become a locomotive again.
Unemployment rates have declined with more than 700,000 people finding new employment in 2007. Tax incomes from the communities, regions and the federation have increased remarkably and the federal budget is balanced for the first time since 1984.
Consumers have started spending money again and it is starting to show. But most importantly, the Germans, who are not known for their optimism, are now showing confidence and a little more trust in their future.
It started at the end of 2006 and had been long awaited. The pessimists had given up hope and the optimists were even starting to have their doubts, but 2006 brought a remarkable change for the German economy and new expectations for the watch and jewellery branch.
Retailers, wholesalers and the German subsidiaries of Swiss and Japanese watch producers were delighted by good turnovers and satisfying profits. With some regional exceptions, 2007 turned out to be successful for both Germany’s watch and jewellery suppliers and retailers.




Josefine MÜller, Andreas Filius, Christian Bartosch and SÉbastien Knop


But, to be honest, one has to admit that 2007 was different to the previous year and business was varied. On one hand the German jewellery and silver goods industry are expecting a similarly good turnover to 2006 (exact figures were not available at the time of print) and it is easy to find many happy importers or agents of foreign watch com-panies who were pleased with last year’s business.
But on the other hand, you can just as easily find retailers who have been disillusioned by the economical development.
“They are not satisfied,” says Andreas Filius, whose family used to run one of the big wholesale companies in Germany. “Watch sales are satisfying,” he explains, “especially the demand for profiled, design-oriented mid-price brands, but good turnovers in the jewellery section are missing. Only two out of ten retailers reached the same results in 2007 as they did in 2006”.
The company Filius & Haake is a good example of the change that is taking place in Germany, where it is hard to find a traditional watch wholesale business nowadays. Wholesale retailers are not supplying watch and jewellery stores anymore; it is the German subsidiaries of powerful Swiss watch brands and independent importers. The big companies, who are nearly all part of large groups like LVMH, Swatch Group or Richemont, are trying to minimize their distribution networks. In other words, they are terminating their contracts with small shops in minor towns, unless the shopkeepers generate a high minimum turnover. For agents and importers it is much more profitable to supply major stores in metropolitan regions and big cities.
“We are not paying attention to this trend”, says Christian Bartosch, General Manager of Piaget and Baume & Mercier in Germany, who had a respectable double-digit increase in 2007. “But the trend is obvious; customers prefer fine stores in top locations in the city centres.”
“We had our best results with shops in Hamburg and Munich” says SÉbastien Knop, Brand Manager of Vacheron Constantin, who cannot fulfil all of his clients’ wishes because of the limited manufacturing capacities of the traditional Geneva brand.
Another insider has a simple explanation: “Fewer rich people are buying more and more.”
But Josefine MÜller, Head of Marketing at Chronoswiss reminds us “it is true that luxury, mechanical watches are timeless and at a certain level of income there will always be a market. But we have realised that we have to be more active in order to motivate the consumer to buy. The German brand Chronoswiss is predominantly suffering from delivery problems from its suppliers.”
Retailers in suburbia, small towns or country regions can sometimes get their stores refilled by the supply of companies like Filus & Haake, who sell brands like ‘Regent’ to them that are in strong demand. Andreas Filius himself, as a foresighted salesman, puts his focus on distribution of design watch brands. The Internet warehouses Amazon and Karstadt, Germany’s biggest convenien store chain, are already among his customers. When asked whether he is afraid of the Internet as competition to the traditional retail business Mr. Filius replied, “No I am not, as a distributor you cannot ignore the Internet. I do not see the watch trade being endangered. A lot of people search for information on the Internet, but they buy their watch in the jewellery store next door.”


Source: Europa Star February-March 2008 Magazine Issue