SWATCH GROUP forced to reopen the doors of its “supermarkets”

August 2013

In mid-July, in the middle of a summer heat wave when watchmakers were finally looking forward to taking some time out, or having a good time, either at the seaside or in the mountains, the now famous COMCO (the Swiss Competition Commission) caused a stir. Going against the recommendations of its own secretariat, which had patiently negotiated with the Swatch Group a progressive reduction in deliveries of its strategic assortments (the balance-spring assembly), the COMCO executive rejected any reduction in deliveries. From 1 January 2014, the Swatch Group will once again have to supply its assortments to anyone who asks for them, without restriction. The planned reduction in deliveries of mechanical movements – 10 per cent in 2014 – was, however, accepted. But the precise terms of this reduction, which were included in the overall agreement, must be revised.

From 1 January 2014, the Swatch Group will once again have to supply its assortments to anyone who asks for them, without restriction.

For the Swatch Group, which officially announced its “disappointment” at the decision, this is a strategic setback. For other brands, it’s a breath of fresh air. Just as Swatch is preparing to launch its new Sistem51 this autumn (a highly innovative mechanical movement that consists of 51 elements and a single screw), independent brands face the threat of being caught in a two-pronged attack, from below with the Sistem51 and from above with the increasing rarity of assortment supplies.

SWATCH GROUP forced to reopen the doors of its “supermarkets”

They can now breathe a little easier, because “this decision gives more time to movement manufacturers like Soprod, Sellita and La Joux-Perret to make up lost ground,” comments Alain Spinedi, the boss of Louis Erard and one of the most strident voices in the campaign to get the COMCO to counter the intentions of the Swatch Group. But this respite should not be an excuse for brands to rest on their laurels. Nick Hayek is right to remind everyone that the availability of ETA movements and Nivarox assortments, which represent between 90 and 95 per cent of the market, has for too long allowed other brands to postpone their investments in this field. Now, the long-term future of the Swiss watchmaking industry demands that efforts be focused in this very area.

The week after this decision from the COMCO, another announcement drew attention: Swiss watch exports to the Eldorado that is China dropped by 18.7 per cent in the first half of 2013, and those to Hong Kong by 11.1 per cent. And it was above all gold watches that were concerned by this reduction rather than those in steel. Although this may well be a direct consequence of China’s policy to stigmatise open displays of luxury, it may also be the indication of an end to the good times. Could market forces be regrouping around a slightly more modest offering? Come what may, efforts towards industrialisation are more necessary than ever to secure the long-term future of the industry. The “respite” accorded by COMCO to all stakeholders gives them time to get organised and invest to ensure their autonomy. The “supermarket” may be opening its doors once again, but before rushing to empty its shelves, its “customers” would do well to think seriously about their future.

Source: Europa Star August - September 2013 Magazine Issue