nderstanding the Australian market for watches and luxuries is not just an easy matter of dialling up the statistical indicators.
In 1999/2000, reliable buyer performance was entangled with Australian taxation reform when a 10% retail Goods and Services Tax (GST) was introduced into Australia replacing a huge 33% wholesale sales tax. For many decades, anybody contemplating buying a serious watch would fly to Hong Kong to enjoy a very comfortable all expenses-paid holiday on the back of the tax saved by purchasing in the tax-free port.
Statistics concerning Australia’s participation in the luxuries markets was thus distorted by the deeply embedded culture of buying tax-free offshore.
Over the last ten years Australia has suffered a slight contraction of global imports of all products of -5.95% but Australian imports of watches tell a quite different story. From all countries*, Australian wristwatch imports look like this:
Thus over ten years Australian imports of watches grew by 50.72%, USA watch imports contracted -2.4%, UK grew by 35% and Canada by 45%.
We can see that in 2016 there was a very significant drop in watch imports into Australia and this should be seen in the context of the global political instabilities of that time. But a further contributor points to supply-line irregularity causing the very large complementary bump in imports in 2015, where the wholesale pipeline became overcharged and a necessary supply adjustment took place.
Today’s global instabilities notwithstanding, Australia’s economic outlook remains very strong and there is no reason to believe that the average trajectory of the last ten years will not continue. A federal government election is touted for 2018 and there is local political instability, but this is certainly not of a nature to affect trade of consumer items.
The country has completed its 26th consecutive year of annual economic growth (despite appallingly vacuous conservative political leadership). Statistics published by the Australian Government Dept of Foreign Affairs and Trade indicate Australia is:
• The second nation in terms of wealth per adult (after Switzerland) • The number one global exporter of coal, iron and aluminium ores • The second largest global exporter of liquefied natural gas • The number one global exporter of wool and fourth largest exporter of cotton • Ranked first in the world for ‘well-being’ • Ranked sixth globally on prosperity.
Roughly 65% of the population own their own home. Huge market appreciation means most who have held their property over 10 years will have become a millionaire on the property market revaluation alone.
So how do we interpret these straws in the wind in terms of the state of trade for the luxury watch market?
Raynald Aeschlimann, President of Omega, said the Australian market had evolved considerably since his first visit 15 years ago. “We consider it one of the key regions of the world. This store being new and so big is a sign of that evolution. To open a store is nice, but if it’s only to please yourself it doesn’t last… If you are opening that big, you also know why. The results are very good.”
Primarily, many factors point to strong personal wealth but with limitations of disposable income, because whilst so many are now paper ‘millionaires’ this does not provide discretionary cash or the incentive to loosen the culturally restrictive strings on spending.
But consciousness of beautiful watches and luxuries is growing
Over recent years some independent watchmakers have established private watch names for local distribution. Of these there are two rather more serious developing brands.
The Bausele brand was established five years ago by combining Australian design with the ‘Swiss Made’ epithet and incorporating an innovative idea of Christophe Hoppe, the owner of the brand. The see-through crown is hollow and filled with a little ‘part of Australia’, being famous Bondi Beach sand or red sand from the Gibson Desert. Further, Hoppe’s firm has recently completed a successful partnership with Flinders University Research in Adelaide to develop the manufacture of ceramic watch cases.
In a complementary development, the Rebelde brand is Australian designed/assembled and its owner, Nicholas Hacko, is acquiring the needed machinery, training and expertise for full local manufacture of a branded in-house calibre. His firm is well advanced along a five-year procurement and training plan.
Logically, discussions are already underway between these two entrepreneurs to combine their developments and ideas for a full, locally manufactured watch.
Of course there are export opportunities for this collaboration, but their primary market is initially within Australia and there are interesting possibilities, which will play out in due course, for a locally made watch in the luxury price-point sector.
All these indicators tell us Australia is a rich and resourceful country
That there is entrepreneurial innovation and supportive finance is undeniable, but it will take skilful promotion and consistent application of good marketing policies to tap into the abundance of prospective buyers.
It is important here to understand that the old adage that “one good Swiss watch is enough” is deep-seated in old generational culture. The high-end makers would like to make subtle adjustments here by embedding the idea that several good Swiss watches will surely create a better culture? To this end they must dedicate psychological targeting and convert the oneoff buyer into a collector or repeat buyer of the very beautiful high-end Swiss watches that are tempting us in the Australian luxury boutiques today.