Vertical integration in distribution How do you assess the impact of the strengthening in vertical integration in distribution by big brands / big groups (monobrand and large multibrand stores dedicated to a group) on small independent brands / distributors / retailers? 71%
p Independent brands p Distributors / retailers / independent retailers
65%
21%
26%
3% Threat
Neutral
develops into an international hotspot, the first retailers on the ground will have an invaluable advantage.” One way for independent brands to improve their competitiveness, according to Credit Suisse, is to “join with other brands in cooperative distribution groups”. But as the bank notes, “this option is not often observed”. To the extent that we are familiar with the jealous character of watchmakers, this remark does not surprise us. (PM)
Opportunity
“Mono-brand boutiques are the admission card to the emerging markets.” Credit Suisse THE OFTEN-NEGLECTED SWISS MARKET
Source: Deloitte
Opening of mono-brand boutiques Do you plan to open new mono-brand stores in the next 12 months? (Responses from brands only)
26%
47% 26%
p Yes 62 STUDIES / europa star
Source: Deloitte
15%
p No opinion p No
While statistics abound for Swiss watch exports, thanks to the regular updates provided by the Swiss Watch Industry Federation (FHS), it is much more difficult to get an accurate idea of the state of the watch market in Switzerland. The FHS estimates that the Swiss market absorbs five per cent of timepieces produced in the country and federal VAT receipts suggest that watch and jewellery retailers generated turnover of 2.8 billion Swiss francs in 2011. But this figure includes jewellery sales and does not take into account watch sales in department stores and souvenir shops. Taking these data into account, as well as the retail sales statistics from Switzerland’s Federal Statistical Office (SFSO), the Credit Suisse report settles for an estimated market value for the watch industry of two billion Swiss francs at final retail prices.
As the chart on the next page shows, regardless of the absolute figures watch and jewellery sales have consistently outperformed all other retails sectors – and therefore total average retail sales as a whole – over the past couple of years. This is undoubtedly due to the huge significance of tourist sales in the Swiss market. Estimates of the share of sales to tourists range from anywhere between one-half to twothirds, according to the Credit Suisse report. This assumption is backed up by VAT statistics indicating that half of all watch and jewellery sales in 2011 were for export (although this figure does not take into account sales to tourists who do not reclaim the Swiss VAT on their purchases). Often neglected, perhaps because they are now increasingly considered as a dying breed, are the distributors based in Switzerland. They may be supplied directly by a brand or by a Swiss retailer. In either case, the volumes that they trade are not included in Swiss watch exports and are instead hidden away in the murky waters of Switzerland’s retail statistics, where watches and clocks are grouped together unhelpfully with “electronic products”.
THE ROLE OF THE CHINESE TOURIST The biggest driver of tourist sales are visitors from China, who accounted for 815,000 overnight stays in Switzerland in 2012, making the country the fourth most popular luxury tourist destination for the Chinese, currently behind France, the USA and Singapore. Overnight stays by guests from China increased by 21 per cent in 2012 and those from Gulf states by 24 per cent – impressive figures when seen