Geneva's luxury watch show where shop owners search out such brands as Cartier and Piaget opened Monday under a cloud as the franc surged after the Swiss central bank abandoned its bid to hold down its value.
The fair in Geneva, attracting only professionals, aims to draw 14,000 visitors in just four days from the world over. On opening day, participants at the annual Salon International de la Haute Horlogerie were putting up a brave front, saying consumers would be willing to pay higher prices for true luxury and perfection.
The luxury watch sector is now facing one of its most challenging periods, after the end of surging sales in Asia and new found competition from smart watches connected to the Internet and capable of a plethora of functions. Sixteen of the world's most expensive watch brands, of which three-quarters are produced by Swiss group Richemont, are on display at the show, a red carpet event drawing the biggest names in the industry and top celebrities.
"We will see how the franc evolves but the watch industry has witnessed worse cycles than this," said Alexander Schmiedt, head of the watch division at Mont Blanc. "We are very well established across the world," he said, stressing that last week's decision to scrap a cap on the franc-euro exchange rate would not affect sales.
Since Thursday, the franc has shot up 20 percent against both the euro and the dollar, punishing leading Swiss watchmakers whose shares plummeted before rising again on Monday. They include Richemont's top end brands such as Cartier, Piaget and Mont Blanc. Tim Sawyer, the chief marketing officer for Audemars Piguet, said it was a misconception that the luxury sector was more protected against price fluctuations than others.
"I think it's fair to say that in the very, very high end you're probably a bit more isolated, you know, it's not about little price changes," he said. "Ultimately, as the context becomes more difficult, often I say that it's not necessarily the biggest that win but the smallest and the fittest, and we think that we're definitely ready for that," he added.
Mont Blanc meanwhile is entering the smartwatch fray led so far by the likes of Samsung and Google with a new offering priced at 2,690 euros (3,126 dollars). An e-strap connected to a traditional watch turns it into a sporty looking smartwatch with email and music controls. It lasts five days on a single charge.
Fears of haggling buyers
The reaction of buyers meanwhile was divided. "Surely it's not a good period for us, because we would like not to have an increase of the price, because if you are focused on the domestic market, the prices are quite high for the domestic market," said Renato Scloza, head of commerce at Rocca -- an Italian company that purchases 45-50 percent of its watches at the Geneva fair.
"I heard they are going to increase five to seven percent, roughly, the average should be that, so we are waiting. This is the first day of the fair so we need to have more official news," he said. But Russian self-described "collector" Dimitri Sabirov was unfazed. "For me, this is not the right place for talking about money, it's just a place about technology, about beauty, about friendship for watches," he sniffed.
Andre Boersch, the owner of SwissTimeCorner, a Luzern watch store, confided he feared falling sales along with haggling customers. "This is a very big problem for us, because Luzern is a touristic area, and all the foreigners they can look all over the world, over Europe, and they will bargain a lot because they will say that in Frankfurt it's cheaper and in Paris it's cheaper than in Luzern, because the Swiss franc is so strong, he said.
"This will be a problem if it stays like this." (Pierre Taillefer and Nina Larson, AFP)