New Delhi: For some years now, international watch companies have courted India as a focus market, even though volumes were much lower than in many parts of the world. Today, that need has become far more pronounced because the luxury business in China has slumped for the past few quarters and wiped out as much as $200 billion.
Raynald Aeschlimann, president and chief executive officer of watch company Omega, owned by the Swatch Group AG, spoke exclusively to Mint virtually about India as a market and the promise it holds. For the entire group, South Korea, India and the United Arab Emirates also considerably outperformed the previous year.
The shift away from China—the largest consumer of luxury in the world—has impacted Swatch, Omega's parent, which reported lower half-yearly sales from a year ago. The group hopes to target newer markets now.
Last week, it reported net sales of CHF 3.44 billion ($3.88 billion) for the first half of 2024, a 14.3% decrease from the previous year. Its operating profit dropped to CHF 204 million from CHF 686 million, with a reduced operating margin of 5.9% compared with last year's 17.1%.
The decline, the company said, was mainly due to reduced demand for luxury goods in China, including Hong Kong and Macau, although the Swatch brand increased its sales in China by 10%. Sales outside China matched 2023 levels at constant rates.
From January to May this year, India's imports of Swiss watches stood at CHF 94.2 million, or $105 million, growing 20% over 2023 and 43% from CHF 66 million ($74 million) in 2022, per data from the Federation of the Swiss Watch Industry FH. However, this could also be due to the devaluation of other currencies including the rupee against the Swiss franc.
Edited excerpts:
We all always thought selling luxury was easy as it was just about having good products which people would just come to buy. But we often tend to forget that consumers are just buying products and it shouldn't be structural but emotion-invoking. Emotions do need to be evoked when selling luxury for people to keep coming back.
In the case of us, a watch brand, it not only has to be recognisable and strong but also desirable and should speak to a person. When the economy is going well, companies must double down on their efforts to become more seen, coherent and consistent. In the countries where luxury is very successful right now, it is not because of the economy doing well, but also that people there save a bit more.
We know footfalls in malls are falling but when we see airline data, we see people want to discover new places and see their family. So brand messaging needs to be consistent, so when there is money, you know they will come to you.
I generally don't like the term "new market". I was in charge of the Swatch Group, of which India was a part, and I had this role for about 15 years and I used to visit even then. We already knew it was important even then.
Our business here is becoming bigger. In fact, we have been pioneers in the watch market here and we believe and know a lot of efforts are being put into keeping our brand name alive here. We also understand the taste and sensibilities of the people here.
A lot of people in India, just like China a few years ago, or maybe even more, are saving up to get their first luxury watch - we see that in the big cities where we are well represented.
More and more of the country's middle class is entering the higher-end shopping market and are also flirting with the idea of luxury goods. It's one of the top 10 priority countries around the world. The Indian population is also spread all around the world. So, of course, we believe in the country.
We started here over 20 years ago and will continue our efforts to be seen more over here with our partners. India's in the top 10 countries in the world and there are big spenders here. We have known very well for the last 15 years that the power of what we do in India is very important not just because of the demographics but because of where it stands in the world.
From Dubai to London, we've seen power spends coming from Indians. We have opened quite a lot of new stores here with our partners.
I remember being in Mumbai some years ago and asking Abhishek Bachchan (who was our brand ambassador till 2018), how it felt to see his father on a billboard. He said it inspired many people. But today, a billboard is not the only way to talk to people. The new generation is always connected to social media.
Yes, China and India are different economically but can be spoken to on social media platforms too. We believe, like for China a few years ago, our messaging is also moving to the relevant social media channels and we are very lucky to be able to talk to the younger generation there. India is very well-linked to these platforms because of the high smartphone penetration and data usage here.
What competition does the traditional Swiss luxury watch industry face from smartwatches?
While smartwatches have indeed made a significant impact in the watch market, we maintain our position as a traditional, high-value legacy brand. The comparison between smartwatches and luxury Swiss watches is not entirely appropriate due to the distinct differences in brand DNAs, pricing, and consumer expectations.
We start at a much higher price point, reflecting the craftsmanship and heritage that distinguishes us from smartwatches.
