Selling Pricey Watches is Getting Harder Thanks to the Strong Dollar
By most counts, retail spending in the Big Apple is humming along quite nicely, with sales increasing 4.6% last year on the back of robust tourism and job growth. That’s not surprising given that the city welcomed 12.3 million international tourists in 2015 (its highest ever), and has gained over half a million jobs since the recession.
However, New York’s luxury watch retailers are struggling to thrive. Although New York has long been one of the top cities for wealthy tourists to purchase a high-end timepiece, its luxury watch dealers are finding it difficult to sell off inventory when the US dollar is stronger than it has ever been in 13 years.
“It’s a bad time to buy watches right now,” said Dimitrie Vicovanu, who runs the Master of Time shop on 47th street in the heart of Manhattan’s diamond district. The strong dollar has made high-end watches, which typically sell well north of $1,000, significantly more expensive for tourists who earn foreign cash.
Vicovanu, a Romanian immigrant who learned watch restoration in Switzerland, said that one noticeable advantage for him has been a rise in customers looking to repair their watches instead of buying new ones— something that has always been his core business.
But retailers who don’t rely on income from watch repairs aren’t so lucky. The strong dollar is making it difficult for the American luxury industry to grow. According to Euromonitor, US spending on jewelry and timepieces has barely recovered from its $15.4 billion high in 2007, reaching $15.9 billion last year. Meanwhile, thanks to their increased buying power relative to the euro, Americans now travel to Italy or France, where they can find cheaper luxury goods than they would find at home.
At the luxury watch stores on Fifth Avenue, salesmen mill about checking their cellphones with little foot traffic to take care of, while watch department stores like Tourneau prominently advertise deals. Just this August, exports of Swiss watches to the US declined by 12.5% year-on-year, according to the Federation of the Swiss Watch Industry. “It’s cheaper to buy [in Canada] than it is to buy here,” said Mak Kar, a tourist from Toronto, as he walked out of the Rolex store on Fifth Avenue empty-handed. In 2012, $100 Canadian dollars used to worth almost $100 US; today, it’s worth only $75.55 US.
But the picture looks far worse in emerging markets, the homes of the tourists who drove the luxury watch industry’s growth in the 2000s. China’s official spending on jewelry and watches, for example, has declined every year since 2012 to about $5 billion in 2015, a more than 6% total fall, according to Euromonitor. Centers of the global luxury trade like New York are affected by such trends because they depend not just on domestic clients, but also foreign ones.
Can the industry recover? In the pages of Geneva-based watch magazine Europa Star, editor Pierre Maillard recently lamented that some brands were keeping prices high despite slacking demand, comparing them to the evil queen in Snow White demanding that her mirror show an “idealistic reflection” rather than the reality.
“In this context, will dropping the price of high-end watches help get the machine back on the road? Time will tell.”
