If 2016 will go down as annus horribilis for the global watch and jewellery industry (W&J), experts predicted some signs of improvements for 2017. So, how has the luxury W&J sector performed so far and what is the role of A number of countries offer VAT/GST refunds to international... More (TFS) in driving future sales?
- Eurozone W&J TFS sales recovers and posts +7.5% increase compared with 2016
- Chinese consumers’ renewed confidence benefits the Asian market, posting a +7.4% TFS sales progression in August
- Promising future key drivers include emerging Asian nationalities and focusing on brand heritage
After ten years of continuous growth, in 2016 a succession of global setbacks impacted sales within the W&J industry. European terrorist attacks and stricter customs regulations impacted tourists’ desire to travel, while general slowdown of the global economy affected household revenues. According to Bain, watch sales decreased by -8% while jewellery sales posted an uncertain +2% increase.
If the W&J industry is “an emotional business”, strongly driven by consumer confidence, recent, more positive macro-economic factors in Europe and Asia should end these dark times for the W&J industry.
Eurozone: holding the fort
Home of Swiss watchmaking excellency and to the industry’s most exclusive brands, in 2017, the Eurozone remains Globe Shoppers’ favourite destination to shop for watches and jewellery. The region attracts 69.3% of global W&J TFS sales, followed by 24.5% in Asia.
The number of W&J TFS transactions increased across key nationalities and segments. For items costing between 2,000 EUR and 5,000 EUR, Chinese consumers’ TFS sales transactions increased by +24% compared to the previous year and by +39% for Russian travellers. For items costing above 20,000 EUR, this positive trend is even sharper as Chinese consumers’ TFS sales increases by +41%, while Russians post a whopping +63% increase.
Asia: China and Hong Kong in the limelight
Asian W&J sales are strongly influenced by Hong Kong’s trend. For 2016, the Federation of the Swiss Watch Industry reported a -11.4% decrease of Swiss watch sales. The same year, China’s tougher anticorruption laws strongly impacted local W&J TFS sales, with a record -45% difference in sales amount compared with the previous year.
In 2017 however, Chinese consumers’ renewed confidence has had a positive effect on their willingness to spend on luxury goods. Since February’s Chinese New Year celebrations, the boost of their W&J TFS spend carried on throughout the year, showing a +7.4% TFS sales progression in August.
Harnessing future growth
Luxury products purchased in origin market will always offer a “higher perceived” value due to a superior shopping experience and confidence in their authenticity. In the Eurozone, to transform these positive numbers into a lasting trend, European W&J houses should capitalise on promoting their brand’s heritage and benefit from favourable currency exchange rates.
Future key drivers also include American Globe Shoppers, who benefit from a strong dollar to increase their Tax Free spend within the W&J segment. The same goes for Russian consumers whose willingness to spend on luxury goods famously parallels oil price increase. In South East Asia, new nationalities have started to emerge. Indonesians, Thais and Malaysians all show potential for stronger interest in purchasing W&J goods.