Can Swiss Watches Compete on Value?

With the price of gold soaring, the Swiss franc still trading high and US tariffs looming, luxury watch companies are facing a growing problem: Watch prices keep rising. That consumers have become more price sensitive and value conscious amid a downturn in overall luxury spending and growing competition from rival luxury categories only compounds the issue. Can luxury watches still compete?

“People want to get something for their money,” said Karine Szegedi, a partner at Deloitte and author of its annual Swiss Watch Industry Insights reports. “They don’t only buy a watch because it‘s luxury: it has to be priced at the right level. Pricing has gone up so far, so what‘s the right price now?”

The question is vexing brands, too. “In more than 20 years in this industry, I’ve never experienced something like this,” said Edouard Meylan, chief executive of the independent watchmaker H. Moser & Cie, which has annual revenues of around 100 million Swiss francs, according to estimates by Morgan Stanley. “Setting the right price has become more and more challenging. We believe in pricing that reflects the real value of what we create, not the noise around it.”

If one thing seems certain, it‘s that buyers are buying fewer new watches. According to the Federation of the Swiss Watch Industry (FHS), export volumes continue to tumble, down 5.8 percent year-on-year to the end of March, following a slump of 9.4 percent last year. Over the past decade, total volumes have almost halved, decreasing from 28.1 million units in 2015 to 15.3 million last year.

“Consumers today are demonstrating a more value-conscious approach,” said Yves Bugmann, president of the FHS. “The current environment reflects a more cautious and discerning mindset.”

Since the launch of Apple’s Watch a decade ago, luxury watch brands have aimed to create clean air between them and the smartwatch market. Today, while some direct-to-consumer microbrands sell mechanical watches marketed as accessible luxury for under $1,000, Swiss-made mid-market luxury mechanicals typically now start at around $2,000, with prices rising quickly from there.

Brands are about to find out just how much price elasticity there is in their products. With gold prices hitting $3,500 an ounce in mid-May, a rise of around 40 percent in 12 months, and tariffs of 31 percent on Swiss watch exports to the US set to take effect from July 1, brands have already started pushing prices up.

Independent research has shown that average prices of Swiss watches available online in the US spiked in April. Watches priced over $100,000 were most impacted, rising on average 17.5 percent, according to the Geneva-based agency Digital Luxury Group. The group’s research showed price increases became more marginal the lower the price segment, with watches costing less than $10,000 increasing only 4.2 percent on average. But few watches in this price bracket contain gold.

One watch retailer suggested that this trend was temporary, though, and that price increases would soon level out. “Recent years have seen extraordinary trends of price increases, which has adversely impacted volumes,” said Brian Duffy, chief executive of Watches of Switzerland Group, which operates a network of watch stores across the US and UK and last week reported revenues for its most recent financial year of £1.65 billion, an 8 percent year-on-year increase. “We believe that this period is largely over.”

Even then, brands have been left battling to shore up their value propositions. Many have settled on a path to the low-volume, high-value category, where it‘s thought consumer price sensitivity is lower. According to Bugmann, export figures suggest this might be a smart play.

“Despite prevailing economic headwinds, demand among affluent consumers remains comparatively robust,” he said. “In 2024, the segment of watches with an export price above 3,000 Swiss francs recorded a slight increase of 1.0 percent, further underscoring the sustained strength of this market tier.”

One critic said brands had only themselves to blame for their current predicament. “Brands are caught in an economic trap, exacerbated by their own short-term thinking during the pandemic,” said Chris Hall, author of a weekly watch industry newsletter called The Fourth Wheel. “When demand was running out of control, they hiked prices just because they could. Now, having budgeted for a ‘new normal’ that could never have been sustained, they have been hit by more legitimate reasons to raise prices: the cost of raw materials, currency fluctuations, tariffs and so on. So customers have seen watches that are completely or substantially unchanged rise more than 40 percent in some cases.”

Many brands are resorting to smaller watches or more affordable materials so they can offer watches at prices that appear to offer a stronger value proposition. In April, Rolex introduced a new line called Land-Dweller with a new-generation time-and-date movement and a mix of steel and white gold in its case and bracelet that it calls Rolesor. The two materials are all but indistinguishable, but the 36mm watch retails from $14,450, considerably less than the $40,200 list price of the solid gold version of Rolex’s Day-Date 36.

“Brands are responding to value and affordability issues through product innovation and increasing focus on value through a move to steel from gold, and simpler functionality,” said Duffy.

Also in April, TAG Heuer reintroduced the Formula 1, a collection of colourful 38mm watches based on a design that helped grow the brand in the mid-1980s after Heuer was acquired by the Saudi group Techniques d’Avant Garde and renamed. The contemporary collection starts from $1,800 with a watch with a solar-powered movement and a case made of a bio-polymer the brand is calling TH-Polylight.

“Value doesn’t mean a cheap watch,” said Nicholas Biebuyck, TAG Heuer’s Heritage Director. “The case material in the Formula 1 is a robust material tested in our laboratory, the movement has 10 months of autonomy and long service intervals, and the watch comes with five years of warranty. This is something of great quality.”

Some brands, including TAG Heuer, have been criticised for investing heavily in marketing. Antoine Pin, the company’s chief executive, told The Business of Fashion earlier this year the brand spent almost 20 percent of its revenues on marketing. TAG Heuer is part of LVMH, which is spending a reported $1 billion over 10 years on a Formula 1 sponsorship deal that has made TAG Heuer the sport‘s official timekeeper.

But Biebuyck is unrepentant. “I’ve lost count of the number of disruptors in this industry who sell watches for under $1,000 and don’t advertise or sponsor,” he said. “Either they die a death very quickly, or they end up going down the traditional marketing route and putting stickers on a rally car or something, because you have to elevate the prestige of your brand in the mind of the consumer.”

Some Swiss watch brands are betting big on value. Oris, an independent company that sells 40,000 watches a year with an average retail price of around 2,100 Swiss francs, according to Morgan Stanley estimates, introduced a steel sports watch with a mechanical movement called the Big Crown Pointer Date last month, priced from $2,300.

“We have tried to bring watches that are more at the entry-level of what we do and make sure we have a very attractive and interesting offer there,” said Rolf Studer, the company’s co-chief executive, noting that in some countries the strength of the Swiss franc accounted for as much as two thirds of recent price rises. “It is a problem for our industry that our currency keeps getting stronger, and it‘s a problem for the middle class and entry-level luxury buyer, because an offering that was in reach only a short time ago may have gotten out of reach.”

Duffy recognised the sentiment. “Luxury watches are a low-frequency category and we experienced some purchase deferrals, impacted by high price increases,” he said. “But we have seen a normalisation of consumer behaviour in 2025 and consumer sentiment towards the luxury watch category remains strong.”

Others said they expected volumes to remain low and that this would heat up the battle. “We are past the period of absolute expansion in luxury,” said Biebuyck. “Gone are the days when people wanted 50, 100 watches; now they want 10 or 20 great watches. And that means brands are now fighting for dollars and having to take clients from competitors. It‘s tooth and nail out there.”

While global economic and political uncertainty persists, few expected the value challenge would ease off. “In the current economic context, marked by fluctuating exchange rates, increased tariffs and rising raw material costs, it is likely that some watch companies will need to further adjust their pricing strategies in order to protect margins,” said Bugmann.