SWATCH Group to stop sale of movements and parts by 31 Dec 2015
Published Saturday, June 14, 2014 by Harry SK Tan |
So finally, or so it seems, SWATCH Group has fixed a date at which it will halt supply of movement ebauches and parts to non-Swatch brands. Many Swiss watch brands had been crying foul (as with the recipient of this German letter from Swatch who published the letter in Facebook) and there had been threats of anti-competition legal action and there had been delays for years since Swatch announced this. This profoundly ground shaking step will have both positive and negative impact on the Swiss watch industry. No one can fully predict accurately the extent of the impact and whether it would be as negative as so many have feared or much more positively if the gears of capitalism kicks into play.
For many decades, the growth in number of brands everywhere depended on the supply of ETA ebauches from SWATCH. It may be a reflection of how well the ETA movements have evolved but it could also reflect how poorly the rest of the industry had not made efforts develop their own mechanical movements. The reality is that there are many Swiss movement manufacturers that could easily step into Swatch shoes and help fill the void. The key issues are probably the skills and training needed to retool assembly plants (and service technicians) and the potential issues of supply from smaller manufacturers.
The greatest risk at hand for the Swiss watch industry is the temptation to source movements from non Swiss manufacturers or use non Swiss movements. Regulators of the industry need to be even more vigilant to maintain the branding of "Swiss Made". For the consumers, when buying watches from brands not part of the Swatch stable of brands - they now need to be much more careful to determine where the calibers come from and whether it that caliber has a positive and strong record of performance.
Will this step by Swatch means the death knell of independent watchmakers and small watch brands? Probably there will be some that would not be able to survive the change especially in light of how consumer behaviour has changed over the past 24 months reflecting a slow down in the industry worldwide. Independent watchmakers how had been using different ebauches in light of the notice by Swatch some years ago will be better prepared for the sea change.
How will this Swatch step impact on consumers? Eventually, within the near future, prices of Swiss watches as a whole will invariably rise even further than the annual inflation rate usually implemented by the different brands. For the non Swatch brands, relying on the Swatch ebauches, their cost will invariably go up in finding and using alternatives. Swatch group itself will in time raise the prices of all their ETA movement watches as the group will no longer be able to rely on sales of the movements to raise their annual profit accounts.
But overall, despite the negative impact of higher costs to the consumer, the positive outcome is that the brands have to evolve, innovate, compete or die out. This will mean more choices for consumers. Third party movement manufacturers will enjoy quantum growth rates and hopefully more innovation and development will follow.
- The immediate impact for watch buyers today is that they have be very careful with models with ETA movement from Non Swatch brands. Reason being the current industry standard of providing two year or more on warranty would mean the brand will have some difficulty or worse not be able to repair a watch post 31 Dec 2015. Buyers will probably see a higher rate of discounts being given by retailers. Even potentially clearance sales. It is advisable that buyers get some written assurance of continued support during the warranty period that goes beyond 31 Dec 2015. Unfortunately after the warranty period, it could be a challenge to find quality third party watchmakers to service the watches. Not likely to be impossible but much more difficult.