Since time immemorial, humans’ penchant for owning luxurious items has transcended generations and national boundaries and grown manifold. This never-ending and ever-evolving demand has ensured the luxurious accessories industry continues to expand and flourish worldwide.
Recent reports peg Dubai’s share of the regional luxury retail market at 30 percent and list the city among the new destinations preferred by savvy luxury shoppers. Enthused with supporting government initiatives and pumping of huge capital, Dubai, Abu Dhabi and Sharjah will continue to facilitate the industry expansion plans.
United Arab Emirates — widely known as the land of optimum luxury and prime lavishness, where sky is the limit for any industry — has always remained on the global radar when there are talks about latest trends that could alter the luxury segment meaningfully. Known worldwide for its unrivalled fondness for luxury watches, UAE has managed to glue its place among the elite group of world’s 20 most important markets of watches.
Despite its comparatively smaller population and geographical area, UAE is giving a tough competition to countries like the US, China, Germany, India, Switzerland and France when it comes to overall sales of luxury watches and new product launches.
Sector to ‘watch’ out for
One of the most promising sectors in the UAE, to keep a close track in 2016, will be of high-end luxury watches. The demand for high-end timepieces and wristwatches grew by 9 percent in the last fiscal year. Currently, the UAE and Saudi markets account for about 6 percent of total Swiss watch exports globally.
With its second largest economy in the Gulf Cooperation Council (GCC) and a burgeoning luxury-conscious population having increased purchasing power, the UAE evidently provides a perfect, robust and growth-oriented environment to the luxurious watch industry to flourish.
As per the latest report of Euromonitor
International, the UAE has built a reputation as being one of the world’s top luxury retail destinations, with a particular appetite for Swiss watch making expertise.
Existing customers, as well as a new crop of watch enthusiasts, are continuously driving demand. The federation of the Swiss Watch Industry released export figures, with the UAE listed among the top 10 export markets.
Exports from Switzerland, according to its statistics, grew by an estimated 9 percent in 2015. This growth further cemented the UAE as the biggest importer within the region. In the UAE, high mechanical watches accounted for 61 percent of sales of watches in value terms in 2015.
A considerable share of high mechanical watches originate from Switzerland. However, early 2015 saw the end of the minimum exchange rate between the Swiss Franc and the Euro, which left the industry shocked due to the appreciation of the Swiss Franc, stated the Euromonitor report.
Ascending graph of Swiss watches
According to the Federation of the Swiss Watch Industry, sale of Swiss watches in the UAE continues to show an upward trend with the imports valued at 1,017.6 million Swiss Francs.
Being the world’s top luxury retail destination, Dubai stands at the ninth position in Swiss watches’ import in the world. Brands such as Rolex, Philip Stein, Patek Philippe, Audemars Piguet and Tag Heuer are the undisputed market leaders. Consumers are ready to shell out up to 1 million Swiss Francs to get their hands on special watches.
Gauging the immense market opportunities, Dubai-based Precious Times, the exclusive distributor of Philip Stein products in 41 countries, is looking forward to expanding its operations in the region in 2016. Besides, watch-making giant De Grisogono has opened its first-ever subsidiary in Dubai. De Grisogono won the 2005 Grand Prix de l’Horlogerie de Geneve for the first-ever
mechanical watch with a digitalised display
Smart-watch is here to stay
Smart-watches, considered a potential threat to mechanical watches, have drawn increased attention to the wearables market, with never-before functionalities that read our environment and enhance our senses – transforming an industry that began with only fitness trackers.
In 2014 Rolex grew to account for a 23 percent share of sales of watches, with value growth of 14 percent over the previous year. The company enjoys high brand recognition in the Emirates and invests heavily in advertising and sponsorship. Although Rolex enjoys a select group of customers, the company has been able to secure its leading position.
The UAE market is unique, as there is a customer base for high-end luxury, as well as a market for luxury items at a discounted price, points out Euromonitor International
Watches made in Switzerland are bound to get more costly in the future, as production costs increased due to the strong Swiss Franc. To put things into perspective, with the appreciation of the Swiss Franc, production costs in a foreign market would be 15 percent to 40 percent cheaper.
The larger brands are naturally expected to hold more leverage, as they will be able to bind retailers to making a smaller profit. The bargaining power for independent smaller watch brands, however, will be muted, and they will have to bear the costs.
2016 seems to be an opportune time for the luxury watches industry in the UAE. The increasing appetite for luxurious and high-end items of residents and tourists will continue to fuel the growth engine of the booming industry in the UAE.
Luxury watch retailers, whether small or big, will make considerable footprints and will rise on the basis of how successfsul they are in satiating the consumers’ growing appetite for unique high-end brands at competitive prices.