Middle East watch sales surge (page 1 of 4)

Slumping sales, plummeting profits, massive cutbacks. For the last two years, the news from the global luxury goods industry has ranged from terrible to awful. The global economy continues to falter and, as a result, the business of luxury has been pushed to the brink.

The world's leading luxury watch brands - including the likes of Rolex, Cartier and Omega - have been hammered along with the rest of the top end of the market. The United States accounts for over 15 percent of global luxury watch sales, and has been hit hard since the dotcom bubble burst three years ago and the US economy began its slide into recession. Europe, which is the largest market for luxury watches and accounts for nearly a third of global sales, has been in a terrible slump since 2001. The picture is even worse in Japan, which has been struggling with deflation and recession for an entire decade.

These are undeniably hard times for the industry, but the global luxury watch market remains valued at over $3 billion. Even today, with most markets plummeting, the industry continues to invest a fortune in advertising and sales. Nowhere is that more evident than in the Gulf, where the world's leading luxury watch manufacturers are spending heavily to set up new, ultra-luxurious boutiques, improve the efficiency of after-sales services and blanket the region with wall-to-wall advertising.

At first glance, this push is surprising.With continuing political instability and the post-war chaos in Iraq, most businesses are increasingly wary of the Middle East and have scaled back plans for the area. But for the watch industry, the region has never looked more promising.
Luxury watch brands (whose timepieces retail in excess of $2,000) now generate nearly a tenth of their sales in the Middle East.

This means that, on a per capita basis, the Middle East accounts for nearly as many watches as some of the world's largest markets, such as Japan. Moreover, this market appears to be growing steadily. The UAE and Saudi Arabia now consistently rank among the top 15 importers of Swiss watches. Last year, Dubai alone imported roughly 700,000 premium watches - nearly one watch per inhabitant. Watch imports from Switzerland increased 15 percent, while those from Asia increased 26 percent.

Keen to exploit this exceptional market, the world's biggest luxury watch brands have been assembling forces. Though the world of luxury watches is cluttered with over 25 brands, the main battle is among three established players. First is Rolex, which is by far the single largest luxury watch brand in the world - and in the region.

Trying to displace Rolex from its comfortable perch are two of the world's biggest watchmakers. In order to achieve its target, Swatch, which last year sold over 4 billion Swiss francs ($2.9 billion) worth of watches, recently set up a plush office in Dubai's Emirates Towers to serve as its Middle East headquarters. In the same building, 10 floors below Swatch, is the office of Swiss archrival the Richemont Group.

Along with a string of smaller, independent brands is the French luxury goods giant LVMH, which has moved in a major way into the industry in recent years, acquiring a range of independent operating in Europe and the United States.
Local hero. While the world leaders are fighting for market share in the Middle East, the region moves to its own beat - a few brands, like Philippe Charriol, are top players in the Arab world, yet virtually unknown elsewhere.