o many potential signposts as to which path to take for Swiss retailers who no longer seem to know which way to turn.

Paradoxically, Switzerland is one of the least wellknown and most opaque watch markets since, for obvious reasons, it is not included in the Swiss horology federation’s export statistics. Moreover, as Thierry Huron underlines, “in our country there’s a kind of traditional culture of keeping figures secret. Not to mention the very strong pressure about confidentiality that the brands exercise on the retailers.” This former TAG Heuer marketing director who honed his skills at statistics agency Nielsen is now setting out to reveal all about the Swiss watchmaking market.

Heading up a new consulting structure called The Mercury Project, Thierry Huron intends to do this in two stages. The first stage had him travelling through Switzerland with the help of two assistants to gather as much information as possible about the 978 watch retail outlets that he documented, representing a total of 396 brands. Based on this initial “big picture” of watch retailing he will complete the second stage: a periodic survey of the Swiss market based on a representative panel of retailers.

Switzerland stands on a par with the major European countries, such as the UK, Italy, France and Germany.

The size of France

Several lessons can already be learned from the first report published by Thierry Huron. From his findings, he concludes that with its strong exposure to tourism “the national market exceeds the one-billion-franc mark and ranks among the top five markets in the world for Swiss watches”. In other words, Switzerland stands on a par with the major European countries, such as the UK, Italy, France and Germany.

“At the last press conference on the results of the Swatch Group, they provided information about their share of the Swiss market: it represented ten per cent of the group’s turnover in 2015,” underscores Thierry Huron. “It attained 14.6% in 2010, and dropped 23% between 2015 and 2016. You have to take into account though that these figures include deliveries of components to third parties, so they can’t be considered as a part of sell-out in absolute terms.”

Tissot rules at home

Virtually half the retail outlets documented in The Mercury Project study sell brands at a median price of up to CHF 800, the remainder being split equally between retailers operating below and above the CHF 5,000 bar. The strength of Tissot in Switzerland – overall the most widely distributed brand in the country – is worth noting: present in 42 per cent of the stores documented, which puts it ahead of Certina and Fossil, it has models in every category of sales outlet.

If we look more closely at these categories, Fossil is ahead of Tissot and Esprit as the most widely distributed brand in the entry-level retail outlets. Tissot outstrips Certina and Rado in the mid-range, the particular preserve of the Swatch Group (editor’s note: see our previous issue on the middle class). As for the top of the range, absolute parity reigns between Breitling, Chopard, Longines and – once again – Tissot, all of which are distributed in a quarter of the most prestigious retail outlets in Switzerland. Note that 134 brands are sold exclusively in one store! Thierry Huron explains: “Many retailers have lost their flagship watches and are launching their own brands as private labels; moreover, certain brands have selected distribution, limited to one single store.”

Zurich tops the list

The consultant has developed a statistical tool called Brand Density Score (BDS), which multiplies the number of watch stores present in a given locality by the average number of brands represented in each. The result is the density of watch brands present in the 259 Swiss towns covered by the study. Zurich comes out top in the rankings, with 89 sales outlets and an average 9.2 brands per outlet, resulting in a total BDS of 819. Geneva comes second: although it has the largest number of sales outlets in Switzerland (no fewer than 97, more than half in the premium segment!), the high proportion of monobrand boutiques detracts from the average assortment per store and, consequently, the end score of Calvin’s city. Lucerne, Basel and Interlaken are the remaining three in the top five Swiss cities in terms of brand density.

Thierry Huron used the same index to determine which chain of outlets had the broadest array of watches. It came as no surprise that with 64 boutiques and a total BDS of 1,264, department store Manor came out at the top of this class for all categories, ahead of two other popular chains: Christ and Coop City. In the premium segment (over CHF 5,000), Bucherer leads the dance with 16 sales outlets and a BDS of 234, ahead of Gübelin, Kirchhofer, Kurz and Les Ambassadeurs. The independent retail outlet is still the most common model in Switzerland: there are 582 of this type of store, compared with 287 chain-owned outlets and 109 monobrand boutiques.

Retail malaise

Independent retailers are nevertheless facing increasingly tough competition not only from the chains and private-label boutiques, but also from online sales. How can they maintain their market share? By offering supplementary services, a more personalised relationship with their customers and niche products, says the study.

“Many watch retailers are suffering today,” Thierry Huron feels. “To remedy that, they’re in search of new investors and are developing their online business and their social media presence. The number of ads there have soared. And that’s only the tip of the iceberg: any number of smaller retailers are shutting up shop or are opting to sell only online, or to sell jewellery.

It’s true that in that market, there are fewer brands, less pressure and consequently opportunities for higher mark-ups. And it’s easy to produce private-label jewellery. The retailers who are keeping their heads above water at the moment owe it above all to jewellery, not watches. In fact, only nine per cent of the stores sell watches only. Given the current challenges facing them, the watch retail trade is having to re-invent itself!”

Watch this space

One of the motives behind the Mercury Project’s designs for a periodic survey is to help ease difficult decision-making in a landscape which is being reconfigured. “My objective is to do in Switzerland the work that the LGI Network has been doing in the United States for a number of years now,” explains Thierry Huron. “That is, to put together a representative panel of retailers, ideally one-third of the documented stores, to provide information about the watch trade in Switzerland and to sell the report to the different industry players who have an interest in this strategic market. Similar surveys exist in France and the UK, but so far not in Switzerland.”

So what motivation might retailers have to take part? “Four years ago, I would have replied ‘none’! Because their sales were experiencing two-digit growth. Today, it’s in their best interest, because that way they benefit from exclusive information about their competitors, and first and foremost they’ll be able to assess their own performance compared to stores with a similar profile.”