COVID-19 IMPACT SURVEY MAY 2020
Boxed in with wealth erosion and discretionary income reduction among the rich and the middle class, the watches & clocks market is expected to decline by -7.8% in the year 2020 before recovering to reach a revised market size of US$73.3 billion by the year 2027. A few weeks into the pandemic, billionaires all over the world have been battered, suffering significant erosion in their wealth, as stock markets crash amid the disruption, fear and losses created by the COVID-19 pandemic. The pandemic has vaporized trillions of dollars from global stocks and wiped out billions of dollars of wealth from top billionaires including LVMH Founder Bernard Arnault, Inditex Chairman Amancio Ortega, Berkshire Hathaway Chairman Warren Buffett and Microsoft Founder Bill Gates, among others. In the U. S. , number of households with US$25+ million as annual income has fallen by 20,000 in the first 3 months of 2020. The reduction in the clout of High-Net-Worth Individuals (HNWIs) brings grim news for the luxury goods industry. While big fashion events across Paris, Milan, New York and London have been cancelled or postponed, sales across retailers have sharply declined amidst travel restrictions. The expected decline in Chinese GDP comes as an additional blow as Chinese consumers account for over 45% percent of the global spends on luxury goods, translating into an 80% growth from this country alone. Against this backdrop, sales of luxury watchesare expected to decline in the short-term.
Financial loses have affected all levels of the rich from mass affluent, millionaires to billionaires. In addition to the premium watches and clocks segment, the mass-market segment is also feeling the heat of the pandemic as consumer confidence tanks. Personal financial outlook, community, economy, job security confidence, purchasing & investment confidence are all tumbling as the human & economic cost of the global pandemic rises. Global GDP is expected to dip into the red at -3% with the US economy shrinking by a shocking -5. 9%. Unemployment rates have hit never-before highs with the US topping the charts with 14. 7% unemployed as a % of total labor force. The number of unemployed persons in the country was pegged at 24. 5 million in April 2020. Social outlook against this background remains grim with households expected witness erosion in wealth. In an unprecedented turn of events, the world has been cornered with limited available options. Governments worldwide have been forced to choke off the economy via harsh social distancing measures. Players in the market will need to brace for impact as a dark and stormy economic climate creeps over the world.
But there will always be a before and after Corona virus outlook and in the post COVID-19period, growth will recover supported by the indispensable human need to be synced with time, the timeless appeal of luxury watches and rising popularity of smart watches in today's digital, connected, and mobile world. Other important factors which will remain evergreen as powerful growth drivers include ubiquity of watches as an acceptable fashion accessory signaling style and elegance; launch of innovative watch designs highlighting craftsmanship and ingenious mechanical clockwork technology; availability of competitively priced products; preference for wall clocks as the most inexpensive way to enhance interior décor; growing popularity of vintage watches especially among watch connoisseurs; and increased preference for clocks as business promotional gifts as the most effective way to increase brand visibility and recall. Swiss-made luxury watches will continue to dominate the global watch market during this period also supported by superior technology, quality, design, tradition and craftsmanship.