Key points
- Johann Rupert calls for reduced watch production amid falling demand.
- Swiss watch exports fell after three years of record growth.
- Richemont is facing subdued sales in key markets such as China and Hong Kong.
Richemont chairman and founder Johann Rupert, Africa’s richest man, has called on luxury watchmakers to cut production in response to slowing demand for high-end timepieces.
Speaking at Richemont’s annual general meeting, Rupert noted that global demand for luxury watches had “beaten the boom”, citing weaker sales in key markets such as mainland China and Hong Kong.
He emphasized that the industry’s focus should shift from chasing volume to adapting to evolving market conditions.
The Swiss luxury conglomerate, which owns iconic brands such as Cartier, Vacheron Constantin, IWC and Jaeger-LeCoultre, saw its watch exports fall after three consecutive years of record growth.
Contributing factors include the drain on savings built up during the pandemic, high inflation and a strong Swiss franc, all of which have dampened consumer spending and squeezed profits for luxury watchmakers.
Rupert praised private competitors such as Rolex, Patek Philippe and Audemars Piguet for cutting production during these challenging times.
Market challenges and strategic adjustments
Rupert pointed out that Richemont faces unique challenges as a publicly traded company that must balance market demands with shareholder expectations.
Unlike private Swiss competitors who can weather market fluctuations without the pressure of shareholder control, Richemont must remain nimble and responsive to changing conditions.
To cushion the blow from reduced demand, some Swiss watchmakers and parts makers have turned to government programs that allow them to lay off workers and temporarily scale back production without resorting to layoffs.
Richemont’s call to cut production comes as the wider industry grapples with shrinking Swiss watch exports, which have fallen after a long period of growth.
As the market cools, Rupert urges luxury watchmakers to adopt a more cautious strategy to avoid oversupply and preserve the exclusivity and value of their brands.
