Gen Z’s fascination for luxury watches was one of the most surprising consumer trends in recent years. But a steep price hike on Switzerland could threaten its market: American youth.
The generation Z – The younger millennials alongside – has embraced luxury watches as a symbols of status, publishing them on Tiktok and Instagram and helping to reshape an industry long dominated by older collectors. A recent BCG survey revealed that 54% of generation Z respondents have increased their expenses in luxury watches since 2021, and Sotheby’s said that almost a third of its watch sales in 2023 went to buyers 30 and less.
But a new price of 39% American on Switzerland could make it more expensive and potentially less feasible for new buyers. The duty, imposed during the last price cycle of President Donald Trump, arrives on the most important market in the world for exports of Swiss surveillance. From January to June, the United States has exceeded Japan and China as the main destination, with $ 3.17 billion (2.56 billion Swiss francs) which divide, according to the Federation of the Swiss surveillance industry.
“Companies cannot realistically absorb the rate, which means that retail prices in the United States will increase sharply,” said Marcus Altenburg, director of the Swiss law firm Goldblum & Partners, said Fortune.
For American buyers, especially the youngest, mathematics are simple: prices are increasing, Anish Bhatt, a millennial “Watchfluercer” with 1.6 million followers on Instagram Fortune. While the 39% levy applies to the cost of an importer, and not to the complete retail trade, industry analysts predict a 12% to 14% increase in store prices if brands reduce the cost for consumers.
“For many American collectors, the 39% price instantly transformed the new Swiss brands outputs into a luxury that can justify,” Joshua Ganjei, CEO of European Watch Company, told Boston, said Fortune. “The opportunity market is now the best option for value and immediate availability – no headache and no sticker shock.”
This passage on occasion is already underway, because availability on the primary market is so limited, said Bhatt.
However, a 2024 report by Watchfinder & Co. found that 41% of generation Z at the age of 16 to 26 came in possession of a luxury watch the previous year – and people in this age group that are ready to buy a luxury watch declared that $ 10,870 would be the starting point for their next purchase. The same report revealed that Gen Z Watch enthusiasts have acquired an average of 2.4 first-hand watches and 1.43 used in 2023, with more than half of purchase for themselves.
Altenburg is expecting buyers of the Z generation and millennium, who tend to be more sensitive to prices than older collectors, gravitate to domestic pre-edifice and gray merchant sellers to bypass prices. Ganjei said his business had “seen a spectacular increase in the volume of purchase in recent months when American buyers are turning away from international sellers”.
On the other hand, Watchfluercer Bhatt said that young consumers always want the “social currency” that comes with Rolex, Patek Philippe or Audema Piguet, even if they pay more to obtain it.
“They also understand the status it gives them,” said Bhatt. The social stamp of a Swiss manufacturing watch takes place daily on social media platforms like Tiktok, Instagram and influencer channels, increasing ambitious demand, he said.
Bhatt does not expect the demand for the most coveted marks to disappear, but says that Swiss names halfway without the prestige of high-level brand could see slow sales. The additional cost can also push Americans to buy while traveling in Europe – where they can sometimes recover the value added tax (VAT) – and bring back parts themselves, potentially avoiding prices, said Bhatt.
“It could be that the allocation of parts is moved to other territories over time,” he added, “because they see an increase in demand in Europe or the Middle East and decrease a little in the United States”
For the Swiss industry, the challenges go beyond the prices of the stickers. Altenburg has warned that the weakness of the United States could put pressure on employment and supply chains in watchmaking regions, while forcing brands to rethink distribution, pricing and even corporate structures to pour the impact of the price.
Bhatt thinks that marketing to younger generations will also be more important in a cooling market.
“When the market is high, they only rely on the brand’s value and the name of the brand,” he said. “When the market is low, they need people to understand the rarity and complexity and the difficulty in producing these rare watches.”
All said, the price will probably not kill Gen Z fascination for luxury watches, but it could redraw the roadmap for how and where they buy them.
It is unlikely that publications on the social networks of Daytonas and Vintage Nautilus disappear. What can change is that, for many young Americans, the product can be more and more used, and perhaps stamped by a shop in Paris or Milan.
