Watches in South Africa

PROSPECTS

Trading down supports demand for mid mechanical watches

Mid mechanical watches recorded the strongest performance in both current value and retail volume growth terms within the overall category in 2019. With aspirational consumers’ disposable incomes continuing to come under pressure, many were forced to trade down to more affordable options that still offered them some level of prestige compared to basic watches.

Designer watches remain a sign of social status to affluent consumers

Despite some trading down amongst certain consumer groups, demand for luxury goods remains amongst more affluent South Africans, especially for designer watches that offer social status and a high level of prestige to the wearer, especially for men, who are the dominant consumers of luxury watches compared to women. This supported stable retail volume demand for high mechanical watches such as Rolex and Omega.

Specialist retailers offer consumer security and high level of service

Jewellery and watch specialist retailers continued to be the dominant retail distribution channel for watches in South Africa, gaining further value share for its distribution of mid mechanical watches in 2019, due to the latter’s ongoing strong performance. Local consumers continue to appreciate the security and level of service that they receive when they visit a specialist retailer, in addition to being able to handle and try on the products before making such a large investment, especially for mid and high mechanical watches.

COMPETITIVE LANDSCAPE

The Swatch Group retains lead due to wide range of prices and popular appeal

The Swatch Group (South Africa) (Pty) Ltd strengthened its leadership of watches in 2018, due to the player’s strong presence across the category, with brands available in basic, mid and high watches for men and women. The company’s well-known basic quartz analogue watch Swatch continues to appeal to lower- to mid-income consumers and is the leading brand within overall watches, trusted for its good value and quality, while it offers the leading brand Tissot in mid mechanical watches, and the high mechanical watches Omega, Longines and Breguet.

Affluent consumers support sales of Gucci

International Timepiece & Fashion (Pty) Ltd recorded another strong performance within watches in 2019, gaining further value share within high quartz analogue watches due to rising demand for its exclusive brands Girard-Perregaux and Gucci, which it distributes locally on behalf of Kering SA. Despite economic instability in the country, affluent South Africans continue to purchase these brands as they have not been as adversely impacted by the recession.

Multinationals want to retain higher profits by dropping third party distributors

While some smaller local players continue to offer well-known brands for multinationals in the country, many larger players prefer to undertake their own distribution in South Africa with The Swatch Group being a notable example. In addition, small independent watch specialist retailers are being forced to close their stores or are likely to in the near future as the biggest players create their own distribution networks with Richemont creating close to 600 of its own selling networks including online sites, dropping its reliance on third party distributors.

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