The Swiss watch industry is reportedly dealing with competition from smartwatches by raising prices.
Morgan Stanley did not immediately reply to PYMNTS’ request for comment.
By raising prices, the industry has offset the impact of a decline in the volume of watches exported, according to the Bloomberg report.
At the same time, the smartwatch industry has seen its first decline since the Apple Watch was launched in 2015, with the volume of smartwatches sold dipping 17% year over year in the fourth quarter of 2022, the report said.
In the coming years, Morgan Stanley expects the Swiss watch industry to grow at the same pace as the personal luxury goods industry — at a compound annual growth rate (CAGR) of about 7%, according to the report.
“Overall, going forward we think the incremental negative impact of smartwatches on the Swiss watches industry will now be relatively immaterial, with the exception of some brands such as Tissot, Rado,” Morgan Stanley analysts said, per the report.
The rise came amid strong demand from luxury shoppers and was made to protect the watchmaker’s margins at a time of currency fluctuations and a strong U.S. dollar, Bloomberg reported Jan. 3.
Luxury watch brands are also working to expand the demand from younger consumers by using digital tools like Snapchat and bitcoin.
Watchmakers have used Snapchat to let prospective customers virtually try on luxury brand watches using their smartphones or tablets, and have made sales in bitcoins, Fashion Network reported April 3.
“It is very important that once a year we showcase that wearing a watch is trendy, and even something for the youngest generation which is not used to wearing watches,” Rolex CEO Jean-Frederic Dufour said at the time of the Watches and Wonder trade fair in Geneva, according to the report.
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