World's largest watch fair opens as industry rebounds

Skies appear to be clearing after a stormy time for the Swiss watch making industry.

The sector is emerging from its steepest demand slump in over two decades, with customers responding to last year’s recession by cutting back on luxuries.

Retailers responded by running down stock levels, a phenomenon that Baselworld, the world’s biggest watch and jewellery fair, aims to reverse this year.

The eight-day show, which Swiss Federal Councillor Moritz Leuenberger opens on Thursday, is a key sales event, attracting 1,900 watch makers from 45 different countries.

“The 2010 event is sure to reveal a revitalised industry,” said event director, Sylvie Ritter, in a statement.

“Baselworld is fully booked,” she said.

After only 39,000 people attended the event last year, organisers expect around 100,000 visitors this time round, similar to 2008 levels.

Baselworld offers a combination of publicity-generating exhibits and market place booths where dealers from around the globe come to inspect the wares on display and make orders.

In some cases, 80 to 90 percent of a watchmaker’s annual turnover may be done in one week at the fair, said Bernard Keller, a spokesperson for the organisers.

Consumers cannot actually buy any watches at the trade fair.

“It is mainly for dealers with appointments,” said Keller. But “if you are a watch enthusiast, you can come window shopping,” he told Swisster.

Swiss watch manufacturers exported goods worth 13.2 billion francs in 2009, a drop of 22.3 percent on the previous year’s sales, according to figures from the Swiss Watch Makers Federation.

“These are challenging times for the exhibitors,” Keller told Swisster. “We hope Baselworld will herald a turnaround for the industry,” he added.

Jacques Duchêne, president of the exhibitors’ committee, sounded a cautious note on Wednesday.

“We should not be overly confident, because the global economic situation is still highly precarious,” Duchêne said.

“Many small businesses, key for our sector, encountered severe difficulties and numerous highly qualified professionals lost their jobs."

But not everyone had such a tough time last year. During the Winter Olympics in Vancouver last month, Omega President Stephen Urquhart touted his brand’s 10 percent sales growth in 2009.

The brand was a major sponsor of the Olympics, and is also backed in advertisements by Hollywood superstar George Clooney.

Bienne-based Swatch Group, owner of the Omega brand, is one of a number of industry leaders and analysts who are upbeat about the sector’s prospects for 2010.

Swatch has targeted double-digit sales for all its brands for 2010, after the second-best January figures in the history of the group.

Exports across the industry were up 2.7 percent in January to 976 million francs, after falling 7.2 percent in the previous month, according to the FHS.

The trade fairs are less important to commerce than in previous decades, as air travel and technology enables people to do business more flexibly, said Jon Cox, an analyst for Kepler Capital Markets.

But Cox said he is in Basel to gauge the mood of the industry.

“The key thing at Basel is to get a feel of how the US is doing,” he said, noting that retail watch sales across the Atlantic were up 20 percent in January.

Swiss manufacturers suffered a decline of 35.6 percent in North American markets in 2009.

Cox predicts that global exports will be up 10 percent this year, suggesting that the Baselworld organisers’ optimism is not misplaced.

A similar positive mood was also evident at the Salon International de la Haute Horologerie (SIHH), Switzerland’s second largest watch fair, held in Geneva in January, said Cox.

Positive signs, such as growth in Asia, have helped boost the stock prices of Swatch and other luxury goods sellers, including Geneva-based Richemont.

“China and Hong Kong orders account for a third of distribution and that market is up double digits,” said Cox.

Shares in Swatch, listed in Zurich, have risen 22 percent this year to 326.50 francs, outstripping the SMI (Swiss Market Index), which was up only four percent over the same period.

Shares in Richemont, owner of the Cartier and IWC watch brands, also shot up 16 percent this year to 41.27 francs.

The Baselworld fair runs until March 25, with tickets selling for 60 francs online or at the door.