Sunday, June 8, 2008

Major Price Increases from the Swiss

Most of the large Swiss Watch manufacturers have now announced really major price increases to be implemented over the summer, most in the month of June. Price increases are ranging from 13% up to 27% and cover virtually all models in the brand's assortments.

There are two major reasons for the price increases and then there is also the mindset of the Swiss who own the factories.

First are the actual cost increases in the manufacturing process. Raw materials, labor and production costs have all risen significantly. And the cost of shipping, as you all probably know, has skyrocketed.

Second, and much more important, is the exchange rate between the US Dollar and the Swiss Franc. The dollar is at an all time low. Because most (but not all) Swiss Watchmakers have held off on price increases, they are now caught in a terrible bind. At today's exchange rate they are simply losing money. Watches sold in the United States at the current exchange rates are below the actual costs, after the exchange rates are considered.

Finally, the price increases are often rather strange because of the mentality of the Swiss owners. They are extremely concerned about the possibility of their customers transshipping watches from country to country. So they are attempting to balance all the exchange rates around the world. This leads to some really bizarre retails like $406.00 or $842.00 rather than the conventional price points like $399.00 or $799.00.

When all factors are considered, I believe this will cause huge sales decreases in Swiss Watches. When I see a really popular watch like the Swiss Made Luminox Ultimate Navy Seals Chronograph (model 8351) going from an affordable $650.00 up to $825.00, a 27% increase, I'm not certain the consumer won't turn to much more affordable products from the far east and Japan.

The Japanese and American are holding prices or limiting them to very small increases of 2% to 5%. The gap in pricing will become huge.

The bottom line is that if you're considering a Swiss Watch, purchase it quickly before the prices go up. You could save hundreds or even thousands of dollars.