4/13/2006

High Times for Luxury Watch Makers

Luxury watch makers are starting to see a boom in the industry. Watch exports from Switzerland rose 11% last year, while some individual companies saw increases of 50% or more. The reason that the article states is the cause of the boom is the increase in personal wealth. Last year, the United States had 10% more millionaires in 2005 compared to 2004. Asia also reported an 8% increase in millionaires as well. Watch makers say that these people view watches similar to wine. They like to collect them, and enjoy different style watches from all over the world. What does this mean for the industry? According to the article we will see more mergers and acquisitions, along with a larger selection of watches and higher prices.

3 comments:

noah said...

I read an article the other day that said the demand for watches was going down among young people because most teenagers and young adults have cell phones and/or pdas that tell time. At first I thought these two articles contradicted each other, but it makes sense that the demand for luxury watches would go up as incomes go up. The older generation generally makes more money and expensive watches are a status symbol to them.

Dr. Tufte said...

There's an interesting tidbit here: the elasticity in question is with respect to wealth not income. We don't usually hear about the elasticity of demand with respect to wealth, but it apparently is positive for some goods.

Colin said...

I love my brand new watch which I bought from Fossil at discounted price...