Post-Brexit risk, Swiss watchmakers stock up on goods

Customers look at watches on display at the Baselworld Watch Fair in Basel, Switzerland on March 21. Photo: THX/TTXVN

Increasing stock levels at UK retailers ahead of Brexit is one way Swiss luxury watchmakers and other businesses are ensuring their operations are not affected under any Brexit scenario.

Speaking at the Baselworld watch fair, which ends this week, Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said companies were looking to deal with "practical problems" that could arise after Britain leaves the EU, including new customs procedures or a rush of imports.

Rolf Studer, CEO of luxury watchmaker Oris, said the company had increased its stock as a precaution because "Nobody knows what will really happen."

Oris opened a store in London's Mayfair area last year.

Meanwhile, the CEO of iconic watchmaker Hublot, Ricardo Guadalupe, confirmed that the company has increased its inventory in the UK, saying that the UK is the "engine" driving the watch business.

According to statistics from the Federation of the Swiss Watch Industry, Swiss watch exports to the UK increased by 58% in February, compared with a 24% increase the previous month.

Switzerland, a non-EU country, and Britain have signed an agreement to maintain future trade relations, including provisions to ensure trade between the two countries continues if Britain leaves the EU "without a deal."

According to Mr Pasche, the bilateral agreement should ensure that direct exports of Swiss watches to the UK by air are not subject to new restrictions, but any goods transported by road will have to pass through EU countries and could therefore be held up at the UK border.

Mr Pasche notes that there is another reason Swiss watchmakers want to ensure ample stock at London retailers: a falling pound, which could trigger a post-Brexit buying frenzy.

At that time, VIP customers, especially in London, sought to benefit from the falling pound.

A similar case happened in 2016 after the British people voted on Brexit, causing the pound to lose value, causing tourists, especially Asian tourists, to "spend money" on luxury watches, helping to increase sales in the UK.

In addition, the decline in watch sales in France due to the impact of the "Yellow Vest" protest movement that broke out in mid-November 2018 is also the reason why stockpiling goods in the UK has become important.

The Hublot store at Place Vendome in central Paris remains closed every Saturday as protesters continue to take to the streets on weekends to protest against the government's fuel tax hike.

Earlier this month, 91 stores, including Bulgari's outlet on the Champs-Elysees, were damaged, burned or looted.

There are concerns that the "Yellow Vest" protests will reduce tourism to France, while luxury watch sales are heavily dependent on tourism.

Most analysts predict that French watch imports will fall sharply this year./.