Sales that have fallen 8 percent over the first two months of this year, on top of a 10 percent fall through 2016, have diverted luxury watch sales from the China market to the US grey market, reports Reuters.

The luxury watch industry, dominated by Swiss brands, is having to increasingly resort to sales through the grey market, where discounts of 40 percent are common,

The strategy is abhorrent to most luxury watch manufacturers as the grey market, which routinely offers discounts as high as 40 percent, erodes the carefully built up aura and perceived value of the product in the consumer’s eyes.

However, Chinese demand for luxury timepieces, which surged from 2009 onwards, has fallen sharply over the last couple of years, due mainly to the crackdown by the China government on luxury gift-giving by civil servants, and terrorist attacks in Europe, which kept luxury-buying Chinese tourists away.

Luxury watch industry production has two-year lead times, and it hasn’t been possible for manufacturers to cut production already in the pipeline instantly in response to the sharp fall in demand.

Hence the move to the grey market by many well-known luxury watch brands, though some keep tight control of distribution and have limited access to the grey market for their products.

https://www.gemkonnect.com/news/luxury-watches-route-through-us-grey-market-chinese-demand-fades