This week, Swiss watchmakers are gathering in Geneva for an industry event to discuss the impact of sanctions on wealthy Russians as a result of the conflict in Ukraine. While Russia may not have been a significant market for Swiss watch exports last year, managing business and client relations during this sensitive time remains a top priority for industry executives, as revealed in conversations with Reuters at the Watches & Wonders event.
The sanctions imposed on Russia, along with the ban on luxury goods exports, have compelled watch brands to halt shipments to the country and close their directly operated stores. The situation has raised concerns among other brands, such as Richemont and Ulysse Nardin, especially after reports emerged that Russian authorities seized millions of dollars’ worth of watches at Audemars Piguet’s Russian subsidiary. Ulysse Nardin’s Patrick Pruniaux acknowledged the brand’s reduced dependence on the Russian market but emphasized that they still have approximately 20 sales outlets in the country.
While Russians only account for 2-3% of global luxury spending, their loyalty and strong personal relationships with certain luxury brands make them valuable customers. Maintaining these relationships during this challenging period is crucial, as noted by Claudia D’Arpizio, senior partner and head of fashion and luxury at consultancy Bain.
Unfortunately, Russian retailers were unable to attend the trade show due to the sanctions, creating further complications for the industry. Thierry Stern, CEO of Patek Philippe, expressed concern over the impact on their collaboration with Russian luxury retailer Mercury Group. However, he assured that the sanctions will not affect the brand’s access to diamonds. Richemont, on the other hand, confirmed that they have halted purchasing Russian diamonds but are confident in finding alternative sources.
Expansion plans in Russia have also been affected for some brands. Oris, an independently owned brand, has put its partnership plans on hold to prioritize the well-being of those affected by the sanctions. Edouard Meylan of H.Moser shared that they received demands from Russians just before the sanctions were imposed, wanting to spend their money on watches before it could potentially be seized. However, the brand declined these requests to ensure compliance with regulations.
Interestingly, several executives noted a surge in demand from wealthy Russians in Dubai and Turkey, as they seek financial havens in light of the sanctions. This highlights the resilience and adaptability of the luxury watch industry as brands explore new markets and opportunities amidst challenging circumstances.
In conclusion, Swiss watchmakers are facing the repercussions of the Russian crisis and the accompanying sanctions. Despite the Russian market not being their largest, managing business relationships and navigating this sensitive period are of utmost importance. The industry is responding to the challenges with resilience and adaptability by exploring alternative markets and ensuring compliance with regulations.
Useful links:
1. Reuter: Swiss watch industry grapples with Russian sanctions
2. New York Times: Swiss Watchmakers Have a Russia Problem
