Rolex CEO Discusses Challenges in the Watch Industry

In a rare interview with Swiss newspaper NZZ, Rolex CEO Jean-Frédéric Dufour addressed the hurdles facing the watch industry. Dufour highlighted that the industry is entering a phase where not all producers will be able to thrive. He explained that during good times, there is an excess of watch production, but when the market weakens, dealers respond with discounts, which he believes is fundamentally wrong for the luxury industry.

Dufour pointed out several factors impacting the industry, including the rising price of gold. The cost of a kilogram of gold has significantly increased over the last three decades, leading to more expensive watches. Additionally, higher interest rates and global geopolitical challenges affect consumer spending habits.

However, Dufour noted that established brands like Rolex are less affected by these market changes compared to smaller companies. While smaller brands may have experienced significant sales growth during prosperous times, they may now face a decline. On the other hand, brands like Rolex, Patek Philippe, and Audemars Piguet experience smaller fluctuations, typically within the range of plus or minus 2-3%, and are generally better equipped to handle these challenges than their smaller counterparts.