The slowdown first began with China?s anti-corruption drive and its crackdown on luxury gift giving, coupled with the country?s economic slide. Indeed, exports to Hong Kong alone, a major hub for Swiss watches, dropped 22.9%, according to the Federation of Swiss Watches. The soaring Swiss franc, drop in oil prices, along with global political and economic volatility have all played a hand, hitting sales in the top watch-buying markets of Asia, Russia, and the Middle East.

At the same time, smart watches, once regarded by Switzerland as little more than a sideshow, have become a serious factor ? particularly for those looking to spend under $1,500. According to the Deloitte study, a year ago, just 11% of watch executives viewed smart watches as a competitive threat, this year, 25% do. Among the many issues rattling the industry, however there?s another, less openly talked about reason for the downturn: the tremendous glut of inventory. The robust sales of recent years created a hyped-up market, spurring manufacturers to increase production.
Now the flood of timepieces largely intended for Asia and Europe aren?t moving; rather they?re turning up on the ?gray market,? where new models, unlike those sold at authorized retailers, can be had at steep (15% to 60%)discounts.
That is why elite brands and models, usually found in boutiques lining Rodeo Drive or the Bahnhofstrasse in Zurich, are now sold on eBay, Amazon, and a plethora of dedicated watch sites ? and even at Cos...