View single post by bigrustypig
 Posted: Fri May 21st, 2010 11:46 pm
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bigrustypig



Joined: Sat Apr 11th, 2009
Location: Auckland, New Zealand
Posts: 7504
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 The demand curve for watches is inelastic. Meaning, a 15% drop in the Euro won't translate to a 15% increase in watch volumes sold. On the flipside, a 15% strength of the Euro won't translate to a 15% drop in watch volumes sold. The resulting rise/drop in volumes sold therefore will be less than 15%...either way. 

My guess is manufacturers will be on holding pattern for a while and if the Euro remains weak and their input costs rise, there will be a slight uptick in prices. Note that almost all currencies have tumbled too and parities among currencies remain fundamentally untouched. 

For the major luxury brands (PP, AP, VC, L&S) with immense margins, they will hardly make any pricing moves because their material and skilled labor costs are a small part of the total selling price viz the much smaller brands.

Overall around the globe, economies haven't really gotten out of the "hole" in a convincing way and this will keep the smaller brands, and maybe many other brands, wary of instantly increasing prices.

I have an incoming diver in PVD which I bought on-line in Euros a week ago that I think I got at a very good exchange rate. The weaker Euro wasn't compelling enough for me to snap up an extra 2 or 3 same watches.

Just my 2 cents.mini me.gif