Luxury watch enthusiasts are hopeful that two years of plummeting prices and weak demand are nearing an end.
Hard evidence of a backlash is scant. The Bloomberg Subdial Watch Index, which closely monitors used prices for 50 of the most popular watch models, is up about 1 percent from its multi-year low in early October. Several watch makers and retailers, including Japan’s Seiko Group and Swiss Watch, reported increased sales in the latest quarter. However, leading companies such as LVMH, Richemont’s watch division and Swatch Group have all reported declining sales in their recent financial reports.
For some beleaguered collectors, the news is seen as a victory. The luxury watch category has experienced a typical boom-and-bust experience since the pandemic, with new entrants flooding the market with a shot at the Patek Philippe Nautilus 5711/1As and the Rolex Daytona. But as the resale bubble burst in 2022 and Swiss watchmakers continued to flood the market, demand dried up as China’s economy slowed.
Although the numerical evidence of a recovery is still hazy, some observers believe that consumers fed up with soaring prices for handbags, designer logos and other “soft” luxury goods will show renewed interest in watches. Some people become disillusioned with high-tech products and turn to traditional watches. In August, watch analyst Oliver Muller predicted that Rolex would soon overtake Apple in sales and become the world’s largest watchmaker.
“There’s something about watches that feels more permanent than other luxury goods,” said Bryn Wallner, founder of Dimepeace, a media platform focused on women and watches. “Once a week, I get emails from friends saying, ‘Okay, I’m finally ready to buy my first big women’s watch.'”
Watchmakers are also showing more discipline. According to the Swiss Watch Industry Federation, exports in the first nine months of 2024 fell by 2.7% compared to the same period last year.
There’s something about watches that feels more permanent than other luxury items.
Still, it may be too early for the atmosphere Wallner described to lead to a sustained recovery. One of the X factors is whether the collectors who were burned two years ago will come back.
“When you talk to collectors today, it seems like people are much more comfortable hitting the buy button than they were a year ago,” said Tim Strzok, founder and chairman of the board of watch resale platform Chrono24. he said.
Opinions differ here.
“Watches are being sold for longer periods of time and consumers are becoming more patient,” said Charles Tian, founder of Watch Charts. “This is a buyer’s market…so we don’t expect to see broad stabilization within the next three to six months.”
More and more agree that the changes seen during the boom in the tradition-bound watch industry are likely to continue after the collapse.
Many watch makers continue to court underserved customers, especially women, by pushing out luxury watches priced from $10,000 to $100,000 or more.
For example, Grand Seiko, the luxury brand of the Japan-based Seiko Group, plans to expand its product offering in the $10,000 to $15,000 range, said Bryce of Grand Seiko Corporation of America.・President Le Trodec said that they are also planning a smaller model targeting women. . The brand continues its retail expansion in the United States after opening new stores in Atlanta and Honolulu last week.
And even in a technology-driven society, mechanical watches remain attractive.
“As the world becomes more technologically advanced, more connected, and electronic devices become more disposable, there is something inherently appealing about watches as a product category,” Tian said. “High-end and mechanical watches are the opposite. There is craftsmanship, art, engineering, brand tradition and history, and the most durable watches will last more than a lifetime.”
All the while, watches have been a big part of the mainstream conversation about fashion and culture.
“You often see guys like Tyler, the Creator with Louis Vuitton trunks and luxury cars, but he also has an incredible collection of vintage Cartier women’s watches,” Dimepeace’s Wallner said. spoke. “Events like this have opened up a lot of people’s minds about how they wear their watches.”
Watch brands have historically avoided treating their products like fashion. Fashion runs on trend cycles and cues from culture, so it has a much faster life cycle. But these days, the smartest brands are turning to organic media coverage of their watches to inform their product development. As an example, Wallner pointed to Cartier, which relaunched its vintage Baignoire model in 2023 after gaining a new cult following the previous year.
As with any sector, there are front runners that significantly outperform the industry as a whole. The three largest companies in Swiss industry, Rolex, Patek Philippe and Audemars Piguet, are all privately held. But analysts believe it’s their premium status that allows these brands to maintain their growth and value in the used market. For example, the average retail price of 98 different SKUs of Patek Philippe watches is $76,764, according to WatchCharts and Morgan Stanley data.
In the field of luxury watches, “the higher up the pyramid you go, the better it is,” says the watch collector and founder of Massena Labo, a watch brand that frequently collaborates with other brands such as Albischone and H. Moser. said William Massena. & Cie. “These days, it’s easier to sell a $100,000 watch than a $1,000 watch.”
Meanwhile, sub-$1,000 brands are having a mostly difficult time maintaining market share against smartwatches, Massena said. The latest Apple Watch costs about $400 on its own, or about $1,300 for a version with a Hermès-branded titanium case and knit band.
Ultra-expensive watches often feature innovative complications that go beyond timekeeping, such as a time recorder known as a chronograph, multiple time zones, and moon phases. Le Trodec said Grand Seiko will continue exploring the complication segment after successfully launching a chronograph watch called the Tentagraph in 2022.
These days, it’s easier to sell a $100,000 watch than a $1,000 watch.
Vintage models are also a popular category, such as Cartier Baignoir. “People want old models, classic things,” says Massena, and they also want models made of materials such as lapis, onyx and malachite.
Brick-and-mortar retail in the rapidly growing U.S. market also represents a growth opportunity, especially for certified second-hand sellers. “We expect to see significant investment in real estate, which will stimulate demand,” said Rob Corder, editor-in-chief of WatchPro magazine.
Already, he added, retailers such as Swiss Watch and Bucherer, which Rolex acquired last year, are transforming the shopping experience in the United States. Bucherer launched its own certified pre-owned product program in 2019. With great customer care, these retailers foster customer loyalty and “can get people to buy multiple luxury watches in their lifetime,” Corder said.
Finally, insiders agree that the largest white space in the space is women’s watches, a historically underserved segment. In a study released last month by Deloitte and the nonprofit Watch Fam, 85% of female respondents said the watch industry doesn’t offer or market enough products that they actually want to wear.
But the demand is certainly there. At The RealReal, where the majority of customers are women, watch sales increased by 13.5% year-on-year compared to Black Friday and Cyber Monday. Fashion Phil, a resale platform for women, also saw sales of classic watches increase by 60% compared to the previous year.
“There are always people buying watches for the first time, but it’s not part of the story,” Wallner said.
