Secondary watch market leads sector’s strong recovery
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When the onset of the pandemic hit Swiss watch exports in 2020, manufacturers and retailers were reluctant to express firm optimism about the future of the industry. But, since then, a combination of growth and hype has generated a horological frenzy, resulting in a new wave of watch wearing and purchasing habits.
In January of this year, the Federation of the Swiss Watch Industry (FH) reported an unexpectedly swift recovery from the 2020 dip in watch exports, which had been down by 13.1 per cent year on year. Driven by strong growth in the US alongside a steady upward trend in China, the last quarter of 2021 produced the best-ever annual results for the sector, at SFr22.3bn ($22.5bn) — some 2.7 per cent higher than in 2019, breaking the 2014 record by 0.2 per cent. Then, this past July, the FH reported that the first six months of 2022 saw nearly 12 per cent growth in the value of exports compared with the same period in 2021, taking total export value to SFr11.9bn.
And these export figures, representing the wholesale activity between Swiss watchmakers and their network of international retail partners, continue to slope upwards. The US, which had emerged as a strong driver for growth in 2021, holds 16 per cent of the value of all Swiss watch exports so far this year. But Asia, despite negative growth in China and Hong Kong due to lockdowns, remains the market leader, absorbing 49 per cent of the value of all Swiss exports this year to date.
Mid-year reports coming in from luxury groups such as Richemont and LVMH relay revenue growth across the board. Independent brands such as Rolex and Audemars Piguet do not share financial numbers, but “the demand for high-end watches by the most recognised and established brands simply exceeds market supply,” according to Mike Manjos, chief trading officer at pre-owned watch website WatchBox.
“We’re seeing the strongest performance in the market within the ultra-rare and collectible space, and consumer interest, as measured by demand, has rapidly grown in the independent segment,” Manjos reports. “Success by pioneering independent brands has institutionalised this type of manufacturer. Names such as De Bethune, FP Journe, Greubel Forsey, Grönefeld, H Moser & Cie, MB&F, and Voutilainen date to the 2000s or even the 1990s.”
These companies have also hit customers with wait-lists, therefore pushing consumers again towards the secondary market, which has seen its own growth as a result. Last year’s report by McKinsey and The Business of Fashion put annual growth in the pre-owned watch market at 8 to 10 per cent from 2019 to 2025, with sales reaching between $29bn and $32bn.
Paul Boutros, head of watches for the Americas at auctioneer Phillips, says that the past two years have seen historical records broken at watch auctions. In 2021, Phillips achieved the highest annual sale total for any auction house in history at $209mn — a 57 per cent increase from 2020. But the record could be broken yet again this year, as Phillips had already reported $127.5mn in sales before the autumnal auctions started.
“What we’re seeing here is that the market is very large — much larger than what it used to be for a collector’s auction,” says Boutros, crediting this greatly increased attention on the watch world, in part, to social media. Last year, Phillips sold a special collaborative Nautilus watch by Patek Philippe and jeweller Tiffany & Co for $6.5mn during a nail-biter auction.
Even regular Patek Philippe Nautilus watches command a premium in secondary markets. Frequently referred to as one of the three “hype watches” (alongside the AP Royal Oak 15202ST and the Rolex Daytona 116500LN Black Dial), the Nautilus peaked at $237,700 for a model that would normally retail at $35,000, but with a waiting list of close to 10 years.
This inflated number drew new investors looking to make a quick profit by reselling watches. However, this summer’s crypto market meltdown triggered a sell-off of popular timepieces, as their owners suddenly found themselves in dire financial straits. Meanwhile, in Asia, more than a dozen popular watch brands have lost between 20 per cent and 50 per cent of their value on the secondary market since Shanghai, China’s commercial capital, imposed a strict lockdown in March.
Still, despite relative price dips, the overall hype, market conditions, and rise of the pre-owned market has managed to attract a slew of enthusiasts who are shifting the market with differing buying habits. Over the past two years, women have become a rising consumer segment within the male-dominated watch industry. Frustrated by lacklustre product offerings and sexist marketing campaigns, women have become increasingly vocal about what they want in a watch.
Ginny Wright, chief executive of Audemars Piguet Americas, talks of the brand’s shift toward its female clients: “When I started at AP [in 2019], 16 per cent of our clients, at least in North America, were self-purchasing females. Now, it’s 23 per cent.” Wright says there has been a concentrated marketing and product response to women’s rising demand for higher-end complications and, as a result, expects 30 per cent of AP’s clients will be female by 2030.
“Today, we see a much bigger interest from our ladies clientele for complicated timepieces,” says Christian Selmoni, the style and heritage director at Vacheron Constantin. Its Traditionnelle perpetual calendar ultra-thin model is the brand’s first-ever perpetual calendar watch created intentionally for women.
Marketing, too, has become thoughtfully female-focused, with watchmakers hiring strong female brand ambassadors to entice this burgeoning consumer group. Last year, Panerai signed on Chinese actress Dilraba Dilmurat, understanding the potential of influencers to boost brands, as particularly evident in Asia. Since 2016, the company’s female market in China has grown 60 per cent, with the fastest rise occurring since Dilraba’s appointment.
This shift has been seen across the industry with the continuation of Omega’s HerTime exhibition and Zenith’s DreamHers campaign launched in 2020, to name but two. Most recently, in September 2022, Tag Heuer signed with 14-year old professional skateboarder Sky Brown to appeal to a younger female crowd, which is warming up to the watch industry via the pre-owned market.
According to last year’s Deloitte Swiss Watch Industry study, the shift toward the pre-owned market is particularly strong among young consumers, with 42 per cent of millennials and 34 per cent of Gen-Zs saying that they would buy a pre-owned luxury watch.
“Whether it’s the sharing economy or being more socially conscious, younger consumers today are far less reluctant to buy items that were previously owned,” says Karine Szegedi, consumer industry leader at Deloitte Switzerland. “This generational shift will continue to benefit the pre-owned watch industry in the years ahead and is certainly part of a wider trend towards more sustainable shopping behaviour among young people.”
With more diverse and younger consumers, come fresher perspectives. A new wave of watch wearer is best exemplified by the American rapper and record producer, Tyler, the Creator. Over the past few years, Tyler has amassed an impressive collection of vintage Cartier timepieces — mostly found under the “ladies” category — fuelling a trend toward genderless watches.
Cartier, a brand long defined by androgynous appeal, has since surpassed Omega as the second-largest Swiss watch brand behind Rolex, according to Morgan Stanley’s 2021 annual report on the Swiss watch industry. The Richemont-owned brand has become increasingly favoured by the younger set, drawn in by its relatively lower prices and a nostalgic yearning for the genderless timepieces worn by the likes of Diana, Princess of Wales and artist Andy Warhol.