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A Look at the U.S. Watch Market

Once upon a time, shopping for a watch was a pretty simple and straightforward process. For new watches, you would typically go to mono-branded boutiques like Patek Philippe and Rolex, specialized family-owned watch stores like Betteridge, or large watch retail chains like Tourneau. Some large cosmopolitan cities, like New York City, have a bevy of brand boutiques like Blancpain or Breguet — not to mention all the watch shops on 47th Street, home of the so-called Diamond District.

For vintage or rare high-end pieces, auctions houses offered another option. In the late 1990s, some people, like Matthew Bain, started to specialize in vintage wristwatches. But other than retail stores, auction houses, and a few specialized insiders, the options for buying watches were quite limited.

Then, when the Internet came around, websites like eBay offered another way to buy and sell watches. Some retail stores began launching their e-commerce platforms as a way for consumers to shop for a wide range of products from the comfort of their homes. By the late 2000s, websites dedicated to watches and watch collecting starting popping up everywhere. There were websites like Hodinkee, which offered information and advice about different watches, and forums where watch enthusiasts would share information.

These online blogs and forums also facilitated the buying and selling of not only watches, but also watch-related accessories such as straps, traveling pouches, storing boxes and watch winders. Even Hodinkee launched an e-commerce platform, selling well-known brands (both new and vintage) including high-end marques like Vacheron Constantin. What’s more, social media platforms like Facebook, Instagram, and Twitter allow users to easily share watch information and/or buy and sell goods.

New concepts revolved around trading watches online have exploded; there are websites like StockX that operates like a stock market for goods, online retailers like Watchbox and Bob’s Watches specialized in pre-owned watches, and platforms like Chrono24 that facilitate transactions between watch buyers and sellers.

Vintage boom

As more online spaces appear dedicated to vintage watches and modern timepieces—whether informative or commercial—we can see the effect it has on the business. While wearing an expensive modern watch has always been a display of social status, there is now a booming interest in collecting vintage watches too. Even offline we see the explosive growth, with auction houses hosting bigger sales that attract global audiences and large showrooms like Analog/Shift in New York focus on vintage timepieces. With so much information available at our fingertips, it’s easier to learn about the history, evolution, and popularity of particular watch models.

And people are not just collecting watches because they are passionate about them, but also because they see a potential return on investment.

However, having all these choices to buy and sell watches can be confusing too as it can lead to continuously questioning which option is the best in terms of cost, efficiency, security, and authenticity. There is simply no right answer here; it’s a matter of going with a person or company that you trust. Unfortunately, successful industries will always attract dishonest parties that are looking to take advantage to customers. We’ve all heard the horror stories about fakes, Frankenstein watches, forged documents, and questionable provenance particularly involving popular brands like Rolex and Cartier.

Brands and Trends

For the last few years, I have noticed that people really shop for certain brands and models. At the top of the list are Audemars Piguet Royal Oak, Patek Philippe Nautilus, Blancpain Fifty Fathoms, Omega Speedmaster, and Rolex GMT-Master, Submariner, and Daytona. It is intriguing to witness people battle it out for these particular pieces at auction while the rest of the watches barely reach reserve prices.

The demand for specific brands is no doubt driven in part by high-profile auction results that grab international headlines; Paul Newman’s Rolex Daytona “Paul Newman” selling for $17.8 million, a first-generation Omega Speedmaster selling for $400,000, and the Patek Philippe ref. 1518 in stainless steel selling for $11 million. In fact, writer Alex Douglas published an article on the WatchPro website stating that the popularity of Patek Philippe and Omega helped Sotheby’s increase their watch sales by 54% in the first half of 2019.

Some collectors are selecting watches as a way to diversify their investment portfolio. However, it is a handful of brands that are leading the charge in terms of value, collectability, and marketability. What’s more, metal options have an impact too, with stainless steel being the most desirable at the moment. Some dealers have expressed concern that Rolex Daytona ref. 6263 “Paul Newman” models in yellow gold are barely selling for $110,000 in today’s market when they once easily sold for over $150,000.

Of course, a watch cannot continuously increase ten percent or fifteen percent every year. At some point, there’s a plateau and the market stabilizes and corrects, and value can eventually decrease.

Furthermore, how many new concepts, tools, sellers, online platforms, and investment companies can the pre-owned watch market absorb before it becomes too saturated? Of course, no one really knows for sure, but once the economy slows down, we will see a clearer picture. A very famous New York watch dealer once told me that now he introduces himself as a watch collector since everybody it seems is a watch dealer.

Even high-end watch companies like Audemars Piguet and Richard Mille are revamping their business models, shifting away from third-party resellers to in-house boutiques in a bid to have better control over their distribution and earn bigger margins. If more brands follow this trend, what will happen to independent stores and watch retail chains like Tourneau? In my opinion, not many players will be able to survive the future of watch retail; the shuttered-up stores and empty windows on 47th Street are already signaling a shift.

What will happen when borrowing money won’t be so cheap and private equity will be more cautious with their investment strategies?

Confusion?

Despite being in an open economy in a competitive world, too many choices can lead to confusion. In his book “Competitive Advantage,” Michael Porter stresses that the two ways to survive are to either focus on a niche market or be a big player—otherwise anything in between will disappear first. And I agree.

So much emphasis is currently placed on image, branding, marketing, market share, and cost that maybe we are forgetting about trust, confidence, authenticity, expertise, and proximity. Word of mouth is still critical in the watch business, and reputation is everything. I think people will eventually grow so tired the constant bombardment of emails, promotions, and messaging, that they will return to seeking out valuable relationships again in the retail space.

For me, the experience of walking into a store where not only do they know my name, my buying history, and my preferences, but where the salespeople can also guide me with advice and information is by far better than scrolling through a thousand images on a tiny screen to see what is available.

There are plenty of signs in the market that signal a big shift is coming in the watch industry, but with so many moving parts right now it is difficult to determine which direction will ultimately win the hearts and minds of consumers.

Laurent Martinez is the proprietor of Laurent Fine Watches in Greenwich, Connecticut. Read more by him at blog.laurentfinewatches.com or visit his store’s site at www.laurentfinewatches.com

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