The Preowned Luxury Watch Gold Rush

The Preowned Luxury Watch Gold Rush

Swiss luxury watch brands have historically considered the preowned watch market, and it's close cousin the grey market (new unworn overstock watches), as the competition, and with good reason as it is estimated to be at least a 5 billion dollar a year market. The United States where new watch sales have dropped for years is the number one market followed by Britain and Japan.

Now with that kind of money on the table it seems those very same top Swiss brands have been forced to take a second look at the market and furthermore to take action. Companies want more control of their products lifespan and they are taking the necessary steps to achieve that goal.

With the advent of many reliable online retailers, coupled with single digit new sales growth statistics this decade compared to double digit increases of the past decade, may have some brands adhering to the old adage “if you can’t beat em join em”

By all accounts the second hand market is running smooth with plenty of certified watches and even unworn models offered by numerous reputable online dealers from the brands own overstock, along with many independent brick and mortar stores which have been servicing this market before the internet. Tirath Kamdar president of TrueFacet along with co-founder Chris Chan launched the platform in 2014, and who have since seen a 120% increase in sales quarter over quarter, have been working hard to convince Swiss brands that the grey market is not a bad thing and is in fact helping to grow their brands perceived value, especially among recycling millennials. The flip side of that coin and a thorn in the side of some brands is that their watches are selling at a fraction of retail, in the 20% range.The market is changing, the luxury consumer is changing. The new consumers value variety over permanent ownership.

102 year old Govberg Jewelers reports annual sales of preowned luxury timepieces saw an increase of 40% over each of the last 5 years with an increase of only 3% to 5% annually of new timepiece sales. They predict preowned sales to overtake new sales within 5 years.So encouraged are they by the future prospects of the market that they launched WatchBox in Asia, an internet platform for buying, selling, and trading of luxury preowned watches and then opened a WatchBox preowned only store in Hong Kong in September of last year and have experienced $3 million in sales each month since opening.

Essentially all major brands have been toying with the issue for many years and now it seems the hats are close to being tossed in the ring. Jean Claude Biver who oversees Tag Heuer, Hublot and Zenith has stated 100% they will be approaching the market it is just uncertain the exact time. Breitling C.E.O. Georges Kern has stated they will begin buying and selling used Breitlings online this year. Crown and Calibre are collaborating with Jared Jewelers as another outlet for their services. Jared customers can trade in their old watches to Crown and Calibre for cash, store credit plus 20%, or upgrade to a new timepiece all at a Jared location or online. H. Moser & Cie, Mb&F, Bremont, Richard Mille, A. Lange & Sohne just to name a few have all said it is only a matter of time and many brands have run beta tests to feel out the market.

There are however 2 very concrete steps forward, one by by Audemars Piguet and the other by The Richemont Group.

First off Audemars Piguet has begin the process of opening stand alone stores for the sole purpose of buying and selling preowned watches, this according to CEO Francois-Henry Bennahmias. It will initially allow customers to trade in old Audemars Piguet watches as part-exchange for new ones, and then sell the second-hand watches.They started with one store in Geneva and have plans to institute more Swiss locations before moving on to the U.K., the U.S. and then Japan. He estimates a 10 to 20 times larger market for used as opposed to new sales in the future.

The largest combatant in this arena would have to be the Richemont Group with their 2.7 billion euro takeover of Yoox Net-a-Porter, a Milan based luxury e-retailer and the purchase of U.K. based Watchfinder, a platform for buying and selling luxury watches, for an undisclosed amount, making Richemont a dominant force in luxury e-commerce sales including luxury timepieces.

Richemont spent 500 million euro in the last 2 years on inventory buy back from overstocked retailers which they now have a platform from which to liquidate. All of this to keep the watches out the grey market where they feared they would be sold at such a discounted rate as to ruin the exclusivity of the brands they oversee. Opportunistic move? Maybe. Watchfinder grew in sales from 14 million euros in 2012 to 96 million euros in sales in 2017.

Not only is it a new distribution network it also put them in the enviable position as retailer of their competitors product.

So what will this flurry of activity in the market by some of the industry powerhouses do to the consumer and his approach to his next preowned luxury watch purchase? I think we will have to wait until all the hats are in the ring before we can tell just how big the brawl is actually going to be.

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