The secondhand luxury watch market is growing so fast that soon the market for new watches could begin to shrink.
Fantasy? Perhaps. But a growing number of industry insiders say that during the next five years buyers drawn to lower prices, easy access to products in high demand and proof of resale values may well turn to the pre-owned market — and turn their backs on traditional retail.
This secondhand boom is being fueled by a new breed of upscale pre-owned retailers like WatchBox and Chronext, and by Watchfinder, which the Swiss luxury conglomerate Richemont bought in 2018.
Typically, these businesses have high-functioning websites, supported by brick-and-mortar outposts in strategic locations like London and Hong Kong. In addition to reselling watches, they buy or trade them, giving customers access to the equity in their collections.
(And they definitely prefer the label “pre-owned” to the more commonplace “secondhand.”)
“Pre-owned watches are a platform for both newcomers in the watch industry and existing watch collectors,” said Mohammed Seddiqi, chief commercial officer of the prominent Middle Eastern watch retailer Ahmed Seddiqi & Sons. “For people who are starting a collection, it is good way to find what they are looking for.”
The growth in sales of pre-owned watches is part of a global surge in sales of all kinds of secondhand goods, spurred largely by young shoppers focused on ecological concerns.
The Luxury Goods Worldwide Market Study by the management consultants Bain & Company calculated that the personal luxury goods secondhand market would be worth 22 billion euros ($24.2 billion) by the end of 2018, and has grown by an average of 9 percent every year since 2015.
The pre-owned watch market already is worth $16 billion annually, according to an estimate by Jon Cox, an analyst at the financial services company Kepler Cheuvreux. Mr. Cox said pre-owned represents almost a quarter of the overall watch market. Yet its retailers say their market segment is still in its infancy.
“Every year, there’s approximately $50 billion of new watches sold at retail,” said Danny Govberg, who introduced WatchBox in 2017 in the United States. “In 10 years from now, there’ll be another $500 billion of pre-owned watches in the world. Every year more pre-owned watches are being created.”
WatchBox, Mr. Govberg said, has sold 45,000 watches in two years and, as of Nov. 1, had a global watch inventory worth $80 million. And, he added, its revenues were on track to reach $200 million this year. “Not a single day goes by we don’t sell a watch for $100,000,” he said.
Similarly, Philipp Mann, the chief executive of Chronext, said the site’s 2018 revenues were expected to have doubled by the end of this year. “We started in 2013 and we sold 100 watches in our first year,” he said. “This year we are going to do over $100 million in sales” of new and pre-owned watches.
Retailers say the demand for resales or trades has been outstripping the supply of watches turned in by customers so, to increase their stocks, larger businesses have begun partnering with retailers who are authorized by brands to sell new watches.
On Nov. 10, WatchBox announced it had opened its first boutique in partnership with the Seddiqi company, which sells more than 60 watch and jewelry brands across the Middle East and has been the driving force behind Dubai Watch Week. The announcement described the boutique, in the Dubai International Financial Center, as its “first-ever major dive into the Middle Eastern market.”
“Primary is going to meet secondary,” Mr. Govberg said in an interview.
In a different effort to gain additional stock, Mr. Mann said Chronext developed what he called a “real-time pricing engine” that it now licenses to more than 100 retail partners. The company, which is Swiss but has its headquarters in Cologne, Germany, charges as much as €1,000 a month for use of the tool and provides a trade-in service for the retailer.
Risks and Benefits
One of the challenges for retailers who sell pre-owned watches is gaining buyers’ trust.
In the past, the market for pre-owned was dominated by platforms like eBay, where sellers could market fakes unchecked. Then, in September 2018, eBay introduced a service that offered thousands of pre-owned models verified by professional authenticators.
But there are other sites where “buyer beware” is still the norm, like the private sale site Chrono24, which says a transaction is between the seller and the buyer.
“There are still so many risks associated with the current landscape,” said Zahra Kassim-Lakha, the director of integration and business development at Watchfinder. “There’s still a lot out there that’s not clear or transparent, and it can be a maze for customers to figure out. Usually that’s only when something bad happens.”
She said that Watchfinder services watches before selling them and, to reassure buyers, it has been accredited by 18 brands, including Omega, Cartier and Audemars Piguet, to service their watches.
Watchfinder, Chronext and WatchBox all offer two-year warranties on pre-owned watches, and both Mr. Govberg and Mr. Mann said they ship watches in what the industry calls “as-new” condition. “Most younger watches will look like new watches: you will not see the difference,” said Mr. Mann, adding that he employs 24 watchmakers to do the refurbishing.
All About Value
Long-term value has begun to be important to watch buyers, Mr. Mann said. “Ten years ago people bought watches they liked,” he said. But today, “the notion of resalability has changed the way consumers purchase. Why should you buy something that loses value?”
Mr. Govberg of WatchBox agreed. “Customers are going to start making buying decisions based on a watch’s pre-owned value,” he said. “Wait another two to five years and you’re going to see a big divergence. Will somebody buy a $20,000 IWC that only has a $2,000 secondary value?”
It might seem odd but some primary retailers say their businesses actually are benefiting from the growth of pre-owned watch sales.
“Pre-owned gets people into the category as a value proposition and it provides liquidity for owners,” said Brian Duffy, chief executive of the Watches of Switzerland Group, a British company that primarily sells new watches but also accepts trade-ins and has a small collection of pre-owned pieces.
Mr. Duffy said his central New York and London stores tried for years but failed to build pre-owned business because of a lack of consumer interest. “People come to see the brands we represent,” not resale pieces, he said, adding that he believes the sector’s future growth will come online rather than in established stores. (Mr. Cox of Kepler Cheuvreux said that online sales accounted for a third of the secondhand watch market, compared with only 5 percent for the primary market.)
And a number of brands now offer their own pre-owned collections. In October, Cartier introduced a vintage collection in its New Bond Street boutique in London, following similar efforts by Audemars Piguet and F.P. Journe, the independent watchmaker that sells restored watches online through its Patrimoine service.
Prices
The popularity of the pre-owned market has driven up prices of some more in-demand models, such as Patek Philippe’s Nautilus and the Rolex Daytona, leading some observers to suggest that retailers of pre-owned watches are inflating the market and leading consumers to pay more than the true value of watches.
For example, Paul Altieri, chief executive of the online pre-owned Rolex specialist Bob’s Watches, was quoted on the website WatchPro last month saying he had sold a current generation Rolex Daytona for $25,000, almost twice the list price.
Mr. Mann of Chronext described the pre-owned watch business as being like Prohibition, saying the scarcity of some models is behind the increases.
And Mr. Govberg had a similar view: “It used to be how much discount you can get, but now it’s how much over retail is it going to cost. The customer decides what the market is.”
Retailers of pre-owned watches are confident that the current growth will continue. “We’re optimistic,” said Ms. Kassim-Lakha of Watchfinder, although she would not disclose any financial statistics, in keeping with Richemont’s policy. “The murkiness of product available two or three years ago is no longer there. And it helps that there’s a strong sustainability angle. There are so many benefits to the customer.”
But Ben Clymer, chief executive of the watch website Hodinkee, expressed a note of caution. “It’s important to remember that watches, above all else, are a purely emotional purchase.
”Used watches neither provide you the ‘create your own story’ moment of buying new at retail, nor the inherent cool factor or rarity of a vintage watch,” he said. “Used watches are often the very first stop on a person’s horological journey, seldom the last.”
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