Demand for secondhand luxury watches is nearing a two-year low. Here’s why the luxury watch market may be reaching a critical juncture.
Early last year, when pre-owned watch prices were at an all-time high and it was literally impossible to buy a new Rolex or Patek Philippe because stores around the world were out of stock, the Wall Street Journal interviewed me about the future of mechanical luxury watches. I warned that the bullish demand is likely overinflated by a few factors and not a reflection of a boom that legacy brands can capitalize on forever. The writing was already on the wall for a bursting bubble.
The recent Bloomberg Sundial Watch Index confirms my prediction, a price index that tracks the performance of the most in-demand pre-owned luxury watches. It not only shows that the demand for secondhand watches is slowing down, but it is nearing a two-year low. This is a worrying sign for luxury watch brands, as it suggests that the broader market may be reaching a critical juncture.
First, the market has become increasingly saturated in recent years. There are now more competing luxury watch brands and items than ever before, and the ubiquity of fine timepieces has led to a decrease in the exclusivity of owning a luxury watch.
Second, affluent Gen Z, particularly in Asia, tend to gravitate towards newer, trending brands like Richard Mille, Jacob & Co. or Roger Dubuis. This will pose a challenge to many legacy brands in managing the generational transition from Gen X and Y to the up-and-coming Generation Z, already the most influential generation today and expected to become the number 1 client group for watch brands by 2030.
Moreover, being the first generation of digital natives, the adoption and desirability of smartwatches is particularly strong among younger clients. Legacy brands have been hesitant to venture into the smart watch arena and integrate new technology, and the initiatives so far have not always been convincing.
While many fine watchmakers tell me that smart watches are not a danger for fine watches and that they — on the contrary — are a springboard for younger clients to upgrade to a mechanical watch, I would caution not to make the same mistake that Kodak, Nokia, or incumbent gasoline car makers made when confronted with technological disruption. Continue to read the full article here
