Despite a recent market price pullback, luxury watches are attracting new buyers. Fashionable professional buyers are comparatively more interested in the secondary market, especially Gen Z & Millennials who are comfortable buying online.
Third-party online marketplaces promote the secondary market by educating buyers, encouraging price transparency & connecting buyers & sellers. These digital channels are on track to account for close to 60% of sales by 2026.
1. Reputation
Historically, watchmakers were reluctant to embrace the secondary market for fear of damaging their brand image and value proposition. But today, Gen Z and younger millennial consumers are increasingly drawn to secondhand watches, seeking both the craftsmanship and mechanics that define luxury and the investment opportunity that these watches provide.
The secondary market is a key channel for brands to learn from consumer feedback and promote their own products to new audiences. It also offers the opportunity to build a community around watches and encourage social sharing through platforms such as TikTok and Instagram, making it an important part of the marketing mix for both new and established watchmakers.
Amid ongoing macro uncertainty, a number of high-profile brands have shifted their focus from growth to margins and bolstering resale values. The shift could prove critical to their long-term health, as the majority of US and European consumers expect to cut discretionary spending by more than 6% this year.
In an attempt to protect their reputation, watchmakers are focusing on building a stronger and clearer definition of “Swiss Made.” LVMH’s TAG Heuer is one of the few brands to publicly admit buying movement parts from Japan’s Seiko, but stresses that this does not damage its reputation. But smaller players may be forced to buy less crucial components from Asia if stricter rules are adopted.
Another key area for watchmakers is the development of direct-to-consumer (DTC) sales channels, a trend that is already causing some incumbent multibrand retailers to lose $2.5 billion in revenue by 2025. Watchmakers can benefit from this trend by taking control of their customer relationship and building a more dynamic omnichannel approach.
2. Quality
A reputation for quality is something that takes time to build, and it’s easy to see why luxury watch brands like Rolex, Patek Philippe, and Audemars Piguet have such a strong secondhand market. After all, it costs money to market a brand that carries the “Swiss Made” label – and these brands have been building their reputation for quality for centuries. From the manufacturing of high-end materials to the marketing of their image, there’s a lot that goes into the price of a Swiss watch besides the cost of raw materials and manufacturing labor.
Many consumers have come to expect that they should be able to purchase a luxury watch for a reasonable amount of money. This has led to a larger movement among buyers that is suspicious of the need for luxury brands to support overly ambitious profit margins and is interested in seeing their hard-earned dollars stretch as far as possible. This has lead to a growing sentiment that any luxury or Swiss watch that is priced significantly above the manufacturing cost should be considered overpriced and a waste of money.
Interestingly, the secondhand watch market for Swiss watches has been growing at a faster rate than new sales because of rising buyer demand and limited supply of the best models. This is in part because the luxury watch brands that are focusing on high-end materials and craftsmanship often avoid producing in larger volumes. As such, they can only sell so many of the best models each year, and waiting lists to buy one of these watches new can be years long.
The secondhand watch market for Swiss watches is also being driven by buyers who are looking to use their luxury watches as investments. This is largely because the best Swiss watches are often considered to be “collectible” and can be a good alternative investment for those who do not want to tie their money up in stocks or other forms of traditional investing. As a result, buyers in this category are more engaged with the secondhand watch market than any other group of luxury watch buyers and are the fastest growing segment of the secondhand market for luxury and Swiss watches.
3. Design
When you purchase a luxury watch it is more than just a fashion accessory or a way to tell the time. You are purchasing a piece of history that is both heirloom worthy and has a long life span. Unlike the mass-produced watches sold at high street stores, which are often produced by unskilled labor and have very little regard for quality control, luxury watches are handcrafted by expert horologists with decades of expertise and strict quality inspection standards. This is what allows the resale value to increase as time goes by.
In addition, the quality materials that are used in the manufacture of luxury watches make them less susceptible to corrosives and are more resistant to wear and tear than cheaper models. This is why luxury Swiss watches have such a strong reputation for being reliable and enduring. This reputation is further bolstered by the fact that many watches are made with 316L surgical grade steel, which is a superior alloy that is highly resistant to corrosion from both industrial and biological sources.
Aside from the enduring quality of a watch, the design itself is what makes it a desirable and sought-after accessory. When paired with a suit or tuxedo, a luxury watch can subtly display a man’s wealth and success in a tasteful and sophisticated way that is not overtly self-aggrandizing. This is why so many prominent men from the world of business and sport wear luxury watches, from American Presidents to FTSE100 CEOs.
Finally, the large marketing and demand investments of a brand like Rolex create a larger market for luxury watches, and smaller brands can compete with the bigger players by targeting smaller audiences. This competition helps to drive prices up, but the higher retail costs also help to cover the massive manufacturing and marketing investments that are necessary to create and maintain a luxury watch presence in the marketplace.
4. Functionality
In addition to the design of a watch, the functionality that it provides can also impact its resale value. This is especially true for a Swiss-made timepiece. The “Swiss made” label is a seal of quality, and it is backed by Swiss law. The label is allowed to be used only if the watch has undergone technical development in Switzerland, its movement is made in Switzerland or cased up there, and at least 60 per cent of the manufacturing costs have been incurred in Switzerland.
Those are significant restrictions, which may help explain why a watch that has been “Swiss made” is able to command a premium over a similar watch that might have had its movement made in China or Germany, but not as much of its assembly done in those countries. And the fact that a Swiss-made watch is almost always made from 316L surgical steel, which has an exceptionally high corrosion resistance against corrosives – both industrial and biological – contributes to its reputation for durability.
Some brands of Swiss watches have a particularly strong emphasis on functionality. These include Oris SA, a small independent brand in the sea of larger conglomerates like the Swatch and Richemont Groups; Jaeger-LeCoultre, which has many patents for movement inventions; and TAG Heuer, which has had strong ties to motorsports, including Formula 1, and introduced one of the first smartwatches to the market.
A watch manufacturer can also use data to determine which types of consumers are most interested in specific functions, and then tailor its products to meet those needs. This is what’s known as market trend analysis, and it is an important tool for companies to leverage.
5. Value
The resale value of a watch is directly related to how much demand there is for it. If the supply for a particular watch is low and there aren’t many people willing to pay a premium for it, then its resale value will be lower. If, however, there is a high demand for a watch, its price will be higher, as it will be a desirable asset.
The luxury watch market is booming and many brands are looking at how they can capitalize on it. One of the ways that these brands are doing this is by focusing on secondhand sales and promoting them online. This is especially important for younger buyers in Generation Z and millennials, who are interested in purchasing used watches. Third-party online platforms such as Chrono24, Watchfinder, and Big Watch Buyers are helping to make this happen by educating consumers on the condition of different watches, providing transparency about prices, and connecting buyers and sellers.
There are some watch brands that are considered to hold their resale value the best, such as Rolex and Patek Philippe. These brands are often associated with a rich history and prestige, which can help to drive their resale values. In addition, these brands are typically limited in production, which can add to their resale value.
There are other watch brands that can also increase in value over time, such as Breitling, Omega, and Audemars Piguet. These watch brands tend to have a high level of demand and a strong reputation for quality. They also use high-quality materials and Swiss movements, which can help to drive their resale value. However, it’s important to remember that not all watches will appreciate in value over time, as there are a lot of factors that can impact this.
