The Swiss luxury watch manufacturer Patek Philippe has one of the most successful advertising slogans of all time.
n Ad for the high-end company ran for 20 years. It said: “You never actually own a Patek Philippe. They just take care of the next generation.”
Another told us: “A Patek watch is not a device to tell the time. It is an heirloom that transmits values across generations.”
For those of us who don’t have the money, or even the inclination, to buy one of these watches even though we could afford them, the whole thing sounds a little sucks.
But the market for luxury watches and high-end jewelry has been growing rapidly, both in Ireland and around the world.
So much so that you may never own a Patek Philippe watch because there are waiting lists to buy some of the most popular models that are way too long.
The Rolex Daytona, Patek Philippe Nautilus and Audemars Piguet Royal Oak are currently three of the world’s most popular watches – with waiting lists of up to 10 years at many retailers.
Covid saw many very wealthy people unable to spend money on travel or food so they turned to luxury purchases.
The number of millionaires whose fortunes have increased during the pandemic is also well documented.
Supply chain problems also hit the luxury market and not enough expensive watches were offered for sale to meet the increasing demand.
This in turn has fueled a massive used market for luxury goods, particularly watches. McKinsey consultants estimated that sales of pre-owned watches reached $18 billion in 2019 and could reach $30 billion by 2025.
A US watch seller named Hodinkee raised $40 million from high-profile investors in December 2020.
Some buyers who get their hands on a particular type of Rolex or Patek Philippe can later turn it down for multiples of the original retail price they just paid.
It’s a bit like high-end ticketing, but perfectly legal.
Some in the watch industry are trying to fight back.
Luxury watch manufacturers insist that luxury retailers only sell to customers they know, and in some cases discourage retailers from allowing unknown customers to put their names on a waitlist.
At the top end of the luxury watch market, you have to be some sort of VIP customer to get your name on a waiting list of up to 10 years .
The trickle-down effect has led to a massive surge in jewelry purchases by those who can afford them but aren’t necessarily multi-millionaires.
In Ireland, Paul Sheeran Jewelers has signed a deal with investment group Hines to lease the entire ground floor of a new Chatham & King development off Grafton Street where it plans to sell watches from some of the biggest luxury watch brands including Cartier, Breitling , IWC, Jaeger LeCoultre and Panerai.
In London, Britain’s leading Rolex retailer Watches of Switzerland Group will be moving its flagship store to a much larger location.
The group plans to move its current Rolex boutique to Old Bond Street, where it will be eight times larger than the current store.
The growth forces, especially in luxury jewelry and watches, are shaped by several factors. Covid was one.
Rising prosperity in Asian markets like China is another.
The surge in cryptocurrency values has also created a cohort of new fortunes looking for something to buy.
These luxury purchases carry the seal of quality that the nouveau riche in particular want to acquire. There is something about the expensive watch that is almost addictive for those who are truly intrigued by them and have the cash.
A Switzerland-based Irish luxury watch manufacturer I spoke to a few months ago told me that their customers like to buy multiple watches and be informed about the next model they release.
MMA fighter Conor McGregor has splurged on several high-end watches from Jacob & Co to Rolex and Patek Philippe, some of which are priced in excess of $1 million.
This is a far cry from the approach taken by billionaire Warren Buffett, who wears a $20 digital watch that performs the same function. It shows the time.
As Tim Calkins, a professor of marketing at the Kellogg School of Management, once asked, “How do you sell a $25,000 watch when people can buy an accurate watch for $10?”
There are signs that the rise of the luxury watch market will not continue to defy economic gravity or become impervious to broader economic realities, from the Ukraine war and Covid to inflation and geopolitical uncertainty.
The price of used luxury goods has fallen rapidly in China in recent months.
The rich are cutting discretionary spending. And some even sell their Rolex watches and expensive handbags to raise some money.
According to a recent financial times Items for more than a dozen popular brands of luxury goods have lost between 20 percent and 50 percent of their former value in the Shanghai secondary market.
Strict Covid lockdowns are contributing to an economic slowdown that is showing signs of a bite, particularly in the used market.
Another weakness in the luxury secondary market has been linked to the fall in value of some cryptocurrencies.
The crypto crash has led to an increase in the supply of pre-owned luxury watches and, consequently, falling prices.
There will always be a market for this kind of flashy show of wealth.
The big question is whether it will be able to weather the pull of economic gravity that may be coming.
https://www.independent.ie/opinion/comment/waiting-lists-for-a-rolex-defy-the-economic-gloom-but-can-it-really-last-41919358.html Waiting lists for a Rolex defy the economic gloom, but can it really last?