This won’t surprise anyone following and investing in secondhand luxury watches for the past few years.
Part status symbol, part fashion and part piece of art, luxury watches entail a long list of admirers for their exclusiveness and craftsmanship. But surprisingly, the recent demand boom has less to do with style than with money.
Pre-loved luxury timepieces are in-demand as excellent investment options! Yes, you heard that right. While this has been the case for a while now, the market has gained further legitimacy after big names like Rolex have entered the space.
Today, the secondary watch market is commanding massive recognition in the watch industry as buyers show more interest in paying high premiums for pre-owned watches from top brands like Rolex, Audemars Piguet and Patek Philippe.
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What exactly is happening in the secondhand luxury watch market?
- According to the latest report, Rolex, Patek Philippe, and Audemars Piguet watch prices rose at an annual rate of approximately 20% from 2018 to 2023. This is despite the economic downturns, pandemic, etc.
- The secondhand watch market is growing faster than the first-hand market. This trend is most likely to continue in 2023. For instance, if the watch market accounts for $75 billion, then pre-owned watch sales are nearly $22 billion. By 2030 it could be worth more than half of the watch market.
- Even after the price correction and better availability of a few sought-after models, the demand is exceedingly high among collectors and buyers alike.
- The positive fueling of the secondhand watch market has attracted new buyers, further accelerating the growth.
Why is the secondhand watch market booming?
6 reasons could explain the craze for pre-owned watches.
1. Knowledgeable Sellers
Earlier, the watch market evoked images of fake deals and discounts, further increasing the chances of fraudulent activities. But coming to 2023, the watch market has revised itself and become transparent, encouraging more online transactions.
Today, more and more online websites with knowledgeable and reputed sellers are selling luxury watches that are otherwise rare to seek. According to statistics, almost 95% of them are not even in production anymore.
2. Gen Z as Consumers
The Millennials and Gen Z consumers driving the current watch market share a great appreciation for craftsmanship and the technical aspects of watchmaking.
The younger age group is lured by the investment performance and hence, is more tempted to invest in watches than in any other traditional form of investment.
According to a recent study, over 44% of younger customers enjoy the thrill of finding deals and offers. 66% of them said that the anticipated value growth influenced their decision.
The buyers even connect over social media networks to exchange relevant information, further amplifying the secondhand watch market.
3. Growing Third-Party Online Platforms
People are no longer distinguishing between new and pre-owned watches offered in excellent condition. Additionally, millennial buyers find comfort in buying online.
This has led to the emergence and establishment of third-party online platforms, further promoting the watch market’s growth. The sellers educate the buyers and assert complete transparency, encouraging online sales to exceed the stores.
4. Alternate Investments
As said in the beginning, watches have delivered strong performance over the past five to ten years as investment options. This welcomes wealthy investors to invest in classic pre-owned Rolex and Patek Phillipe watches as it diversifies their portfolio and amplifies their growth.
Pre-owned Rolex watches hold value really well, and it even appreciates over the years. Going with the latest reports, Rolex watches have outperformed traditional financial investments like stocks to offer better returns. This makes them an excellent investment choice.
5. New Watch Scarcity
The scarcity of new watch models plays a big role in the booming of the secondhand watch market. Due to the ever-increasing demand, some variants of new watches are nearly impossible to get through retail channels. So, people resort to the pre-owned market to acquire them.
Unlike other items whose value typically drops once they leave the store, the value of luxury watches tends to shoot up in value in the pre-owned space.
6. Long Waiting Lists
Whether new or secondhand, brands like Rolex, Audemars Piguet and Patek Philippe get higher attention than others due to the long waiting lists and unavailability in the retail shops.
On the secondary market, the AP Royal Oak and Rolex Daytona or GMT-Master II sell at a hefty premium as buyers are willing to pay more than the retail to grab one.
How can watch brands benefit from this scenario?
The larger watch brands kept their distance from the secondary market for a long time, considering them a competitor. But times are changing, and so should the brand strategy.
It may be the time for the big brands to accept the secondhand market’s ability to generate revenue and collaborate with them.
- The right approach can multiply new product sales, help the brand connect with potential customers and reinforce the brand’s value in the market.
- Building on an integrated strategy with the pre-owned market, brands can target a larger demographic area based on their understanding of customer demand.
- As most of the secondhand buyer population is young, investigating the market can help develop stronger brand loyalty.
Below are some strategies the watch brands can implement for dealing with the pre-owned watch industry.
4 ways in which brands can extend their presence in the secondhand market
· Monitor & Participate
Luxury watch brands can monitor the pre-owned market and nurture their relationship with various marketplaces and auction houses to enhance their brand image. A few efforts include investing in Blockchain technology, authentication services, customer services, etc. All such activities could further improve brand loyalty.
· Improved Planning
Demand for watches is scaling up, and it would be only wise if brands could team up with the secondhand market and use different approaches to understand the customer’s true demand. For instance, by cross-checking the waiting list, they can enhance the supply chain, etc.
· Invest in community & content building
Companies can create online communities for watch fanatics by developing a community strategy. The platform will allow like-minded customers to share knowledge and information.
Brands can use digital platforms and other digital products to share inspirational content and drive engagement.
· Encourage Private Investors
The graph of the secondhand watch market is likely to grow in the coming years. Companies can seek private investors and individuals to invest in watches instead of traditional assets to diversify their portfolios.
Not just a solid growth potential and value retention, investing in luxury watches provide investors with additional benefits like durability, enjoyment and accessibility.
Lastly, it would be safe to summarise that luxury watches are no more stylish accessories but thoughtful investment assets for the growing savvy investors.
Thanks to their high demand and short supply, waiting lists are long, and prices are strong, giving the secondhand market an incredible boost.
And honestly, this is just the tip of the iceberg.
By 2030, the total valuation of the pre-owned market is expected to touch $36 billion. Whether you’re a collector or a brand, it’s time you examine the long-term benefits of participating in the pre-owned watch market and act quickly!