Key factors that fuelled the growth of pre-owned luxury watches
The watches industry has a long legacy dating back to the mechanical movements followed by automatic, quartz and later digital smart watches. Despite all such developments, the demand for luxury watches irrespective of the type of movements has only increased in recent years. The sales of pre-owned luxury watches had hit $18 billion in 2019 and by 2025 it could touch $30 bn. The pre-owned watch sales would account for 50% of retail watch sales in 2025, according to McKinsey.
Here are the factors that influence the growth of pre-owned luxury watches:
Limited Editions: With major luxury watch brands such as Patek Philippe, Rolex, Audemars Piguet and Richard Mille having limited production of watches, there aren’t enough watches to meet the increased demand. Rarity or shortage increases the value of luxury watches. Most of the brands collectors cherish are not available in the primary market. For example Patek Philippe 5711 was recently discontinued and many coveted pieces of Rolex are no longer available in the primary market. Long waiting lists and scarce allocations of luxury watches of leading brands increase the demand for pre-owned watches.
Many of the luxury watches from Patek Philippe, Audemars and Rolex have gained in value in the past five years. For eg. Patek Philipe Ref.5711 Green Dial which sells for $35000, got an auction value of $490,000. The value of Audemars Piguet Royal Oak 15500ST (blue dial) has increased three times while Rolex Day Date prices rose 76%.
Increased Wealth: Globally, the millennials and Generation-Z has increased wealth, thanks to new investment opportunities in stocks and crypto currencies. Lot of millennials have also found success with start-ups and this has also led to increased buying of luxury goods. Luxury watches are a display of wealth and success. Hence successful businessmen and professionals go for the top luxury brands as a personal brand investment.
Investment: With large online markets and auctions evolving in the pre-owned luxury goods market, returns on investment in luxury watches is giving good returns and easy liquidity. Several online players in pre-owned luxury watches have created a demand and consumer interest in this category in the Middle East and Dubai. Trustworthiness and authenticity of collectibles have also helped improve the market. Most online players have brick and mortar facilities that enable customers to visit and personally see the luxury watches they cherish. They have brought pricing transparency, authenticity to the secondary market for luxury watches.
Sustainability: The concept of a circular economy where every product could be reused, recycled for longer use has caught on with the millennials and Gen-Z. Advocating the cause of sustainability has helped in driving the demand for used luxury goods. Most of the luxury watches are made from mined materials such as gold, stainless steel, titanium, crystals, quartz among others. This makes it as invaluable as an ornament made of a precious metal. Luxury watches are usually handed down from generations in the family and cherished for its antique value.
Digital Platforms: Digital platforms provide greater flexibility and reach in terms of variety of brands offered and authentication. They could even offer unique virtual reality (VR) and augmented reality (AR)experiences for customers. Moreover, they have brands at every price point from entry to premium levels. Social media has influenced the demand for collectibles as the millennials and Gen-X would like to flaunt the Swiss status symbols on Facebook and Instagram. The enthusiasm for collectibles were also influenced by celebrity endorsements for top brands of watches. Most sellers of luxury watches continue to reinvest in leading brands they cherish which in turn generates more buying and demand for such quality timepieces.