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Fashion,Watches

Millennials and young professionals fuel the demand for pre-owned, vintage, luxury watches

11 Jul , 2018  

The Indian market has grown several folds over the last five years

 

K Fernandez

 

In March, Mumbai-based Ethos Watch Boutiques launched a section for premium second-hand watches on its website. The luxury retailer certifies every pre-owned watch it sells and provides a two-year warranty. “We are creating a market, which would treat these watches as investment,” Pranav Saboo, co- founder, Ethos Watch Boutiques, told the Mint newspaper.

The move is in line with evolving brand strategy as manufacturers attempt to control their products life cycle. The starting block is Audemars Piguet, which will open standalone boutiques where pre-owned watches can be bought and sold. “Second-hand is the next big thing in the watch industry,” Chief Executive François-Henry Bennahmias declared on the sidelines of the Salon International de la Haute Horlogerie watch fair in Genève. “We are witnessing a social and cultural change that forces us to think about what the business will look like in five or 10 years,” he told reporters. The brand, which makes about 40,000 watches a year, estimates that the demand for pre-owned watches could be 10 to 20 times the size of the current market for new pieces.

 

Audemars Piguet’s Millennary collection; the brand is all set to open standalone boutiques where pre-owned watches can be bought and sold

Audemars Piguet’s Millennary collection; the brand is all set to open standalone boutiques where pre-owned watches can be bought and sold

 

Growing prospects

LVMH, which owns TAG Heuer, Hublot, and Breitling, is also eyeing the second-hand market, which is currently largely dominated by independent shops and online platforms such as eBay, Amazon and Chrono24. Much of this business is over the internet.

Overall, the pre-owned market clocks up to about $5 billion or ten per cent of the annual $46-billion generated by new watches, according to a Bloomberg analysis. Vintage, contemporary and discontinued models fall into the category of pre-owned watches, which gets most of its buyers from the USA, China, Singapore and Hong Kong. The segment is widely seen as one of the fastest growing, as sustainability- conscious millennials want to acquire luxury brands at affordable prices, and quickly build a collection.

Second-hand watches, particularly of non-marquee brands, often appear online at prices ranging between 25 to 40 per cent the retail cost of a new model. On classic models, however, the difference may not be so great. For instance, a second-hand 32mm Cartier Tank Francaise is listed as sold out on Ethos’ website at Rs419,520, while a smaller, new model of 25mm is catalogued at Rs 498,000.

 

The 32mm Cartier Tank Francaise

The 32mm Cartier Tank Francaise

 

For a clearer understanding of the strength of this new market, consider the Asian online retailer of luxury timepieces, WatchBox: it claims to sell a watch every eight minutes, each priced at an average of $10,000, and the site has been growing at 50 per cent annually. WatchBox opened a store in Hong Kong last year and has plans for several new boutiques in Europe and elsewhere in 2018.

Vintage in vogue

Those eye-popping numbers also chime with the broader embrace of vintage luxury, as celebrity style icons such as Anne Hathaway and Selena Gomez show up on the red carpet in vintage pieces. According to a research from resale consignment site thredUP, the global resale market is forecast to be worth $41 billion, by 2022. The data shows that environment-friendly millennials buy more resale items than any other demographic. “The younger generation are conscious shoppers. They want to own unique pieces nobody else has,” Sara Maggioni, Director Retail & Buying at trend forecaster WGSN, told the industry news site fashionista.com.

The challenges

However, watch brands seeking to capitalise on this emerging market niche must contend with several challenges, including the development of new online retail channels, strategic market positioning and commission structures. These have made brands think and rethink the merits of a preowned business for decades, even as the grey market mops up a significant revenue.

“I know the in depth challenges,” said Wilhelm Schmid, Chief Executive of the German brand A. Lange & Söhne. The German brand has been evaluating an entry into the secondhand market for over two years, he told The New York Times. The brand is one of the many adopting a wait-and-watch approach, letting other players make the costly and time-consuming mistakes. “We are prepared to jump on it if necessary. But at the moment, I’d clearly label this as important but not urgent,” Schmid said.

 

Wilhelm Schmid, CEO, A. Lange & Söhne

Wilhelm Schmid, CEO, A. Lange & Söhne

 

Time could soon run out on that kind of thinking, given the prices luxury watches are commanding at auctions. In May, an Omega worn by Elvis Presley went for $1.82 million, a new auction record for the marque. The price was a fraction of the value that Paul Newman’s Rolex Daytona changed hands for last year: it became the most expensive wristwatch ever sold when it went for $17.8 million in October 2017. While both were linked to A-list celebrities, there is, nevertheless, too much at stake for the majors to contemplate.

 

Elvis Presley’s 18K white gold Omega wristwatch recently came under the hammer for a whopping $1.8 million—the highest price ever paid for an Omega watch

Elvis Presley’s 18K white gold Omega wristwatch recently came under the hammer for a whopping $1.8 million—the highest price ever paid for an Omega watch

 

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