Presenting a preview for trends to watch at the upcoming Baselworld 2022.
If 2020 was the year that the luxury market found its feet online thanks to pandemic-induced digital shopping, then 2021 will go down as the year that luxury marketplaces shook up the resale / pre-owned watch market, as watch fans adjusted their purchasing habits and dialled up on digital.
Second-hand luxury watches are seeing huge consumer demand, according to recent market analysis by McKinsey & Co. The pre-owned market represents 27% of all watch sales across the premium to ultra-luxury value segments, according to the research firm, that expects the market to further expand by between 8-10% per year from 2019 to 2025, generating annual sales of $29 – $32 billion, which is up from $18 billion in 2019. This level of growth is faster compared to new luxury watches, which are forecast to grow only 1-3% annually for the same period.
Much of this growth has come from a handful of online marketplaces that have raised their game in terms of product offering and authenticity accreditation with warranties that have done much to change consumer perception about the pre-owned or resale market in recent years. With secure payments and investment in easy to navigate online valuation tools, plus seamless customer service, the likes of Watchfinder and Chrono24 have changed the marketplace. These platforms have facilitated a seismic shift in the way watch collectors buy and sell luxury watches – compared with just 5% in the new product category, 30% of pre-owned luxury watches are now sold online, according to McKinsey. It’s no wonder, eBay UK just launched a new authentication service for watches sold over £2000.
Unsurprisingly, China is one of the fastest-growing pre-owned markets and has seen around 20% year-on-year expansion over the past four years. Chinese luxury watch collectors have been slow to get over the stigma of second-hand, but demand is now being driven by increasing numbers of online luxury shoppers, the trend for individualism among the youngest cohort of Gen Z luxury shoppers (who value vintage more than older generations) and a growing maturity of pre-owned luxury online marketplaces (JD.com partnered with Farfetch in 2017 and in 2021 it launched a dedicated resale platform called Jing Zhi). For Chinese audiences, the focus is about including specialist authentication and livestream sessions with celebrity KOL hosts via platforms such as WeChat or Weibu.
Pre-owned market investment wave
A number of investment deals in H2 2021 have underscored the dynamism in the pre-owned watch market, which is being driven by increased online shopping habits since the pandemic. A few start-ups are well placed to benefit from the surge of online watch buyers.
“People couldn’t spend on restaurants, hotels, experiences, and travel anymore. So, they were sitting at home and then, as revenge, buying luxury watches,” says Tim Stracke, co-CEO and founder of luxury watch marketplace, Chrono24.
Chrono24 was founded in 2010, and after the company’s revenues grew 50% in 2020, it is now a ‘unicorn’ after raising a $118 million funding round in August 2021. Chrono24 expects to see transaction values of roughly $2.9 billion in 2021.
“As originators of the digital marketplace concept within the luxury watch world, we’ve built a platform that not only supports and encourages evolving consumer behavior, but also provides invaluable proof of concept to an industry that has traditionally shied away from disruption,” says Stracke.
With high-end watches and jewellery listed as the second-best performing luxury goods category in 2020, according to McKinsey & Co, due to their investment value, people are buying vintage watches because they are currently seen as “super stable in value and mostly appreciate over time,” according to Stracke.
One of the best known names in the online luxury watch market, Hodinkee has recently launched a pre-owned watch shop, where it will buy and sell watches produced after 1990. The company has grown from an editorial content hub for all things watches to e-commerce platform and raised $40m of investment in December 2020. “Hodinkee aims to be the go to resource for every consumer’s journey with watches, and pre-owned is our next step in doing that,” says CEO Toby Bateman.
Early to see the market potential of pre-owned watches was Richemont with its 2018 investment in online marketplace, Watchfinder & Co. The company’s CEO Zahra Kassim-Lakha says the pre-owned market has been growing fast recently, resulting in more choice and availability for consumers.
“Until not that long ago, many customers didn’t know you could buy pre-owned watches safely. And they didn’t know they could sell and trade their watches. The market didn’t exist. But now we have this circular economy, which we’re seeing across luxury categories. This dimension is key to the growth of certified pre-owned,” she tells the Business of Fashion.
In July 2021, Net-a-Porter and Mr Porter decided to tap into the hot horology vintage trend with their exclusive partnership with fellow Richemont Group company, Watchfinder & Co. The partnership was designed to appeal to watch collectors and enthusiasts who have been increasingly seeking out heritage timepieces that have either been discontinued or are difficult to find at retail. It also services the trend for consumers seeking out more sustainable purchasing options and those who are interested in the circular economy.
Both Net-a-Porter and Mr Porter feature a dedicated ‘Pre-owned by Watchfinder & Co.’ section listed on their websites, complete with in-house watch specialists who are available for personalised recommendations and offer virtual one-on-one shopping appointments and access to exclusive invitation-only events.
The collaboration marked both of the online retailers’ first forays into the pre-owned luxury watch market and saw 108 different timepieces launch – including unique limited editions and rare discontinued models from the last three decades from some of watchmaking’s finest brands such as Breguet, Patek Philippe, and Rolex alongside luxury names Dior and Cartier.
Vintage: a new value-economy
Keeping tabs on drivers for the pre-owned watch market, Chrono24’s Stracke thinks the practice of some brands discontinuing certain lines (meaning demand outstrips supply), is not a long-term strategy. “It came as a big surprise that brands are discontinuing these super successful pieces,” he told Highsnobiety in May. “But everybody knows that they will very soon replace them with similar models, so it’s not that the series is completely over………If a watch is getting too popular, and if too many people are owning it, it might not keep the value and it might not be as scarce. So, this is why I think it’s a bold move but also smart.”
Rolex has been identified as a brand that likes to maintain it has a very limited distribution of new watches, according to a report by Insider, that suggests this could be a reason why Rolex’s current models such as a steel Daytona, priced at $13k on the Rolex website, immediately jump in resale value, achieving a listing of $36K on the Chrono24 platform.
Dress to impress
The collaboration between Watchfinder & Co and Net-a-Porter attests to the trend for more vintage dress watches being sold to customers searching for unique, archive pieces.
Arjen van de Vall, Chief Executive Officer of Watchfinder & Co, told Forbes: “There’s been a noticeable return to more dress-style watches and smaller case sizes. This can be seen in the market through the popularity of the Tank de Must collection from Cartier and in particular asymmetric watches in pop-culture such as the Cartier Crash.
Vintage is the new bling for increasingly discerning watch collectors.