Luxury watch shortage drives growth of $20 billion secondhand market
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A rush of companies are vying to become the eBay of high-end horology — including the storied online marketplace itself.
The Covid-19 epidemic saw a surge in demand for expensive watches. But the Big Four watch brands — Rolex, Patek Philippe, Audemars Piguet and Richard Mille — are holding firm on the limited production runs that make their timepieces so rare. There is a boom online in vintage watch buying and selling, with many start-ups trying to take over the market.
McKinsey projects that the value of pre-owned watches will reach $18 billion in 2019 and rise to $30 billion by 2025, according to McKinsey. According to McKinsey, pre-owned watches will account for about half of the new retail watch market by 2025, compared with about one third currently.
Toby Bateman (CEO of Hodinkee), a well-known watch collection site, said, “The preowned watch market remains very much like The Wild West.” Many watch-selling websites exist. The watch’s seller may not be the one they are buying from. It is impossible to guarantee its authenticity. They cannot guarantee it’s authentic. The watch may not work correctly, and they cannot guarantee its authenticity.
Hodinkee opened its first pre-owned watch shop on Tuesday. Here it will sell and buy watches manufactured after 1990. The company — which raised $40 million in December from the likes of NFL quarterback Tom Brady, singer John Mayer, Apple alum Tony Fadell and investor Peter Chernin — aims to be the “world’s preeminent brand for all things watches.”
Hodinkee will open a pre-owned shop in Atlanta with 250 watches. It also offers authentication and refurbishing services from its Atlanta-based watch factory. Bateman stated that Hodinkee has an advantage over other competitors due to its history and expertise as a respected watch brand.
Investors still pay attention to competitors. Chrono24, a German company, recently raised 100m euros ($116 million), from Aglae Ventures and General Atlantic. Chrono24, which was acquired for more than $1billion by the investors, is now considered the sector’s first “unicorn”. According to the company, it has 500,000 watches in stock from over 3,000 retail outlets and more than 33,000 private sellers.
Chronext in Switzerland was planning on raising $270million through an initial public offering. That would have valued Chronext above $1 billion. Chronext, however, said that it had delayed its debut last week due to adverse market conditions.
Chronext has put together a star-studded board — including former Facebook marketing chief Gary Briggs and former Barneys New York CEO Daniella Vitale — and aims to expand in the U.S. and Asia.
Watchfinder, WatchBox, and Watchmaster are all expanding their market share. Even eBayRolex is being targeted by the launch of an authenticity program. This will also target collectors who are more discerning.
It is unclear how much longer the watch boom will continue and if there are enough online sales. Privately owned brands such as the Big Four are responsible for most high-end collection. They have all maintained low production volumes despite large demand to protect their unique quality and exclusiveness. Morgan Stanley reported that Rolex was the most popular brand, selling 810,000 watches. Audemars sold 40,000 watches and Richard Mille sold 4,300.
In the short term, demand is likely to exceed supply. Prices in the secondary market have risen as stainless steel watches and popular models are difficult to find at retail. There is a long wait list and limited supply. Patek Phillippe Reference. The $35,000-retail price of the 5711 Green Dial was $490,000. It was auctioned off in July. Chronext reports that the Audemars-Piguet Royal Oak15500ST (blue dial), has nearly tripled in value since 2017, and is now worth more than $55,000. The Rolex Day Date 40, on the other hand, is up 76% from 2017 to reach over $50,000.
According to industry executives, the rise in global wealth due to stocks and crypto and the proliferation of information and watch collector sites online have created a new generation of collectors who are buying and selling watches online. The rise of social media, where collectors are more proud to display their Swiss status symbols through Instagram and TikTok has also fueled sales. It remains to be seen if the preowned market falls in demand and prices for watch sellers and buyers, as well as online marketplaces and start-ups.
Bateman stated that “there are many more people who consider themselves collectors or enthusiasts today than just a few decades ago.”
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