Over the past four years, the market for luxury pre-owned watches has been on a down cycle, to put it mildly. Sales exploded during the Covid-19 pandemic, but now they’re tanking — though most stakeholders say it’s less a crisis than it is a return to normal.
The pre-owned market began to heat up in 2020, when shuttered retail stores and locked-down watch factories meant fewer new goods, and consumers reallocated their travel budgets to other, more tangible luxuries. Sales zoomed, speculators moved in, and suddenly prices on blue-chip models from brands like Patek Philippe, Audemars Piguet and Richard Mille were selling for as much as five times their retail value.
Prices on the secondary market peaked in May 2022 and have been dropping ever since, with 2023’s fourth quarter marking the seventh consecutive quarter of decline, according to a mid-January report from Morgan Stanley and analytics company WatchCharts. Prices have continued to drop in the first half of 2024, as a report from the two companies revealed in July.
“Given reduced market speculation, worsening value retention, depressed absorption rates (inventory turnover), and the historically high age of inventory, it seems unlikely that secondary prices will stabilize in the near future,” said the July document.
Even auction houses, which sell the generally recession-proof top category of luxury watches, saw those sales dip 13% in 2023, according to industry consultancy The Mercury Project’s Hammertrack report.
‘We’re not panicking’
But is this a crisis? Secondhand dealers seem more relieved than stressed about the drop.
“Prices have definitely come down the last few years, but they went up so fast and so high that there’s no way that the market was going to sustain that kind of pricing,” says Joe DeMesy, president of DeMesy Fine Watches & Jewelry in Dallas, Texas, which sells both new and pre-owned watches. “As soon as supply and demand caught up with pricing, the prices definitely dropped back. But the pre-owned market is huge. I mean, for every hundred pre-owned watches we sell, maybe we sell 10 new ones. Our business is booming. We’re not panicking at all. Basically the market has settled into where it should be.”
Some dealers say they’ve escaped the downturn altogether.
“It’s important not to apply a broad-stroke analysis across the entire pre-owned watch market,” says John Shmerler, CEO of The 1916 Company — a merger of online dealer WatchBox and three other US jewelers. “While demand has shifted in certain categories, we are still seeing strong sales across The 1916 Company. In the specific segments we focus on — high-value collectibles, independent watchmakers, and the Rolex Certified Pre-Owned (RCPO) program — we’re seeing trends that diverge from what WatchCharts is reporting on a global scale.”
There are several other macro factors influencing “the cyclical nature of the market,” he observes. “During the early days of the pandemic, for instance, the watch industry benefited as consumers shifted their spending to luxury goods in a substitution economy, given fewer opportunities to spend elsewhere. That effect is now tapering off as consumer options have broadened.”
The advent of cryptocurrency also fed the upsurge. “When discussing the impact of the crypto market, it’s similar to other moments in recent history when new forms of wealth were created,” continues Shmerler. “During times of rapid growth in cryptocurrencies, for instance, we’ve seen a corresponding rise in demand for high-end watches. For example, when Bitcoin surged from $42,000 to $62,000, it fueled strength in the upper tiers of the watch market.”
Resilience at the top
During the nine-quarter slump to date, the pre-owned sector has become a buyer’s market instead of a seller’s market in some ways. However, certain brands and models have remained almost immune to the price declines.
“We’re seeing growing interest in elite independent brands and models in the $50,000-plus category, which remains a bright spot in the market,” says Shmerler. “We continue to observe strong consumer demand for independent brands such as F.P. Journe, De Bethune, H. Moser & Cie., and Greubel Forsey.”
Overall, in fact, he says sales have not gone down at 1916: “We’ve seen year-over-year growth in the high single digits to low double digits so far this year, demonstrating resilience in the segments we specialize in.”
Contributing to that resilience is the pre-owned market’s considerable size. Sales of secondhand timepieces hit $24 billion in 2023, around a third of the retail value for all luxury watch sales, according to EveryWatch, which tracks secondary-market transactions worldwide. And despite dropping in 2023, auction sales were still high at CHF 610 million ($696 million); for comparison, 2021’s auction sales for the category came to CHF 634 million ($646 million). It seems the 1% are, as they say, impervious to the vagaries of the market.
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Main image: Rolex’s Certified Pre-Owned scheme officially authenticates Rolexes up for sale on the secondary market. (Rolex)
