Buying Watches In An Age Of Hubris: One Collector’s Search For The Truth
A friend called me recently, thrilled that he just bought a rare 50th anniversary watch at a local boutique that shall remain anonymous. I shared his joy and asked him how he found it. He had never owned any watch from this brand, but another friend of his put him in touch with the local boutique, who told him they had two in stock and he could choose whichever dial color he wanted.
I figured that the boutique must have the other one in stock, so I called. I didn’t specify the watch but told the salesperson on the line that I’d like to come in and see what they have. They said I was welcome to make an appointment, but I should know that “they had nothing in stock.” I thought that was incredible: a factory-licensed boutique without one watch for sale seemed impossible, especially given my friend’s choice.
When I said I wasn’t sure if it made sense to come in, the salesperson told me, “People come in just to introduce themselves.” I replied that would be fine and asked if I could order a watch from the boutique’s parent company. However, she said, they don’t allow watches to be ordered and only sell what has been allocated to them.
Even then, I replied, “I understand. Can I just get on a list in case something comes in?” I was rebuffed again when the salesperson said, “No. We not only can’t tell what’s coming but when they come in, they’re always spoken for.” At that point, I gave up. Even if they had one anniversary watch in the back room, they weren’t going to sell it to me. In fact, they did everything to dissuade me from buying any watch.
My friend, while pleased with his new black-dial model, had also asked about the availability of the blue-dial version. The dealer told him, “We only sell those to individuals who have spent a million dollars with us.” Since I very much doubt that there are that many buyers, I decided it was likely that wasn’t exactly true. Besides, if the dealer really would get only what was allocated, then why even promise that to mega customers?
And not only there
A few weeks before, I had a similar experience involving another boutique of a different luxury watch brand, also to remain anonymous. I walked in and simply asked for, “Any steel sports watch with bracelet.” I knew they were scarce, but it seemed to me to be a simple enough request.
The sales clerk replied that they had none in stock, except one “used” one. That one looked brand new to me, and the boutique was asking about $20,000 more than the retail price of the brand it represented.
I looked puzzled and said, “Isn’t that a bit high?” The clerk replied that it was “market price,” although my research found that to be about $10,000 too high based on secondary market pricing. The salesperson also politely refused to put me on a waiting list, saying they receive only what they’re allocated.
In the latter instance, I reported my encounter to the company itself, who apologized, indicating that was not how they want their company represented and would take corrective action. The representative also said that they had no knowledge of when another model would arrive but would add me to the list of interested buyers. I’ve had that occur before with other brands, and I never received a call back, not even after years. They decided to humor interested buyers but without any real intent to fulfill their list.
Back to the anniversary watch . . . did I really want it after all?
For the anniversary watch, I thought of asking for help from a friend of mine, an executive with the company. I then decided against that, not only because I dislike asking others for favors, but I also wasn’t sure I wanted to do anything with that company. In the other situation, I added my name to the list as I not only believe the watch to be outstanding in design and craft, I trust the company to handle a direct sale with integrity. Over the next year or two I’ll see if my trust was misplaced.
What has occurred in both cases, I believe, is that a scarce product, whether intentionally created or simply due to unanticipated demand, has appealed to an incredible arrogance motivated by, to be candid, dealer greed. My best guess is that, eventually, the market will crash. There can be a softening of demand as buyers look at entirely different luxury goods, be they jewelry, art, automobiles, or many other items. Or a recession, which hopefully won’t occur, may remove enough potential purchasers to soften the demand curve.
However, we have today a luxury market perhaps unlike any other in history. While there always has been a luxury segment for many consumer goods and services, it now has expanded exponentially. Some have blamed the cryptocurrency market or other investments, but that might be a simplistic explanation of a complex phenomenon. A rising tide has always buoyed all ships, but today’s market, especially for watches, appears different.
Many people now view expensive watches as investments. Given the market crash in the spring of 2020 as COVID-19 brought economies to a standstill and the stock market witnessed precipitous plunges, a segment of our society has turned to hard assets. And investments that can be worn serve double duty.
The numbers reflect this boom. Exports of watches with public prices over CHF 6,000 increased almost eight percent in the one year between 2020 and 2021, while lower-priced watches declined in export value. Over the past 20 years, the greatest growth in pricing has been at the higher end of the watch market.
The allure of a valuable asset that will increase in value has caused some newcomers to not know what they’re buying. Of course many do, but there also is a new breed of younger consumers with more disposable time on their hands, sometimes working at home. Many have never experienced a watch market crash.
As someone once said about certain art buyers: “They buy with their ears and not their eyes.” Whatever is in vogue in the watch world often spirals to new demand heights. Many buyers worry about the colors of their dials or straps and much less about the real skill underlying manufacturing a precision instrument. Some even probably don’t know if their watch has a rubber band inside causing the hands to move, or at least they ask about changing batteries.
The internet influences the luxury market
The internet’s interplay with the luxury market has not been fully assessed, but also plays a significant role here. Twenty years ago, watch companies were wary of the internet, and many believed that a customer had to see the actual watch and try it on in person. They were fixed in old-school ways and protecting their dealer networks.
That sometimes is the case today, but the internet has changed buying patterns. Some companies now sell online: a few directly, many through newly established boutiques and also as some of their dealers do. Importantly, the internet has allowed a deep and broad secondary market to develop, especially given relatively large price markups. Online logistics and information have fueled a bonanza. Watches now are accessible to buyers not in major cities. Everyone can learn product details and pricing information via the internet. And with additional stay-at-home time, plus the disadvantage of being stuck inside to avoid a virus, a buying explosion occurred.
It might be tulip mania, but I suspect these dealers – the ones manipulating buyers and the market – will have every incentive to continue. In fact, there are many more of them than there used to be, and in a petty sense some are very clever. They’ve been survivors and have found a new milieu to exploit. It never makes sense to reminisce about the good old days, but this combination of dealer greed plus scarcity and surging demand, all fueled in part by the internet, has taken a lot of enjoyment out of watch buying.
It would be incumbent upon major watch companies, especially the famous manufacturers located in Switzerland, to address these issues better than they have. Some of them, I believe, enjoy this scarcity, which they believe makes their luxury products more desirable. That’s short-term thinking, and it may come back to haunt some. Fortunately, a few Swiss watch companies do not act this way.
Some people have proposed a free-market solution: that dealers should price their wares at whatever price they’d like. While that might solve a shortage problem, it raises numerous other issues that consistent pricing has historically resolved. It also ignores the role of company-owned boutiques, direct sales, and disgruntled consumers who discover they have significantly overpaid compared to others. It’s a good way to solve one problem and create others, at least in a world without perfect knowledge and communication.
Moreover, it’s not just an issue involving some dealers and unauthorized resellers. In my opinion, many of the best-known brands have become the most difficult to deal with, including those requiring headquarters’ approval for some purchases or review lists of prior purchases. Or companies that change from a steel limited production model watch to a titanium one at almost double the retail price.
Imagine the corporate meetings in which these allocation or pricing issues are discussed. They seem to be justified in the minds of executives as ways to “reward” apparently loyal customers at the great expense of interested newcomers. It might appear as a logical step but ultimately it might be detrimental to consumers and potentially lethal to the entire luxury watch industry.
There is no simple solution here. But if management always begins from “top down” then watch companies must lead the way. They must develop better tools to deal with maverick dealers and opportunistic resellers. They need to develop consistent and logical policies, especially on pricing and distribution, that serve everyone and will continue to do so in the long run.
That’s not an easy task, but it is time to start.
Michael Friedberg has been collecting watches for close to 30 years. For 20 years, he helped a major Swiss watch company with its consumer marketing, including assisting in the development of a collector internet forum and subsequently writing numerous articles about its watches.
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There is The Most Simple Solution imaginable.
Do NOT buy.
If any seller of any item does not treat you with common courtesy, walk away and never go back.
I remember a while ago, I was in a shop (the product doesn’t matter) and I asked to see models under a certain price. The salesman pulled one from the shelf and said,
“This is good,”
(It was 15% over my clearly stated budget)
“And you will sell it to me for (budget price)?”
He looked confused and replied “No.”
I simply walked out the door.
There are many times we have to be humble and bite our tongues. Dealing with officials in a foreign country, talking to our boss’s boss, dealing with banks.
Spending thousands of dollars on a completely discretionary item is not one of them!
DO NOT BE TREATED WITH DISRESPECT IN ORDER TO BUY A FRIKKIN WATCH!
Personally I believe that there should be a ln official report sent to The Swiss Government about this issue. It has become a scam and must be stopped.
I’m not sure about the governmental notification part (it is, after all, a free-market economy).
However, I am in 100% agreement with the rest of your post. On unnecessary items, prices go up only because there are people willing to pay those prices. Hype is an incredibly specious reason to purchase anything.
I think you mean an uncontrolled economy in which bad actors are making a fortune at most people’s expense.
Ha, easily can tell you’re talking about AP and Rolex. What an absolute joke the watch industry has become. When watches are no longer a hype flex, I’d love to see these companies’ strategy bite them back 10 fold.
With respect, you didn’t identify the two brands correctly.
Oops, too much of a coincidence then with 50th anniversary and blue dials
And stainless steel sports watches with bracelets 🤔
They’re the ones I would have said too…
Actually, you didn’t guess both correctly.
AP and PP.
The anonymous watch is, of course, AP, who is celebrating the 50th anniversary of its Royal Oak. AP is one of the big three and the worst one of them when it comes to welcoming new customers. They require a new customer to buy their failed Code 11.59 before admitting you to their club. Once you buy a Code, you will be offered a ROO, a watch of hideous proportions that is gradually becoming unfashionable. The “Empty Boutique” has become a selling technique for AP and I advise new customers who want to spare themselves the indignity to stay away.
Thank you for articulating the sentiments that many of us carry, and that have put us off to what was once an enjoyable hobby. I have come to see the state of the industry is not about to change its practices. The brands and their retailers are in a symbiotic relationship to exploit their arrogance and avarice as much as they can without regard. Through experience I’ve come to see the ADs/retailers are as guilty as and in collusion with the brands themselves. They have no compunction lying or behaving badly, as if they’re doing the customer a favor by just allowing him/her to enter the store. It’s outrageous. These crooks and their way of doing business are destructive. But they could care less.
Name the brands! They deserve the bad press.
I guarantee it’s AP and Rolex.
Unfortunately your guarantee is not correct, although both brands might have difficult sellers.
hi michael, your over insistence in denial of the guilty brands names serves only to confirm that these readers, obviously watch afficionados in their own right, are very likely correct🤷🏻♂️Rolex is definitely guilty, they built a full fledged store at the 24H Lemans track last june, complete with 6 security guards/fashion models and nothing to sell. Come on!
Rolex indeed might be guilty also, but the two experiences I mentioned at the beginning of the article, at two brand boutiques, did not involve Rolex.
There are several other brands that also might have retailers manipulating allocations.
Hopefully watch collectors are not junkies, (at least not all of them). We can unconvince ourselves that we need an AP or a green datejust. We can vote with our money. It is very possible that the watch collectors are no longer the main target of some brands. As to find ways to fix the grey market, I don’t see what is the real incentive for the brands. They sell plenty of watches at good prices which eventually end up on the wrist (meant in the safe) of happy customers, and these can afford a very large markup over retail price (which starts to become a bit of an obsolete concept). I can see the day of new models being sold by the brands at auction price,.so that they capture the high markup of grey market.
To finish with one more fun aspect. I bought a couple of years ago a luxury watch (12k$) retail at that time. Today the same thing is 16k$ at retail, over the course of 3y. I can’t really make sense of this steep increase, but I suppose offer and demand still rules ruthlessly.
Very well written article, and this is as rare as some of the models of brands we talk about.
Quite simply the motto of the last few years remains; “Greed is Good”. As more of the AD’s disappear into the night, boutiques continue to grow, there is little room to develop a working relationship with your “local” AD. The manufactures have a simple plan, eliminate more of the AD’s, expand their own footprint with branded boutiques, and maintain far more of the profits. I have personally seen and experienced more of the take it or leave it pricing structure and attitude from sale people. So I made the decision to explore lesser known brands that actively wanted to Earn my business! Novel idea, Yes? As for the boutiques, let’s see how they do in the long run. Tourbillion, a Swatch high end timepiece vendor, lasted only a few years in Seattle. Will be interesting how it all plays out.
Totally agree with the previous comments. Why did AP create their ‘houses’ if they have no inventory? A bit overpriced anyway. Why not buy what is available? Plenty of brands with integrity selling watches that are affordable and great to wear. As you said, we are letting the internet hype something that doesn’t need to be hyped.
Obviously commenters are correct on brands. And what a lame article not to name them. If you don’t have the guts to name the brands then just stick to the reviews and fluff pieces. On another note, You’ll see this market change too. Within the next 6-12 months for max impact. Lots of deniers who haven’t been through severe economic downturns before. It’s here. Takes some time for many to realize things are bad and luxury items should be delayed. Of course there are always some who can afford it but Demand will decline even more and market will adjust.
Thank you for your comment about a “lame” (what a teenage word) article and your absolute insistence this will be temporary. You must atypically understand economic markets well.
You didn’t understand, however, that the name of the brands was not my point. I could easily name at least a half-dozen brands, which almost all here already know. My point is that the overall production and distribution systems are broken and need repair.
I believe that some luxury marketing now is using the Birkin-strategy for exclusivity. ButI also I suspect that there are “under the table” deals since many products quickly appear on the secondary market. Those concerns have nothing to do with naming brands but rather reflect on broader economic issues.
“You must atypically understand economic markets well”.
Every single person I have ever read who has claimed to “understand markets” has been an apologist for them.
You are a welcome exception.
However, I am struck by the irony of the fact that we are all complaining about not being able to access high luxury items while most other far more prosaic and essential so-called Markets have already been broken for decades, on purpose, by the very type of person who has now turned his attention to destroying the market for those luxury items.
Actually I have had a terrible year and tried to sell some watches on chrono24. Only my Tudor Prince has gone. This was a shock which has caused me to seriously re-evaluate my buying patterns.
AP – 100%
We all jump to one must be Rolex aka the king of sports watches and the Grey market games, Dealer corruption (gotta buy 2 ladies Date Justs and this to get this), etc. AP, PP, VC, ALS, Rolex… any more folks?
I moved most of my big $$ (Own Rolex Omega too) to indies years ago before the shift. I also pre-pandemic have a great Rolex dealer I got Blue Milgy than a deep sea with minimal wait for the deep sea (Changed from Cameron to DS). These Practices definitely sour some on Brands…. wonder if they will ever get $$ blowback for doing this?
Kari V, Gronefeld, Moser, Czapek, Moritz Grossman, Kudoke, MB&F, SUF, Sarpaneva, and Laurent Ferrier, are some of the bigger $ Indies where a bespoke experience can accompany the watch creation. So much more rewarding than the big houses IMO.