The market for collector’s watches has its own specific set of rules. Watch expert Manfred L. Brunner provides an introduction to these rules and shares his views on today’s watch market.
Everything changes over time, including the luxury watch market. However, the actual change in the ladder is affecting the primary and secondary markets in very different ways.
Wristwatches are generally sold through official channels such as monobrand boutiques, licensed multi-brand retailers or, increasingly, online stores. For decades, the prices at which these channels have been selling their wares have been based on non-binding retail price recommendations. However, whether or not and to what degree these recommendations are ultimately followed depends to a significant degree on how strong the demand is for the product.
Watch manufacturers take different approaches to how they sell their watches. Rolex, which is currently the world’s best-known and most sought-after watch brand, does not operate any stores itself. Instead, the company, which was founded in 1905 by Hans Wilsdorf, has a tradition of cooperating with selected retail partners. These authorized partners sell the watches either in monobrand boutiques, brand corners or alongside watches made by other manufacturers.
But no matter the channel, demand for Rolex watches exceeds supply by a wide margin. And despite this fact, Rolex requires its dealers to carry a range of exhibition-only watches. Such pieces can only be purchased after they have been explicitly released for sale.
The individuals who are lucky enough to get their hands one of these watches have no illusions about negotiating a potential discount. Any such discussions are pointless, because the next customer in line would immediately jump at the chance to buy the watch at full price. So in the end, the price paid is the recommended non-binding retail price.
However, Rolex hasn’t always enjoyed such a strong seller’s market for its products. At one time, the storied brand had a somewhat dubious image. That is now a thing of the past, but until about eight years ago, it was still possible to negotiate a discount of one or two percent, provided you weren’t in the market for a Daytona Chronograph in stainless steel, which has been in high demand since 1988. Needless to say, times have changed.
Just about everyone on the planet knows that Rolex watches can be sold in the blink of an eye, risk-free and for a profit. Hence the existence of the infamous “flippers”, who can be found at Rolex dealers every day. With what are often flimsy arguments, they try to convince dealers to sell them a Daytona, Submariner, GMT-Master, Sky Dweller, etcetera, in the hopes of turning a quick profit.
Sales staff are all too familiar with these flippers, and make sure they leave the store empty-handed. The waiting lists for Rolex watches are very long. Priority is therefore logically given to regular customers who often purchase jewelry and less in-demand timepieces. But even these customers have been known to on occasion sell a Rolex at a premium shortly after receiving it.
A consistent sales strategy and overwhelming demand for its products have enabled the family-owned company to grow its sales to around two billion Swiss francs.
Gisbert L. Brunner on Audemars Piguet
This is much to the chagrin of manufacturers and authorized dealers, who might sometimes themselves be tempted to leverage the strong demand for the watches to increase their own profits. This topic and the role played here by strawmen, is in fact explored in depth in a number of internet forums. There is also a heated debate on the internet about whether it is appropriate to require customers to purchase considerable quantities of jewelry or other goods before selling them a Rolex, a Patek Philippe or an A. Lange & Söhne. But these complaints and rants won’t change anything.
While Rolex leaves the retail side of the business to others, Audemars Piguet has taken the exact opposite approach. Six or seven years ago, independent retailers were selling its classic flat Royal Oak at a steep discount. Today, there are doubtless many people who regret not having bought it at the time. But they didn’t, because the re-sale price for this watch, designed in 1972 by the designer Gérald Genta, was nowhere near where it is today – at In order to re-sell it, the price had to be discounted.
Four years ago, François Bennahmias, the CEO of Audemars Piguet since 2012, introduced a completely new approach. Longtime retail partners could either go along with this change and open an Audemars Piguet boutique, or lose their right to sell the watches. Part of the strategy was to house the exquisitely furnished AP boutiques on the upper levels of buildings in prime real estate locations, thus keeping leasing costs in check.
Walk-in customers usually leave these boutiques empty handed, because the watches that are available are usually already reserved. But either way, “discount” is a foreign word at Audemar Piguet too. A consistent sales strategy and overwhelming demand for its products have enabled the family-owned company to grow its sales to around two billion Swiss francs and to overtake its long-time competitor Patek Philippe.
Audemars Piguet ranks among the very top luxury watch brands, thanks in particular to the iconic Royal Oak, which turned 50 years old this year. But speaking of Patek Philippe: their fine timepieces, which are manufactured in Geneva, can be purchased either in boutiques operated directly by the company, or by partners, or in traditional multi-brand retail outlets. But no matter where a person goes to buy one, their experience will be the same as for people looking to buy a Rolex or Audemars Piguet.
Just a decade or so ago, you could buy particularly sought-after items such as the Nautilus and Aquanaut straight from the store and even negotiate the price down a bit. But like with numerous other watch brands, it has been hugely hyped and as a result, delivery bottlenecks are the norm.
Watches that are casual yet elegant, and have a touch of luxury are currently the most in demand. These include Odysseus by A. Lange & Söhne, Alpine Eagle by Chopard, Laureato by Girard-Perregaux, Hektor by Lang & Heyne, Tonda PF by Parmigiani Fleurier, Polo S by Piaget, Ripples by Speake-Marin, Overseas by Vacheron Constantin and, more recently, the Defy Skyline by Zenith. If you want to get your hands on one of these timepieces the official way, you need to have good relationships.
Incidentally, Audemars Piguet is setting a precedent with its successful approach. Brands that can afford it are increasingly looking to operate their own exclusive sales channels, thus enabling them to optimize margins. Popular or limited edition watch models are then generally exclusively available through these channels. Getting direct access to the names and addresses of wealthy clients is one of the goals of this strategy, as that is information that independent retailers are not willing to share. This intangible asset is a valuable commodity for everyone operating in the watch market.
This situation is ideal for secondary, parallel and gray market dealers. Their business model has stood the test of time because it helps the traditional retail sector move hard-to-sell items. This in turn results in liquidity. Breitling, for example, has started to accept discontinued models and exchanges them for current models, to which they apply a certain discount. After undergoing any necessary maintenance, these watches usually end up being sold at Breitling-owned outlet stores at a 30 percent discount.
Successful luxury brands are trying to fight the trend of flipping unworn watches by posing as potential buyers on internet platforms such as Chrono24 or Chronext. If a customer is caught red handed trying to flip a watch, they are put on a blacklist. The dealers receive a warning.
The secondary market does not face the shortages that exist in the primary market. Everything that is not available in the official market can be bought there immediately – some items can even be found in the abundance. Anyone who does a search for the most in-demand luxury watches on the Chrono24 website (currently the largest marketplace for luxury watches) can choose from the full range.
However, the stumbling block in the parallel market is the fact that these watches sometimes command significantly higher prices. Aficionados will ask themselves whether an unused Patek Philippe Nautilus reference 5711/1A-010 that is officially no longer available, is really worth the 160 000 euro price tag. After all, that is more than five times the official recommended retail price.
The same applies to the 50th anniversary edition of the Royal Oak. The official price of the 2022, 1000-piece limited edition 16202ST with a specially designed rotor is already significantly higher than its predecessors, coming in at 34 100 euro. In the parallel market, the initial asking price at the beginning of 2022 was around 300 000 euros. Whether this exhorbitant sum was actually paid is unclear. Currently, the watches are going for about half that amount. Which is still too much.
The A. Lange & Söhne Odysseus reference 363.179, which is also made of stainless steel, but is considerably rarer in terms of quantity, is a more moderately priced acquisition. Customers that are well known to the brand, or in other words, people who have bought their products in the past and are considered reliable, can buy one exclusively at the brand’s own boutiques at the official retail price of 33 000 euro. This compares with a current minimum of 85 000 euro on the internet. One seller recently decided that this amount was unrealistic, and in an attempt to secure a sale, reduced the price to 75 000 euro.
The 99 examples of the Hektor produced by the small Dresden luxury manufacturer Lang & Heyne sold out in no time in 2021. The retail price per watch was 16 900 euro. Today, the models with a gray dial are going for 35 000 euro, while models with blue or green dials cost considerably more. This phenomenon, which can also be observed for watches from other manufacturers, is a reflection of what happens when customers’ emotions come into play.
In the case of the Rolex Oyster Perpetual Cosmograph Daytona reference 116500LN in stainless steel, which officially retails for 13 550 euro, lighter-colored dials are more in demand than black ones. This is reflected in gray market prices, which start at 35 000 euro. Blue, on the other hand, is the preferred color for the stainless-steel Sky-Dweller Annual Calendar reference 326934, which is why it costs more in the secondary market than its siblings with black or white dials. But this trend appears to be losing steam. Gone are the days when sellers could get 34 000 euro in the parallel market. Its price has dropped to 27 000 euro, less than twice the official price, which is 14 500 euros.
Between early 2021, when no one was yet talking about the war in Ukraine, the energy crisis or the threat of recession, and April 2022, prices for luxury watches generally declined by 20 percent or more. But although prices have come down significantly, they still very far from reflecting the material value of any of these timepieces.
People are paying a substantial surcharge for the luxury of wearing something that is currently popular and for which they quite simply want to be envied.
Although the current crises do not affect well-heeled watch wearers as much as they do the rest of the world, even the wealthy are more reluctant to spend these days. Their compulsion to buy has decreased noticeably. Which means it is unlikely that the gray market has bottomed out yet.
In the tumultuous months leading up to April 2022, speculators and dealers stocked up on goods that they paid top dollar for in the hopes that the upwards consumption trend would continue. But this merchandise is by no means flying off the shelves, and, in cases where liquidity is tight, it is being sold at a loss. So the layoffs at Chronext are no coincidence.
Greed and looking to make a profit are terrible guides when buying a luxury watch. People who are prepared to pay a steep price for an item because of their love of watches, and who continue to enjoy their watches even if prices tumble, get the most joy out of these investments in the long run.
And that should be the main motivation for purchasing any luxury wristwatch, no matter its provenance. If buyers want to avoid disappointment further down the road, one thing they can do is to define a maximum amount they are willing to pay for a timepiece. Also, they should be prepared to wait. Having a bit of patience is not a bad thing, because they might reach the top of the waiting list one day and get their dream watch that way.
The wristwatch boom, which is a unique phenomenon, is not likely to slow down any time soon. Global demand is quite simply too strong for that to happen. And should demand start to drop, clever CEOs will always find ways to ensure that demand exceeds supply.
Watches that are immediately available cannot appreciate immediately. However, true wristwatch classics whose appearance change little, if at all, over the years, can appreciate over time. Examples include the Lange 1 from A. Lange & Söhne, Navitimer by Breitling, Tank or Santos by Cartier, Portugieser by IWC, Tangente by Nomos, Moonwatch by Omega, Big Crown Pointer Date by Oris and Monaco by TAG Heuer.
Inflation, wage increases, higher material costs, technical optimizations and changing exchange rates are all drivers of increasing prices over time. For example, the steel hand-wound Reverso Classic from Jaeger-LeCoultre today costs about three and a half times what this iconic watch, first produced in 1931, cost in 1993.
So anyone who follows the market and this approach will not be disappointed. Things may change over time, but these classic luxury watches are always a good investment.
Header Visual © Elliott Franks / eyevine / laif.