Where The Watch Market is Headed…
Not long ago we were in the age of watch prices being so far above retail for so many sports models. It was COVID, and everyone was getting free money in their pockets to spend on “necessities” but in reality people bought non-essential items like watches. The stock market took off, crypto bros were living the life, and more importantly interest rates were at an all time low. All of these factors, including boredom, lead to the rise of watch prices. But all good things come to an end. Because of the economy, greed of some brands, and the credit card warriors, the market is coming down.
Where are we now?
Over the last year sports models have been on a massive decline. Bloomberg even writing this article: Rolex, Patek prices hit two year low. The Bloomberg Subdial index, which tracks the 50 most traded watches on the secondary market, is down 42% and perhaps even more since April 2022.
There are a multitude of factors contributing to this decline. We have the rise of inflation. People’s living needs are skyrocketing and owning luxury goods, in this case watches, are not in the cards. Thus there are multitudes of timepieces entering the market. A lot of these watch buyers were overextending their budgets including crypto bros, mid-life crisis adults, or credit card warriors.
A lot of these people were buying these watches on debt (using credit cards or other online debt service companies) in order to afford these timepieces and flex on others. But when the time comes to pay the bill, and the cost of living is up, they needed liquidity.
The other reason for this decline is not the buyers fault, that can only go so far. I think the brands have done a massive disservice to the community buying in. You see during COVID it was even harder to get Omega, Tudor, IWC, etc if you wanted one. A lot of these brands wanted to increase their production in order to meet this heavy demand; for one, to make the customers happy, and two, to obviously increase their bottom line.
What happened though is what we are seeing now. Display cases in watch boutiques for brands not named Rolex are FILLED. Speedmasters, Seamasters, Big Pilots, Navitimers, etc. are readily available. So much so that these boutiques need to sell wholesale to grey market dealers in order to stay afloat. Thus, the grey market gets flooded with these pieces. That is why when you go online and sell “Brand New 2023 Unworn”, and wonder who bought this just to never wear it: it was a watch that a boutique couldn’t sell.
Where are we going?
Because of the state of the economy, inflation continuing to rise, and production for these models at an all time high, consumers are now much more conscious about where their dollar goes. People will always buy watches, but why would someone pay $8,000 for an Omega Speedmaster from a boutique when they can go to the grey market and pay $5,500 for one brand new? It doesn’t make sense, and I think these massive watch brands are in for a world of hurt.
Watches are not an investment, and I will never claim that they are. But when you are spending thousands of dollars, you would at least hope that some sort of value is retained. When brands are pushing out so much supply into the market, I really don’t have a lot of faith that any of these modern watches retaining their value. There are so many watches to be had that at a certain point what makes them valuable?
Take Rolex for example, back in the 70s and 80s they were producing under 100,000 watches per year. Which compared today is like nothing. Today they are making 1,000,000+ watches per year. At a certain point that is just too much supply and there will be a time where there isn’t enough demand and these watches will crash.
Speaking of crashing, I think we are still in for some market decline at some point in the next few years. We have seen a 40%+ decline in the market over the last few years as discussed, but Rolex for example is being propped up by the secondary market. Have you seen these watch dealers on TikTok, Instagram, among other places online? Have you seen them trading watches? How often are they selling to an end user? (the person that is actually going to wear it). Hardly ever.
And that’s my point. I would say without any solid evidence, except for my experience, 95% of the Rolex market is being propped up by grey market dealers flipping to each other. Each dealer making $300 profit until it reaches an end user. I personally don’t know anyone that will buy for example a Batman for $6,000 over list price to wear it. And there definitely are people, but there are very few.
All in all I want to leave you with this one thought: buy what you love. There’s a lot of discussion for where watch prices are going, and if you love a watch you have or one you see, don’t let this article stop you from keeping/getting what you like. I am just here to provide context to the watch market and industry in general, and I hope you see some truths in what I am saying.
After all, we aren’t watch dealers. We are watch collectors. Big difference.
