Geneva No sign of the crisis: despite inflation and the banking crisis, Cyrille Vigneron cannot see the demand for luxury watches abating. The manager is responsible for the jewelry and watch brand Cartier at the luxury goods giant Richemont. “All of our manufacturers have waiting lists,” said Vigneron on the sidelines of the Geneva watch fair “Watches and Wonders”.
Customers have to wait around three years for particularly popular models, such as Cartier’s “Crash Watch”, whose deformed case could have come from a painting by Salvador Dalí – or pay prices of at least 150,000 euros on the secondary market. The Cartier CEO confirms: “We also see high demand for our products on the auction markets.”
Stefan Sebök, co-founder of the online watch retailer Horando, assesses the market in a similar way. He qualifies: “Certain moon prices like at the beginning of 2022 will no longer be paid.”
Luxury watches: Increasing demand for Rolex and Patek Philippe
Between the beginning of 2021 and the summer of 2022, they had increased in price by more than 100 percent, as the US bank Morgan Stanley writes in its watch market report. After a brief dip, however, things are now looking up again, observes Sebök. “Since February 2023 we have been able to record an increase in demand again.”
The speculative exaggerations of the market are similar to those of cryptocurrencies or meme stocks, i.e. stocks in which hundreds of thousands of small investors meet on social media to boost the price.
Watch retailer Horando, for example, recently submitted a purchase assessment for a private bank. The bank wanted to finance the purchase of a Patek Philippe for around 500,000 euros for a customer – the price on the secondary market was around 800,000.
In addition to Rolex, the three famous Swiss manufacturers are particularly stable in value: Audemars Piguet, Patek Philippe and Vacheron Constantin. Watch retailer Sebök says: “Customers attach great importance to value stability. The history of a brand is very important.”
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The brands meet this demand by launching new variations of established models with a long history. This year, for example, Vacheron Constantin launched the Overseas sports watch with a so-called retrograde date display. This is a complication that was previously only available on classic watch models.
Extreme prices for luxury watches: Manufacturers are cutting back on production
Rolex, on the other hand, is presenting a variant of the Daytona model, which was first released 60 years ago. “Rolex has managed to create an extreme hype around their watches,” says Sebök. “The company has artificially reduced production. At the same time, demand remains immensely high.” That drives up the price.
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A change in strategy that the watch industry made after the 2008 financial crisis is paying off. This had also hit the successful Swiss brands hard – or as the boss of the luxury goods group Richemont, Jérôme Lambert, puts it: “We just about managed to get by without layoffs.”
As a result, the luxury conglomerate, which includes Cartier and Vacheron Constantin, largely eliminated the middlemen. Richemont sells 75 percent of the watches directly to end customers, for example via brand shops. This makes it easier to capture the “true demand”, explains Lambert.
But this also has another advantage: By controlling inventories, the company can artificially tighten the market. If demand falls, the watch brand buys up its own stocks, for example, explains Lambert. At the same time, influencers and brand ambassadors fuel the hype on social media.
This is how the top Swiss brands have achieved a feat. Watch prices used to rise and fall in line with the US stock market. The industry has at least partially broken this dependency: “The watch prices do not yet reflect the recent decline in the stock indices,” says the Richemont boss.
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