Pre-owned, the hidden part of the iceberg

According to horological pundit and independent journalist Grégory Pons (2022), the market of pre-owned luxury Swiss watches could represent more than 100 million of timepieces that change hands every year. Several brands such as Patek Philippe, Audemars Piguet, Omega or Cartier have picked up on this trend and taken hold of the reigns of pre-owned sales of their products.

With the Swiss Horological Federation (FHS) claiming exports of 21.2 million watches for the year 2021 (not factoring in domestic sales), the yearly amount of pre-own luxury watches sold would represent five times the amount of new ones put on the market.

Another reason is that member brands of the FHS are required to keep an inventory of spare parts up to 15 years after discontinuing a model, so in worst case scenario, a collection that was featured on catalogue for 3 to 5 years would get after-sales support for up to 18 or 20 years after its initial launch. Adding the fact that most watches have a construction that allows them to be dismantle, cleaned up and put back together with a new crystal and new water-resistance seals, which more often than not follow standardised sizes.

The Summer 2022 bubble burst that involved speculation on luxury watches (Hall, 2022) shows that outsiders do acknowledge luxury watches as investments, and the drop in Swiss exports since 2015 might partially have to do with consumer switching their interest towards pre-owned goods, which can be serviced and come with a more predictable appreciation in value on the used market.

Considering the weight of the pre-owned market, and the fact that the industry keeps putting a couple of dozens of million of new watches in circulation year after year. As early as 2019, The New York Times speculated that the pre-owned market could overtake the new one (Swithinbank, 2019), particularly when it comes to younger consumers.

Mr. Pons outlines the necessity for incumbant brands to ramp up the capacity and speed of their after-sales service, and speculates that luxury watch brands might reach a point at which they end up having to focus on servicing existing watches rather than producing and distributing new ones.

References

• FHS, 2022. Swiss watch exports, January-December 2021. Available from https://www.fhs.swiss/pdf/a_210112_a.pdf
• Hall, 2022. The Crypto Collapse is ‘Flooding the Market’ with Rolex and Patek Philippe Watches, Man of Many. Available from https://manofmany.com/fashion/watches/crypto-collapse-impacts-watch-market
• Les Ambassadeurs. "Certified pre-owned" luxury watches. Available from https://www.lesambassadeurs.ch/ch_en/cpo
• Pons, 2022. Le vertiginaux trou noir du marché de la seconde main, Business Montres. Available from https://businessmontres.com/article/le-vertigineux-trou-noir-du-marche-de-la-seconde-main-eyquempons-reluxury-fabiennelupo-rolex-patekphilippe-greubelforsey
• Swithinbank, 2019. Secondhand Is Moving Up in the Watch World, The New York Times. Available from https://www.nytimes.com/2019/11/22/fashion/watches-secondhand-watchbox-watchfinder.html