Sidewalk of London’s Bond Street remained quiet. The once UK hub for international tourists willing to shell out huge sums for luxury watches has come to depend on a much smaller local market, with shoppers more likely to ability to find a special item rather than splashing a bunch of free cash around.
Although concentrated in a specialized niche, the world of luxury watches has always been outward looking, its brand name in a language you can understand anywhere in the world. But Covid-19 has changed that, perhaps in the long term.
Faced with lockdown last year, many well-known brands, including Audemars Piguet, Hermès and Rolex, production pause purely to focus on relocating existing warehouses. Export of Swiss watches decline.
But a lot can change in a year. In June 2021, the Federation of the Swiss Watch Industry, the leading trade association in the industry, reported that exports reached almost 2 billion CHF ($2.15 billion), surpassing the 2019 baseline. was 12.5% and up 71% compared to June 2020. Richemont Group (whose brands include Cartier, IWC, Jaeger-LeCoultre and Montblanc) saw its share price increase significantly. The Swatch Group (Omega, Hamilton, Tissot, etc.) has seen its share price return to pre-pandemic levels. Watches of Switzerland, the UK-based retailer that expanded into the US market and listed on the LSE in 2019, is trading at a record high, with its price up 78% in the past six months.
It’s not just the usual names that are doing well. The pre-owned market, formerly part of the luxury watch world, is booming. One of its biggest players, Chronext, was slated to go public in October in hopes of raising $247 million but has since postpone these plans, citing unfavorable market conditions. Chronoxt to join European companies across many sectors in putting the plan on ice amid volatile stock markets around the world, fueled by soaring energy prices and faster-than-expected inflation. However, when the company does list, rival Chrono24’s pre-owned watch market is expected to follow suit.
“I’m not surprised how quickly consumers adopt pre-owned,” said Chronext CEO and co-founder Philipp Man. “Driven by this demand growth is the next generation of consumers who have a new definition of luxury and a new approach to shopping.” Man describes this new consumer as someone who wants direct access to even the most sought-after models and requires immediate availability — which could be seen as an indirect criticism of the brands. Like Patek and Rolex, with long waiting lists, scarcity is the norm, and — wonderfully — no direct e-commerce channels. Man says the future of the industry lies in the hands of Gen Y and Gen Z (or Zoomer) customers who are digitally savvy and expect brands to have an online presence as a matter of course. .
