Philipp Man, youthful co-founder of pre-owned reseller, Chronext, offers his own frank feelings on the future of what people used to call the grey market, in the wake of Richemont’s purchase of Watchfinder and a recent spate of ‘refurbished’ vintage initiatives by several top-end brands
When Marc Rich (nicknamed the King of Oil) envisioned the spot-market for crude oil in the 1970s, thereby creating the largest commodity house in the world (Glencore today), trading oil at the equilibrium price of demand and supply was unthinkable. This was something left for pork-bellies and agricultural products, surely not oil – a product mostly sold at long-term contracts back then.
Much as Marc Rich revolutionised the commodity landscape, Audemars Piguet CEO Francois Bennahmias‘ statement that “second-hand is the next big thing in the watch industry” sent paradigm-shifting tremors through the collective minds of watch brands. The pre-owned luxury watch market has been estimated by some to be as large as €20 billion in sales annually with €900 billion in watches across the globe waiting to be traded. Before the AP chief’s statement, this market was regarded as something of a dusty offline obscurity moving digitally through uncontrolled means.
But the industry has now shifted significant focus onto the “Certified Pre-owned future” it is facing. Recent initiatives – to name only a few – are Richemont’s acquisition of UK pre-owned retailer Watchfinder, the world’s largest retailer, Bucherer testing pre-owned in the US and even rumours of the big maisons looking at partnering with independent pre-owned digital first players are making news. Why the sudden change in heart?
While a lot of speculation has pointed to the conclusion that “certified pre-owned” is the new grey market, I don’t think that this is a correct nor likely path for the industry. Watch brands do one thing better than anyone else – they build aspirational timepieces that last more than a lifetime and in many cases can preserve true value. Pre-owned suddenly becoming certified pre-owned (or CPO as the Swiss say) is a considerably bigger undertaking than merely instigating tighter distribution controls. CPO is not and will not be the solution to the grey market – it is a totally new business area.
Buying a pre-owned Ferrari, Porsche or Aston Martin has long become socially accepted and endorsed by the original createurs
Watch brands have understood that building truly special products means that these will indeed remain and often resurface in the marketplace. Not only because customer choices and tastes change, but because the general concept of “ownership” – especially with an increasingly important millennial generation – is changing. Why allow products to be sold in a way that may represent your brand, when you have no say in how that is being done? Buying a pre-owned Ferrari, Porsche or Aston Martin has long become socially accepted and endorsed by the original createurs: watch brands need to take the same approach and partner with independent marketplaces and pre-owned retailers.
Apple watch or not, the luxury watch industry is here to stay. Mechanical watches have been built 100 years before us, and they will continue to be produced and sold 100 years after us reading this. The best way to attract, retain and excite new evolving generations of watch lovers is to truly double down on claims of product durability for the next generation. Much like co-operations with auction houses, watch brands have now realised they need to control their digital narrative to preserve their legacy. Only if you see how today’s product will be sold tomorrow, can you have a say on how tomorrow’s marketplace will be. After all, you never really own pieces of certain watch brands, you merely preserve them for the next generation. That is what pre-owned is all about.