One of the great things about events like WATCHPRO Awards and WATCHPRO Salon is that it brings the industry together (along with consumers in the case of Salon) for a good old gossip.
While casual conversations may not have the edge over sophisticated CRM systems, they are an additional way to gather market intelligence that can give businesses an edge.
I was on the prowl for information about whether relentless media coverage of rising inflation squeezing household budgets, unhelpfully dubbed the cost of living crisis, is hitting sales already, or is likely to affect retailers over the Christmas period.
I also wanted to gather opinions on how the recent slump in prices on the secondary market is affecting pre-owned watch traders and primary authorised dealers.
There is no doubt that inflation is impacting the primary market but, like any headwind, it is not affecting everybody equally.
Retailers relying heavily on online sales are reporting weakness, particularly in comparison to the period of explosive growth during covid-related lock downs. Sales seem to be back at around 2019 levels and, for omnichannel retailers, the percentage of sales online is back to roughly the same proportion as before the pandemic.
Volume retailers specialising in jewellery and watches priced at under £500 seem to be steady, but there is nervousness about the peak gift buying period ahead of Christmas. It could be a year of hard discounting in order to maintain demand, or lower margins as marketing costs rise.
The hottest end of the market for expensive and hard to find watches, including artisan independents and steel sports watches from Rolex, Audemars Piguet and Patek Philippe, is motoring along.
A few retailers did tell me demand has cooled, particularly since the death of the Queen.
I was told they were making calls to tell people on waiting lists that the watch they’d had their name down for since 2021 (or before) was ready to collect, only to be told by customers that they weren’t in a position to go through with the purchase.
Although authorised dealers work hard to prevent it, some of these customers on waiting lists may well be flippers. But prices have slumped so much on the secondary market that the business model of these flippers has been all-but destroyed.
According to the senior buyer of a major pre-owned watch business, there are now only a few Rolex models they would pay over retail for: steel Daytonas, GMT Master IIs and some Submariners.
Since flippers were buying any Rolex they could lay their hands on as prices surged in the year to the end of Q1, this is a significant reversal.
Those that thought prices would rise forever, and were still piling into ladies’ Day-Dates and DateJusts in the spring of this year, are now sitting on inventory worth less than they paid for it and with very few buyers.
This is a welcome correction that will be good for the long term health of the watch industry so long as manufacturers are careful to align supply with demand in the coming year.
Flipping being squeezed out of the market would be a sign that we are settling into a new and healthier normal.
