Primary market good, grey market bad.
That has been and remains the mantra of the luxury watch industry, but where would the industry be today without the transparency and self-leveling effect of our shadow economy?
To overcome our psychosis over grey marketeering, the primary market must first accept its role in it.
Watch manufacturers have hugely complicated supply chains that mean production has to be forecast several years into the future. That this forecasting is imperfect is a fact of life, so there are dramatic shortages (by circumstance or design) and there are gluts of certain models.
At the point of distribution, watches are sold to retailers all over the world, and that stock is supposed to be sold only within defined territories. To match supply to demand on a country-by-country basis is a far from exact science, so product is often trapped in the wrong place.
Corruption crackdowns in China, riots in Hong Kong and Brexit in the UK are just a few of the recent unexpected events that caused supply to be in the right place at the wrong time.
Sometimes manufacturers take dramatic action to mop up oversupply, as we saw from Richemont when it spent almost $500 million buying back unsold stock in 2016 to 2017.
More often, brands have turned a blind eye to watches being sold anywhere in the world via platforms like eBay, Chrono24 and Amazon because if retailers cannot clear their stock, they cannot buy more.
UK retailers are considered among the most disciplined in the world, but you only have to look at listings of new watches from UK accounts on the secondary market to see it is commonplace.
So, manufacturers and their authorised dealers cannot escape their responsibility for creating the grey market for luxury watches, but they are also benefiting, and should benefit even more.
The current demand for Rolex is as much driven by over-retail prices for its watches on the secondary market as it is by the company’s peerless management of its brand status.
Rolex was among the most trusted brands on the planet 10 years ago, but its ADs still had Submariners and Daytonas in their windows.
Rolex retailers are not permitted to sell online or via any third party trading platform, and they could do without the headache of flippers using every trick under the sun to secure steel sports pieces, but that does not mean they are not directly benefiting from the soar-away prices on the secondary market.
To score a Pepsi or Batman, the vast majority of customers need to be buying other watches and jewellery from their favoured retailer on a regular basis.
Getting on a waiting list is pointless unless clients keep spending while they are on it.
So, while it would be inhuman not to be frustrated when a watch with a guaranteed £10,000 resale profit goes out of the door, retailers can rest easy knowing they probably benefited from selling several watches to the customer before reaching this point.
More broadly, luxury watches have been elevated as investment-class assets because of the transparency that the grey/secondary market delivers. This has benefited the entire industry.
The pre-owned market is a close cousin to grey, and both have developed at light speed because they compete and collaborate with each other in the hyper-competitive online world. This has also been a huge boon to authorised dealers because they can feed trade-in watches into a sophisticated network of online platforms.
Pioneering data-driven businesses like Watchfinder and Chrono24 quickly became the most knowledgeable organisations in the industry because they are free to buy and sell around the world in a way primary retailers cannot, and they have vacuumed up information about brands, models, customer demand and supply.
Their systems are so sophisticated that they not only know about every transaction that has taken place in the past, they use artificial intelligence and other tools to forecast what will happen in the future.
This is one reason why Richemont added Watchfinder to its portfolio of online retailers, and why CEOs from the biggest watch brands are meeting regularly with secondary market executives to see what they can learn.
That Richemont deal legitimised the secondary market (although not the grey market), and the pre-owned business has now completely lost its stigma.
Watches of Switzerland bought Analog Shift, Bucherer has devoted luxury lounges at its showrooms to pre-owned, Seddiqi & Sons opened a Watchbox store in Dubai and Hodinkee acquired Crown & Caliber.
Pre-owned is no longer in the dock and the grey market should be acquitted next. It is not that the grey market is inherently good. There are too many shady characters breaking tax and other laws to expunge its record, but that is a reason for the industry to engage more, not less.
We may not like it, but the grey market is too valuable to be ostracised.