One of my more trivial concerns as the Covid-19 pandemic swept the globe has been that the grey market would be flooded with watches that could not be sold through retailers when all shops were closed.
The grey market has a devastating effect on authorised dealers when it is awash with inventory because prices can be so cheap and finding watches at massive discounts is the work of 30 seconds on sites like Chrono24 that provide perfect transparency.
The chances of this happening appear to be diminishing when you look at both retail sales data and the export figures for Swiss watches.
Data from GfK shows retail sales in Great Britain declining by 82.3% in April, and that would have been much worse without an increase of 38.4% in online sales.
Sales through brick and mortar stores were down around 97%.
If manufacturing and distribution had been continuing unchecked through a month like that, there would be millions of Swiss watches backed up in the channel.
If authorised dealers were “encouraged” to buy more stock, they would have piled up there as well and, with ongoing demands on cash, many would have found a way to sell them via the grey market.
With demand suppressed and supply rising on the grey market, prices would have inevitably collapsed, leaving authorised dealers, contracted to sell at full retail prices, marooned.
Thankfully, this appears not to be happening because, when we look up a few links in the supply chain, we find so little manufacturing in Switzerland during the pandemic and distribution all-but frozen.
The gradual reopening of manufacturing is sensible from the point of view of keeping team members safe, but it also helps to taper the increase in supply so that it matches rising demand in countries that are reopening after lock down.
Coronavirus has paralysed the industry, but with a concerted effort to get things moving in the second half of the year, I am optimistic there will be little long term damage because there is growing evidence we will not face a dangerous oversupply of watches.
