If 2022 has been a year of two halves — red hot demand for the first six months and cooling since the summer — then the seeds of that slow down were sown in the second quarter.
Russia had already launched its invasion of Ukraine by the time the industry gathered for Watches and Wonders in Geneva at the end of March and into April, but executives acted as if the war would have little impact on the global economy, let alone the luxury watch business.
To be fair, governments and central bankers were sending the same signals, but inflation was building up in the system due to the war, supply chain and manufacturing challenges crimping supply, while savings and pent-up demand generated by two years’ of disruption were driving a rise in demand.
Another macro-economic issue, the rising strength of the US dollar, was causing a differential between prices in America and Europe, which prompted watch brands on this side of the Atlantic to increase prices for the second time this year. It would not be the last hike for some.
The only prices not rising, in fact they were falling fast, were for the most over-hyped watches being traded on the secondary market.
The market turned first for discontinued watches such as the Audemars Piguet Royal Oak Jumbo, Patek Philippe’s Nautilus 5711 and Rolex Oyster Perpetuals in various colours that were dropped from the catalogue in April.
By late April, WATCHPRO was reporting what dealers liked to call a short term correction, but was actually a rout. Once the market had peaked, buyers all-but vanished, leaving sellers slashing prices or sitting on stock that was rapidly dropping in value.
April was also the first time we reported on one of the biggest stories of the year, Rolex’s plans to roll out its own certified pre-owned watch programme.
There was no official news at the time, but Rolex authorised dealers were coming out of meetings at Watches and Wonders with the feeling that something was brewing.
Financial results from publicly traded operations including Watches of Switzerland Group, LVMH, Richemont and Swatch Group, showed the luxury business booming.
The pandemic challenged every assumption for every company, and the best-run were moving forward with greater efficiency, keener commercial edge and tactics that locked in gains such as tapping into domestic demand and improving digital sales and marketing, while benefiting from a return of tourism and in-store shopping.
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