Rolex, Audemars Piguet and Patek Philippe drive new and used watch market towards $100 billion at retail

The global market for luxury watches will be worth over $100 billion by 2026, according to a new report by Boston Consulting Group (BCG).

That would be 50% larger than 2019, the last year before the pandemic, demonstrating just how much watch collecting as a passion, and watch investing as a business has transformed the industry.

Prestigious Swiss watchmakers had their best year ever in 2022, with the value of exports nudging CHF 25 billion ($25bn) for the first time.

That has been translated by BCG into a global retail value for new watches of $55 billion.

BCG estimates that the retail market for pre-owned luxury watches was worth $24 billion, making the combined new and second hand market worth $79 billion.

The study, which was produced with the support of pre-owned luxury watch specialist WatchBox, calculates that the second hand market will expand by a compound annual growth rate of 10% from 2019 to 2022 to be worth $35 billion at retail in three years time.

Over the same period, the market for new luxury watches will grow by 7%, valuing retail sales at $66 billion in 2026.

The BCG/WatchBox reports draws on the findings of a BCG US luxury watch survey conducted in October 2022, which identified four types of consumers who are active in the market today.

Classic Timeless buyers typically invest in traditional financial assets and appreciate durable, credible products.

They purchase across price ranges and seek classic or timeless watches with a strong brand heritage or a distinctive design.

They tend to be comparatively low-frequency buyers and are the least likely to engage with the secondary market.

Fashionable Professional consumers are described as highly educated, stylish, confident, and, on average, younger than other buyers.

They are likely to purchase entry-level luxury watches that are stylish and trendy, high quality, or have an exclusive image.

Such buyers purchase with moderate frequency, but are comparatively likely to buy a watch within the next 24 months.

Sustainability concerns are often the reason for purchasing a preowned watch and this segment is the second-most engaged with the secondary market; more than 50% of fashionable professional consumers have bought a secondhand luxury watch in the past 24 months.

The third category, Luxury Watch Hobbyists, prefer technically complex watches with a strong brand heritage in the super-luxury category, where watch value is generally expected to increase over time.

Moderately frequent buyers, hobbyists (77% of whom are male) tend to be status-conscious and successful. Much of the pleasure they find in purchasing a secondhand watch is in the hunt for a special item.

Finally, there is the growing cohort of Collector/Investor consumers.

Members of this segment are the most active buyer group, on average, favoring ultra-luxury watches at a higher price point than other segments.

Despite being a comparatively new category of customer, collector/investors already represent 44% of watch buyers and claim a 58% share of the market — new and used — by value.

This segment is highly engaged with the secondary market, with nearly three-quarters having bought a second hand piece in the past 24 months.

The investment segment has been turbo charged by shortages of the most traded watches made by Rolex, Audemars Piguet and Patek Philippe and, even though there was a significant drop in prices last year, a compound annual growth rate in the value of this big three, 20% per year from 2018 to the beginning of 2023, has outperformed the world’s largest stock market indicator, the S&P 500, which notched gains of 8% per year over the same period.

Watches have also performed well against other alternative assets in recent years.

From 2005 to 2018, returns for watches were lagging behind jewellery, cars, wine and art, but have outperformed every alternative investment category except art and wine since, and was the top performer from 2021 to 2022.