It is a year since Watchfinder & Co., Richemont’s global pre-owned watch specialist, appointed Arjen van de Vall as its CEO. He took over from co-founder Matt Bowling, who inherited the role of interim CEO after his fellow founder Stuart Hennell exited in 2020.
Mr van de Vall arrived after a seven year stint at Rakuten, a Japanese e-commerce, fintech and digital content and communications company, where he has been president for Europe for the past four years.
Since Richemont acquired Watchfinder in 2018, the company’s major focus has been on expanding internationally, particularly into the United States and continental Europe. Along with e-commerce, Watchfinder has physical stores in London, Paris, Geneva, Munich, Hong Kong and New York.
In his first interview as CEO, Mr van de Vall sat down with WATCHPRO’s Rob Corder at Geneva Watches & Wonders to discuss what he has learned so far about the pre-owned luxury watch business and his plans for future expansion at Watchfinder.
WATCHPRO: The first formal recognition that pre-owned watches were becoming a vibrant and valuable extension of the new market was around five years’ ago when Audemars Piguet CEO François-Henry Bennahmias announced the company was piloting a certified pre-owned project. Richemont’s acquisition of Watchfinder added further respectability to the sector, and here you are exhibiting among the greatest watchmakers in the world at Watches & Wonders.
ARJEN VAN DE VALL: The first time Watchfinder was here was as a visitor after that acquisition. The team was only allowed to visit and browse. Having a presence this year is a big step as well, and we are very grateful to Panerai for welcoming us and giving us space on their stand, and it has generated a ton of interest.
WP: There has been progress, but there is still a sense that pre-owned, and particularly grey market watch sales, are viewed in Switzerland as a seedy bi-product rather than a welcome opportunity to grow the overall industry. A shocking illustration of this is that Chrono24’s CEO Tim Stracke had to meet me in the Ibis hotel outside the exhibition because he was blocked from entering.
AVV: There has been some progress but, from a larger perspective, Chrono24 is the biggest digital platform in watches. You would hope there could be open conversations about how you bring that part of the industry forward. Ignoring it does not make it go away.
WP: In my opinion, Chrono24 has turbo-charged the entire watch industry. Rolexes were not selling for two or three times over retail before we were given perfect transparency of the secondary market.
AVV: You are right. As a digital platform, you need a game changer. You have eBay and you have real specialists like Watchfinder. Chrono24 isn’t going anywhere, and the secondary market is only forecast to grow. If you look at projections, the pre-owned market is forecast to grow much faster than the new watch market.
If pre-owned gets to the point of being worth 50% of the new watch market in the next couple of years, then our voices will be at least half as loud as the voices of new watch brands.
Richemont, with our acquisition, were the first to take the gamble and recognise that pre-owned closes the circle for customers. They buy something new and, down the line, they can unlock the value stored in that watch when they want to buy something new. Richemont is able to remain engaged with the customer throughout that cycle.
WP: Do you think Richemont has accrued as much value out of Watchfinder since the acquisition in 2018 as it could? I appreciate some of the value is in the expertise, in what they have learned about pre-owned over the past four years, but could they have done more and expanded faster? Growth does not appear to have been spectacular.
AVV: With any acquisition, especially one that was outside the comfort zone for an organisation like Richemont, it takes time to integrate. That is work that goes on behind the scenes and is not visible to customers or the industry. In my experience from my previous life, that integration can be a lot more complicated than people imagine.
It was never going to be the case that you just slap the Richemont name on Watchfinder and generate instant success.
Prior to me joining, they were already carefully assessing where the real opportunities for synergies lay. For example, there was a soft launch two years’ ago of our trade in service. That required integration of our internal services with those of Richemont maisons.
Now we are now present in 90 boutiques worldwide. That is rapid scaling and hugely impactful not just for us but also for the boutiques. We have seen that, when we move in and Watchfinder starts handling trade-ins, sales of new watches grow by double digit percentages. It is a complementary service. The money from trade-ins is put towards new watches. It has a really strong impact.
Also, from a customer service perspective, the trade in is handled much more smoothly, which means it is part of the wider luxury experience they expect from a Richemont brand boutique.
This has not just been rolled out with Panerai. We started a pilot in London with Panerai and IWC and quickly scaled up. Now we have Cartier, A. Lange & Sohne and Vacheron Constantin boutiques on board. The interesting thing is that we have a positive impact in all price segments. These boutiques do not just accept trade-ins for their own watches, they will also accept a Rolex or whatever.
The process is very smooth. Close to 80% of transactions are fully automated so customers get their money very quickly and they can spend it anyway they choose. We at Watchfinder take their trade-in watches and release the money, which can even be put towards jewellery.
It is a sophisticated system that has taken time to develop, integrate and roll out. Now we are at the stage where we can accelerate and roll out more quickly. In theory, we could integrate with any watch boutique, jeweller or department store so that they can take trade-ins. That was always going to take time but is a big gain.
Beyond that, there is so much value having a seat at the table with the maisons. That door was always closed to us because pre-owned was seen as a jungle. Now it is more than a dialogue, we are really developing opportunities together.
We are doing really well from a performance point of view as well. Last year was a record year for us, but we know that was similar for everybody.
Top line growth is not really the measurement of success for Richemont at this stage. It is much more about synergy. As you know, margins in pre-owned are a fraction of the margins for new watches, so contributing in this sense is not the most pressing goal.
WP: Richemont does not break down its figures to show Watchfinder as a standalone entity but, because it is a UK-based company, you still have accounts filed with Companies House. These accounts show relatively modest growth, particularly in the UK, and I wonder whether the challenges of Brexit and the changes in the way VAT is charged for pre-owned watches have held the business back in the UK while it was growing in other parts of the world.
AVV: For sure, we have been significantly impacted by Brexit, and that is not just for us but for competitors that sourced watches in the UK and sold them in Europe. We do have advantages over these competitors because we have a strong domestic customer base in the UK, but we have needed to build up our sourcing capacity in different markets.
That has led to us establishing our European logistics and service centre so that, rather than relying on the UK, we can feed the world to some extent from that hub in Madrid. We offer the same quality experience as prior to Brexit, but it has taken a tremendous amount of work to get us there.
Good for us is that we are developing a global infrastructure so that we can source from anywhere. We have developed an arbitrage system so that we can buy in Hong Kong and move watches to the US, for example, and duties are less if we move product directly between those two countries than if it has to go via the UK.
WP: Do you know what Richemont’s master plan is? There is Yoox Net-A-Porter, Watchfinder, discussions with FarFetch, a relationship with Alibaba. I realise you do not speak for Richemont, but are you aware of a masterplan that brings all of this ecommerce together?
AVV: I won’t speak on behalf of the chairman, but what I have seen is a real belief in being agnostic about each individual platform and being much more focused on distribution and how you set up physical distribution to maximise customer satisfaction.
That is why the discussions around YNAP are more about creating agnostic platforms where customers can interact directly with brands and how the industry can take more control so it is less reliant on outside partners. That is at the core, but I should stress that I am not involved in any of these conversations.
Personally, I see a willingness to learn, take risks and innovate. Watchfinder is a perfect example of Richemont being prepared to take that gamble. Things may not have unfolded exactly as the public expected, but there is a great desire to learn about how retail is going to evolve over the coming years.
WP: Your background is in ecommerce, but from outside the watch industry. What do you think Watchfinder and Richemont were looking for when you were hired, and what were your immediate priorities when you joined a year ago.
AVV: My background is not in watches, but I am passionate about watches. I am not a collector or connoisseur, but I do love to study them. Watchfinder to me has been a pioneer and disruptor in the luxury space. They were really the first to develop the technology and systems from scratch because there was nobody doing it before them.
It was pioneering and very successful but not necessarily set up in a way that would quickly scale internationally. That is a big part of the work we have done in the last year.
Secondly is developing our digital footprint by leveraging the content we create and engaging with our community.
Thirdly, the industry at the moment is still very reliant on humans. Not just from the point of view of manufacturing, but also in transactions. With my background, I have been able to take a fresh look at how we can apply technology in a smart way.
For example, helping customers from their first contact with us through to selling, servicing a watch and putting it back on sale. There are many steps involved and the right technology will make it more efficient and better for the customer.
In addition, we want to get smarter with the data we accumulate, and use it to make better business decisions. A prime example is how we evaluate watches. In the past we have looked at prior sales data, and that has been used to predict the future.
What we are doing now is also incorporating internal data points such as how badly we want a product and what does demand really look like that. Based on that, we can give a much more realistic and competitive offer to customers and to generate good enough returns in the future.
WP: So you can make money not just by buying low and selling a bit higher immediately, but also by predicting future price rises that create room for profit down the line?
AVV: The model is evolving so that you buy today and sell when the time is right. That is a mechanism we are building while still turning watches at volume and speed. That requires technology and data, which is a key part of what I do.
I am also here to globalize the business more quickly. It used to be that moving from one market to ten would take years. Now it has to be done in months. We have people on the ground in seven markets but we are active in dozens more.
WP: It is a lot easier to go global if you are just a technology company like Chrono24. It is a whole lot harder if you buy and own the watches before selling them.
AVV: I was in New York a couple of weeks’ ago and saw a lot of stores where watches are not treated the way we treat them before going on sale. They were not polished and were just lying randomly in windows. An industry is sometimes only as strong as its weakest participants and it is very important in pre-owned that the experience is great. That builds trust and credibility.
That is Watchfinder’s mantra, which is why we were one of the first in pre-owned to offer 24 month warranties. That is a sign of confidence in what we are selling.
eBay and Chrono24 are also working on their own initiatives to make it safer and more trustworthy to buy and sell online. I do not believe it is a winner takes all market, and it is very important that all participants work towards improving the overall experience and reputation of pre-owned.
WP: The level of trust has improved, but it is still well short of what we see in, say, second hand cars. There is no question in an advanced economy that every car you see on a forecourt will be the real thing and, when you go to an authorised dealer, those cars will be fully checked, serviced, etc. The watch industry has a long way to go to achieve that level of trust, so I appreciate what you say about the market only being as strong as its weakest players.
AVV: The reality is that fakes are getting better and better. From our side, we have a team of specialists to verify watches. We also have testing to see what work needs to be done. That is the start of our journey every time. It is not just about the case and dial, it is about the movement and knowing that aftermarket parts are not being used. We are aware how devastating it would be if we fail in this authentication and take incredible prize in doing our due diligence 100% of the time.
I can also only applaud eBay for taking this same approach [with its authenticity guarantee]. This is vital to raise trust overall, which will open doors to a much larger audience. Of course we are in competition with the likes of WatchBox, Bucherer and others, but if the experience elsewhere is as good as it is with Watchfinder, that will grow the market for all of us.
WP: Do you expect consolidation in the industry? We know Chronext was looking to go public last year and that other significant pre-owned players [names redacted] are actively looking to be sold.
AVV: I am not surprised that you are well-informed about this and what is up for sale. I do think there will be consolidation, but at the same time a lot of the businesses you mention have a really clear voice and purpose in the market. Just merging them is complicated, so they would have to be complementary businesses. For example, a company that focuses on consignment might be a good fit with a company that buys and sells all of its watches. Or it could be a pre-owned player that wants to move into new watches [or vice-versa].
I am sure it will happen, but at the same time it has not happened in the last 12 months. That is surprising because there has been an abundance of money coming into the space. The war chests are big enough but the only deals to have happened recently have been the purchase of Crown & Caliber in the United States and Watchmaster buying Montres Modernes et de Collection (MMC) in France.
