Last week, WatchPro reported the comments made by James Dowling at the Dubai Watch Week about how watch brands are turning their service arms into profit centres, and the harm that is causing to collectors. Anthony Cousins, managing director of Cousins UK, now broadens the issue to show the inter-dependencies between each level of the market, and how the thinly disguised policy of the watch brands to kill off competition at all levels in the market should make even the major retailers worry about their future security, and have watch owners seriously concerned about the true value of their collections.
Watch buyers range across a spectrum from the super-rich brand obsessed that care only for image, to the dedicated collector fascinated by every nuanced technical detail of the latest iteration of 300 year old technology. The majority of us sit somewhere in the middle, and a key component of our buying decisions is the likely resale value of a watch we fancy. Despite a political climate of austerity, the market for quality watches has bucked the trend and been on the up for a number of years, a proper “bubble” that any economist would spot a mile away.
Speculators love a bubble. Their only interest is profit, and when the bubble bursts, they are long gone. The problem for serious collectors is how to protect the value of their assets, and that means turning a bubble into a stable multi-level market where new entrants can start small, and become the next generation of enthusiasts.
Without that base level of access, an unstable vulnerable market exists, with a pending crash being the inevitable consequence. It is therefore really important that collectors keep a weather eye on what is going on in the watch world as a whole, and take positive action against any market restrictions that affect competition at any level.
Consider for a moment the structure of the Classic Car market, where there are obvious parallels with the Classic Watch world. Anyone even with limited means can become an enthusiast. A £50 rusty 1970s Mini gets you a seat at the table, you don’t have to start with a Lamborghini.
The reason a £50 Mini is a viable entry into the market is because there is a huge network of wholesalers that can supply every part and panel that the market needs. There are also a plethora of books, videos, and training courses where anyone can learn the basic skills needed to turn a £50 Mini into a £20,000 concourse winner. If an owner doesn’t want to do the work themselves, there are thousands of independent repairers happy to take on all different levels of work in order to meet the customers’ needs and available funds.
Collectors angered as brands turn watch servicing into profit centre
And then there are the spin-off benefits. What starts with a Mini progresses on up the brand hierarchy, and provides the demand in the secondary market that in turn maintains the value of the cars owned by the more wealthy collectors. In addition, the most ambitious and talented young enthusiasts become the next generation of trainee repairers and restorers, and the best of the best work their way up from fixing basic models to working on supercars and high end classics, once again helping to maintain the asset value of the high end collections. Whilst some independent repair companies specialise in a very limited range of high end brands, the fact that wholesalers supply any repairer means that those working on the lesser value brands can still make a good living supporting that end of the market.
The prices for Classic Cars fluctuate as you would expect in any such market, but as a general trend they have risen steadily, and the overall market structure is stable and robust, which in turn makes collecting and enjoying classic cars a reasonable financial risk. But now look at what is going on in the Watch world.
For the last 35 years, the brands have been increasingly restricting the supply of spare parts and killing off the independent repair trade that mostly services the lower end of the market. There is no access for a young novice collector to get into the bottom end of the market, because whilst there are plenty of cheap old watches out there, there are no parts available to fix them, no accessible schools for the novice to learn at, and no viable network of cross brand repairers for the young enthusiast to turn to. The handful of wholesalers left have also been cut off from parts supply, and are propping up the last of the independents with whatever historic stocks they have on the shelves. No one new is coming into the trade, and even the high end brands are having to ditch the idea of skilled repairs in favour of movement swap outs, and semi-skilled individuals working a production line repair methodology.
How come the Classic Car market is stable, when the Watch market isn’t?
Couple all of that with a fashion and brand image driven market at the upper end, where speculators and flippers are driving prices ever higher, and you have all the warning signs of a bubble that is about to burst. When you get brand advocates of the calibre of James Dowling openly questioning the cost of ownership, it’s time for all collectors at all levels in the market to sit up and take notice. I have every sympathy for owners of £10,000 watches who are being relieved of almost 10% of that figure for a service, but spare a thought for the owners of watches that cost £750 who are being asked for upwards of 50% of that amount for the same thing.
So how come the Classic Car market is stable, when the Watch market isn’t? In the car market you have open access to all parts, and free and fair competition. In the watch market, the reverse is true. It all comes down to consumer pressure and the proper application of Competition Law. In the car market, when manufacturers tried to restrict parts sales to main dealers only there was uproar from consumers. The independent trade organised itself into a powerful association that lobbied for the law to be applied. It was rewarded with a European wide regulatory ruling that obliges manufacturers to supply parts to wholesalers freely and on fair terms, so that the independents can compete at all levels in the market.
Conversely, the watch collectors have kept too quiet for too long, and have not understood the consequences of allowing the brands to strip out competition at the lower end of the market. The trade associations have not garnered the resources and support that they should have done in order to stop the anti-competitive behaviour, and the brands have been able to use all sorts of bully boy tactics to control every aspect of the market, and in particular to corner the service and repair market at far greater cost to the consumers. The crazy part is that exactly the same European wide Competition Law governs both the car and the watch markets, it just isn’t being applied to both in the same way.
So now consider in the same way the retail market for watches, even to the very highest levels. Small independent outlets have been progressively culled for many years now, and the major chain retailers have convinced themselves that their position with the brands is perfectly safe. But is it really? Just look at the ever increasing number of brand specific outlets that are popping up all over. Why would manufacturers want to give margin to the retailers if they can get away with keeping it all for themselves? They have managed to dismantle the independent repair network, so why wouldn’t the same tactics work in the retail sector.
When Cousins UK sponsored the 2015 British Watch and Clock Makers Guild industry conference (where anti-competitive practices were top of the agenda), we invited all the major retailers to attend, but only two did and the delegates were from the after sales side of the business.
Cousins UK has been in a legal fight with the Swatch Group for the last three and a half years in an effort to maintain competition at all levels in the market. It has not been easy to get the column inches to explain to the market as a whole why this fight is so crucial for the future, so I am obliged to James Dowling for starting this conversation, and to WatchPro for giving it the platform to be aired on.
It remains to be seen whether this article resonates enough with collectors and major retailers, and whether or not they are motivated to protect the value that they have generated. If not, I fear it will prove to be the lack of availability of a winding stem at the low end of the market, that ends up bursting the bubble at the top.
About the author: Anthony Cousins is managing director of Cousins UK, an independent wholesaler of wholesaler of batteries, watch parts, tools, books, watch straps, watch bracelets, jewellery findings, restoration consumables, equipment and clock parts.
Excellent article, I couldn’t agree more with what was said.
Dear Colin,
Strongly agree with your observations. I started my own vintage watch business, called http://www.wrist icons.com one and half year ago. It’s really difficult to get some vintage parts also from really iconic brands and models. Recently I had to source some parts for a chronograph and that took me really a lot of work. I had to contact like 10-15 people to get some tiny parts that were not available anymore at the household b2b suppliers of spare parts. This makes me aware of the issues you state in your article. If I have to service some vintage watches that I buy sometimes I have to buy complete watches to get spare parts or buy the tiniest parts for crazy amount of money. In the end someone has to pay for this. There is another factor that you did not state. This drought of spare parts also gives an incentive to start an industry of making fake parts or 3d printing or whatsoever. I have even seen fake parts from brands that I did not expect to be available.
As mentioned in the article, there are very few apprentices to learn the trade and even more watchmakers at the age of retirement. Once the Apple watch launched, it affected the watchmaking world with a new generation that is not showing as much interest in mechanical luxury watches as they are classic cars they can buy cheap and fix themselves. Less than ten years ago there was such a shortage of apprentices in watchmaking that schools were willing to teach the trade for free! How do you fight that trend? By making your service department a strong aspect of your business. This is more about responding to the changes than it is monopolizing the industry.
I wish Anthony Cousins well in his dispute with the Swiss Brands.
Are they so short sighted that they believe they will be able to cope with the servicing requirements of the products they are marketing after they have wiped out the independent watchmakers..
As a person who worked closely with the Swiss Watch industry in the 1970 & 80’s training watchmakers in Australia with their support , I now feel betrayed because the very students they helped me train can no longer purchase parts for some of the watches they were trained on and newer models that are no longer better built and some even of dubious quality.
Let’s hope customers wake up to the fact that their collection might become worthless one day if manufacturers keep tightening the parts market.
At watchguy.co.uk, we make our living from restoring vintage watches. It’s not always economical to make a part, as that costs quite a lot of money, and a lot more watches could become collectable if parts are readily available. In the long run, this has to be in the interest of manufacturers as well, as it’s free publicity.
I believe that most manufacturers haven’t woken up to the fact yet that they are harming their most loyal customers…
Great article thank you Anthony, There is nothing in your observations and opinions that I do not agree with.
Ross Robinsons’ comment should really be noted. I have also noticed high end watches are not built as well as they should be considering the price paid for them. If the Swiss / Swatch / Swizz is allowed to carry on its monopolisation then collector / buyers of high end watches will need to beware as their collection values are sure to diminish over time. Who would want to buy a watch for £10K that needs a £1K service every 5 years that has to go into the repairers and maybe there for weeks at a time with no true guarantee that the service will be done to the highest of standards. How could they service at high standard when it would be a high speed production line profit driven. The big buyers need to rise up and demand this practice stops.
I’m a watch repair hobbyist and a collector and not being able to source parts is extremely frustrating. Just recently I had an ETA 2772 in perfect condition except the rotor bearing needed to be replaced. I live in the EU but ended up finding a supplier in the US. Before the part landed in my hands it had cost me not only shipping but import charges, administrative fees and domestic VAT, plus over a month waiting for the part to be cleared by customs. Cost? Approx. US$ 50. Just insane and I’m considering giving up on my hobby as there is absolutely no way I can sell a watch and get my money back despite the watch being both serviced and repaired.
I have been following Cousins fight with Swatch over the years, and since I enjoy repairing my own watches, the ready availability of parts is of great importance to me. To be told by JaegerLecoultre that they cannot sell me a winding stem-it has to go to them for a complete service and overhaul is nonsense as far as I am concerned. They argue it is the integrity of the watch they are protecting, and maintaining the resale value of their watches. My argument is that I buy watches in need of tlc, and using readily available parts I keep them going, and add them to my collection. Their value per se is of little interest to me. If I buy a watch, it is up to me if i want to ‘maintain its value’, not the manufacturer.
I recently acquired a rare cal. 400 JLC movement in need of repalcement parts and a case-it had been removed from a gold case and that subsequently sold for scrap( why do jewellers do that-answers on a postcard please………).
In the end, after involving a senior executive of JLC, I ended up with a quote for a repair and service. £2000+!! In the end I decided I will sell the movement on, together with the dial and hands, and have bought an identical complete watch in perfect working order-for 1/.3rd of JLCs charge.
Let us hope Cousins are successful in their fight, and let us support them by clamouring for easy access to spare parts that do NOT require an arm and a leg priced service to get a winding stem!
Excellent article,
I couldn’t agree more with what was said.
Great Article no respect for the law or the future of the industry I forsee even longer waiting times and higher prices in the future if some action is not taken. It was the same decision with movement supply until the demand dried up then reality bites.
Bravo. Could not agree more.
Unfortunately my collection came to an abrupt halt when I bought my last fine Swiss watch when I heard about this very issue.
I agree with most that has been said. However, the thought that spare parts would freely available to everyone cannot be the solution. I come across many movements that have been touched by so-called watchmakers and what I see is horrifying in the eyes of a true watchmaker (I have a 4-year degree from Switzerland and offer my services in the US). So, there must be a certain qualification to properly service a watch and movement or it will fall back onto the brands. Negative images because the so-called specialists were not really specialists caused at least in part that the brands decided to restrict the supply of parts.
Now, I myself have a very hard time to find parts for movements and even more for cases. ETA movements usually are not difficult to get except if the movements are altered to certain special designa for the brands. Then it can become tricky. But when you work on the more elaborate movements, such as JLC, Piget Frere, AP, Vacheron, etc, it is extremely difficult and very expensive to get parts. Hence, one wonders why anybody would still learn watchmaking, invest 2 or 4 years into an education just to face reality that the manufacturers turn off the parts supply and by doing so, the lifelihood for any watchmaker. The only choice one would have then is to get employed by the factories and limit the job task to doing only specific performances, but never get to fully use the training and skills acquired.
It would be fantastic, if it were easier, but under certain qualification require.ents, to get access to parts, so the actual customer who needs his/her timepiece to be serviced, can actually get it done.
As to the price, if a complete overhaul (COA) including refinishing case and bracelet and restoring water resistance, such a repair / service takes easily 4 to 5 hours, if the job is done properly. Now as a comparison, if you get an electrician, plumber or any other certified craftsman to come to your house, not only do you pay for the way there and back, but for the time spend to repair the item and on top of that for the parts. For instance if you buy a washer for let’s say $700, a repair will cost you easily $250 to $350., hence half ot the purchase price. The hourly rate for such craftsmen is between $100 / $150 per hour. Why should a certified watchmaker charge less if his/her education or training takes longer than the one of a plumber or electrician? There is no justification for this and the trade has to realize, that even a watchmaker has to be able to live, pay the bills and support a family. It is more the retailer’s view of “it’s just a watchmaker”, or “we bring you the business which is why we need at least 50% if not more of the repair charge to be in our pocket”. Well, there you have one of the reasons as to why the repair prices are so high. To charge $500 for a 4 to 5 hour repair is absolutely correct and the trade should actually stand behind the watchmakers that do the work. After all, the margins granted on repairs by the factories are much lower.
I hope, that the manufacturers will loosen their parts policies and that the trade will be more appreciative when it comes to what watchmakers do on a daily base.
Thank you for reading. Any comments are very welcome.
Thank you for your thoughtful comments. I particularly agree with the price comparison to tradesmen. It most certainly is ridiculous that a watchmaker’s time should be less valuable than a plumber — much as I have enormous respect for both professions. The world needs more professional watchmakers. The question now is how do we encourage that?
Excellent article, I agree with every single word that Anthony Cousins wrote.
I totally disagree that the spare parts should only be available to certified “experts”. If someone, a complete amateur (and a fool), wants to buy a part and destroy HIS watch during attempted repairs HE should be free to do that. I heard of some idiots that clean a movement by submerging it in a WD40(!), thus destroying it completely and irreversibly. But, I want them to have the right to buy a can of WD40 without any restrictions.