Watches Market Crash…

This is no coincidence ROLEX and watch prices dropping on the second market, while Rolex acquires Tourneau|Bucherer , Jaquet Droz rebranding the company, MB&F making the MAD1, and OMEGA SA collaborate with Swatch to make the moonswatch, and now with Blancpain .

As we know the market has slowed down, some even say were in a “recession” or worst heading toward a “depression”, we also know that the key to a successful business is preparing for the best and worst of times, lets dive in to see what they all have in common.

As a result of a booming economy the past 15 years, we have become the wealthiest generation since the beginning of time, while be overly in a bubble, the same has happen with the watch industry, as all combined luxury watch companies in the world produce a approx “15 million watches” every single year, while there is approx “56 million millionaires” in the world, and the average millionaire has around 4 watches. As you see this creates and very big imbalance for the watch industry.

Besides Rolex, Audemars Piguet , and Patek Philippe most of the huge watch companies are owned by the same three companies in the world leading the watch industry, 酩悦·轩尼诗-路易·威登集团 , 斯沃琪集团 , and 历峰集团 .

As the watch industry had a very big shortage, not well known companies have seen a major boom, including Blancpain, Montres Breguet , Jaquet Droz, and GP芝柏表簡介 , as a result these companies were mostly acquired by the big brands, but now as we see a slow down, there’s a different that these brands have to capture.

As we’ve see lately Rolex acquired Bucherer, while in the beginning of the year Rolex rolled out their Pre Owned Watch sale business, while it looks confusing this was a direct result of the market prep, as Rolex sells approx 1.2 million watches a year, and they are backed up with pre orders, the secondary market is flooded with watches, as much as 500,000 new Rolex watches for sale.

When Rolex rolled out their pre owned program, everyone asked why would anyone pay a premium for a pre owned by Rolex VS going on Chrono24 ? The answer is they were preparing for the crash, and that’s exactly why they acquired Bucherer, they may or may not decide to sell watches at Bucherer exclusively like AP does, we wont know till it actually happen.

But they definitely are going to use Bucherer as their pre owned program dealer, as the market dropped, people get tight on money, the first thing they will do is sell their watches, and this will bring Rolex watches in particular, to drop excessively to a point where it will be beyond repair, and their wont be exclusivity anymore from Rolex, this their only way of pushing watches, therefore by having a company like Bucherer buying off all these watches, they will be able to keep the prices and stock up on all market dumping watches, and with that also getting sales of other branded watches which Bucherer sells.

While this is Rolex approach to our issue, Jaquet Droz has the opposite issue, which is not enough watches out there, and this becomes a bigger issue as sales slows how are they gonna make enough money to by selling their watches?

The answer was by changing the way everything, you see Droz started making all their watches customizable with beautiful 100% completely Sapphire case which is transparent, and skeletonized movements, and different colors and diamond variations, starting at a price point of over $150,000 which in todays day, people wanna have personalized items and especially by the way the watch market commodities watchesm people wanna differentiate, only time will tell if this will work.

This brings us to our favorite company Omega, which is owned by non other than “Swatch Group”, as they realized in the past year, their most influential watch brand is Omega which sells 1 million watches a year, thereby being the second largest single watch seller, that their sales on the watches are declining, while their entry level Swatch watches are being picked up a lot more due to affordability.

In response Swatch group decided it will the best marketing tool for Omega by collaborating with Swatch, in this case, they will boost their cheaper brand Swatch, while showing off their Moonwatch, and this will trigger people to eventually buy their Omega Speedmaster, part of the advertisement was exclusivity as we’ve seen in the news, there was lines for three days straight to get this watch, and based on reports the Speedmaster picked up sales, and the Swatch is being a best seller.

Being such a success Swatch Group decided to do the same shpil with their non picked up brand Blancpain, and came out this week with this $400 dollar SCUBA watch, which is nicer and better build than the Moonwatch, as there were reports of issues with the moonwatch, but what are you expecting at a $250 level watch, while here they upgraded to a more premium model, with a few colors and variations, and they are expecting the same outcome for Blancpain.

While this is a very good marketing tactic, unfortunately in my opinion it is not a long term tactic as it made very upset the real collectors and watch enthusiast, imagine you paid $12,000 for a Blancpain and now you can have similar for $400, the same goes to the moonwatch

The same we got back from MB&F collectors, as you see most MB&F watches are in the 100k range, here Maximilian Busser sells a $3,000 which is pennies on the dollar then a real MB&F.

While it sounds the same style as what Swatch Group did, in my opinion it is not the same, you see Max differentiated between these two watches by making MAD a separate company, and even so their watches don’t look anything remotely closed to any MB&F, and with the watches were constructed with quality materials, to withhold tuff environments, therefore when they are coming out with the new green one I have requested already one, which only God knows if ill win the lottery and be able to buy it.

Going back to Swatch Group, this is their motto, and time will tell exactly if their play was with it or not, maybe they wanna attract a younger less serious collector generation, which we don’t know.

Let me know in the comments what you think.

Thank you for reading and see you next week.

BH