The luxurious watch market is well-positioned to avoid a crash as tight supply and a recent generation of young collectors drive demand, in response to the CEO of Audemars Piguet.
Luxury watch prices on the secondary market fell 8% last 12 months, with some top models falling greater than 20% from their peak, in response to WatchCharts. Experts have been warning that the watch bubble could burst, together with crypto, NFTs and other trendy post-pandemic booms. Yet up to now two months, prices have begun to stabilize on the back of what some see as lasting, strong demand.
“I do not see prices going much lower,” said Francois-Henry Bennahmias, CEO of Audemars Piguet — one among the so-called Big Three of the posh watch world together with Rolex and Patek Philippe. “People still wish to reward themselves, and once they wish to reward themselves, they may have a look at essentially the most respected corporations, in watches, jewelry, fashion, you name it.”
Bennahmias said the posh watch market is benefitting from an enormous and structural shift to younger buyers. Throughout the pandemic, a flood of millennials and Gen Z consumers poured into the collectible watch world, educating themselves online and coveting rare watches worn by sports stars and celebrities on social media.
With the highest watchmakers built on the promise of limited production, supply cannot keep pace with demand.
“The quantities from the watch corporations didn’t evolve,” Bennahmias said. “And the demand became crazy, because we saw the arrival of young those that just were increasingly more excited about watches. And a few individuals with money who weren’t even taking a look at watches before came upon that constructing a watch collection could possibly be something interesting.”
Audemars Piguet’s Royal Oak Offshore Selfwinding Chronograph in black ceramic, celebrating the thirtieth anniversary of the gathering.
Source: Audemars Piguet
Bennahmias said unlike the fickle meme-stock investors of 2021, today’s young watch collectors are here to remain. The common age of an Audemars customer is now 10 or 12 years younger, he said, than in the corporate’s recent history. Despite living most of their life online and immersed in digital products, Gen Z and millennials have developed a specific attraction to highly crafted, mechanical watches.
“When the Apple Watch got here out in 2014, everyone was telling us that we’ll actually die,” Bennahmias said. “They said no young person would ever wear a watch again, in the event that they did it might be a smartwatch. The funny thing is, we thought that young people couldn’t appreciate exclusivity, craftsmanship, watchmaking. They did.”
Bennahmias said younger generations have gotten among the brand’s top ambassadors.
“They’re those preaching the choir with social media and every thing. They’re our greatest promoting campaign, and so they are bringing their parents actually to the brand,” he said.
Market markups
The massive challenge for watchmakers is the secondary market, where pre-owned watches can sell on any of the handfuls of online watch sites.
With demand for watches outpacing supply of latest inventory, prices for pre-owned watches have skyrocketed, together with online sites like Chrono24, Watchfinder and Watchbox that buy and sell pre-owned watches. Preowned watch sales reached $22 billion in sales in 2021, accounting for nearly one-third of the general $75 billion luxury watch market, in response to a recent report from Boston Consulting Group.
Prices for pre-owned versions of among the top “trophy” models — just like the Patek Philippe Nautilus, the Rolex Daytona and the Audemars Piguet Royal Oak — can run two or 3 times their retail price. A pre-owned Audemars Piguet Royal Oak “Jumbo” that retails recent for $35,000 is currently listed on Chrono24 for $115,000. Some have listed for over $130,000.
The mark-ups have sparked widespread frustration amongst collectors, who claim watchmakers are deliberately limiting production to spice up prices and resale values — making their watches more attractive as investments. Bennahmias said most of the price corrections are “healthy” and that the watchmakers prefer customers who’re true, long-term watch-lovers somewhat than speculators attempting to pump up prices.
“I need this to be very clear for everybody,” Bennahmias said. “We’re not playing the market. We’re not doing anything to make the value go somehow. We make a certain quantity of watches that we expect could possibly be accepted by the world. We are saying that is the proper number, then the market is free and can do whatever they need.”
Audemars Piguet produced only 50,000 watches last 12 months and is anticipated to provide about 51,000 this 12 months, Bennahmias said. The brand, founded in 1875 and still family-owned, has long championed quality, craftsmanship and exclusivity over revenue growth.
Audemars Piguet is continuous to expand its production and facilities in Switzerland. But Bennahmias said that even when the corporate wanted to fulfill demand, which can be well over 80,000 watches a 12 months, the corporate would not find a way to seek out and train watchmakers fast enough.
Francois-Henry Bennahmias, CEO of luxury watchmaker Audemars Piguet.
Credit: Audemars Piguet
“The board of directors, meaning the members of the family, have never ever asked me in my 11 years for any growth in percentage terms, ever,” Bennahmias said. “They’ve never said ‘Francois, we wish 10% or 15% or more.’ No. They are saying, ‘Francois, we still wish to be around 200 years from now.’ That is a totally different vision on methods to construct the success of a brand.”
Bennahmias admits the corporate has “made mistakes” with regards to handling customers who arrive at their stores only to be told there aren’t any watches available or that the wait time, in the event that they’re lucky enough to get on the list, is as much as two years. He said sales staff are actually higher trained to elucidate the limited production, the low numbers of every model produced and what number of are delivered to every country.
He also said he wants 30% of all watches to go to buyers who’ve never owned an Audemars Piguet, to maintain bringing in recent customers.
“We’re learning each day, and it is not at all times perfect,” he said. “What we came upon through the course of the last three, 4 years, is that we want to teach people more.”
Audemars Piguet’s Royal Oak Offshore Selfwinding Chronograph in black ceramic, celebrating the thirtieth anniversary of the gathering.
Source: Audemars Piguet
Audemars is now celebrating the thirtieth anniversary of its popular Royal Oak Offshore model, a bigger version of its signature Royal Oak. When the Offshore was first launched, nonetheless, the model was widely scorned, in response to Bennahmias.
“People trashed it,” he said. “When the watch got here out people checked out it and said, ‘You guys are crazy.’ And we weren’t so confident in launching it. Slowly but surely it took off, to the purpose where it was an enormous success.”
Next steps
Bennahmias, who might be leaving his role as CEO at the tip of this 12 months, declined to discover his potential successor or his next position.
He greater than tripled Audemar Piguet’s sales during his tenure to over $2 billion and is well-known within the watch world for his close ties to Jay-Z and other hip hop stars, in addition to Hollywood celebrities, skilled athletes and artists.
Some have speculated his next job is as more likely to be in sports or music because it is luxury or watches.
“I feel I’ve done what I used to be alleged to do with Audemars Piguet,” he said. “I’ve got so many other things I need to do with my life. I’ve got many alternative passions. Music is one. Sports is one other one. And luxury obviously, and I need to do other things. I’m not done yet.”