Simon de Burton Checks the Pre-Owned Market Trends
written by S. de Burton - 19th Dec 2011
Watch manufacturers have traditionally had a rather uneasy relationship with the pre-owned market, and for one fairly obvious reason: they believe that every used wristwatch that comes up for grabs threatens to reduce their prospects of selling a new one.
For an industry which so often majors on heritage and craftsmanship, this attitude might seem rather odd – after all, could there be a better advertisement for a product than an example of that product that has already served one owner well, yet which remains in excellent condition, has years of life left in it and retains an excellent residual value?
There are, of course, some brands that have embraced the benefits of promoting the longevity of their watches, notably Patek Philippe which has managed to encapsulate its ethos in a single phrase: “You never actually own a Patek Philippe, you merely look after it for the next generation”.
Patek’s intelligent marketing conveys the message that its watches are built to last and designed to transcend fashion, an idea that has been heavily bolstered by the extraordinary performance of the firm’s vintage models at auction. At its flagship watch sale in Geneva this month, Christie’s sold no fewer than six Pateks for sums exceeding $1 million, with two pieces – both extreme rarities – fetching in excess of $2 million.
Collectors at that level are, of course, not simply buying a pre-owned watch in favour of a new one to save money (they can generally afford as many new and old ones as they desire) but the fact that such Pateks are seen to be fetching sky-high prices has, over the years, helped to both raise the profile of the brand and made its more affordable new products all the more desirable among people who value the residual value of their possessions.
The power of this almost subliminal form of marketing even led to the highly respected American newspaper the Wall Street Journal running a front page article in late 2007 entitled “How Top Watchmakers Intervene in Auctions” that claimed to blow the gaff on what it perceived to be a murky world in which brands inflate the value of their own products by bidding them up in order to make their contemporary watches seem like great investments.
While this might be true to a small degree, the accusation was essentially groundless – but it did train the spotlight on the fact that more and more brands are realising just how important the pre-owned market can be (both vintage and modern) in terms of promoting the quality and value of their products as well as educating the buying public about what they do.
One notable example could be seen at the Omegamania thematic auction in the spring of 2007, where two particular watches stood out. One was from a small number of prototype Speedmaster Professional ‘Alaska Project’ models made between 1971 and 1973 which featured a detachable outer case designed to protect the watch from extreme temperature variations.
It fetched Sfr 64,900, while elsewhere in the sale were three examples of the quirky-looking Seamaster ‘PloProf’ dive watch of the same era which is instantly recognisable by its asymmetrical case and prominent, red bezel locking button. The best PloProf of the three sold for a ten-times estimate Sfr 35,400 – but the most interesting aspect of the event was that, within a year, both of these long-forgotten models had been revived, upgraded and returned to the Omega catalogue.
Undoubtedly, the publicity from the sale and the strong prices they achieved had put them well and truly on enthusiasts’ radars and created a market that Omega would have been foolish not to exploit.
Although it is an extreme case, this demonstrates how brands are learning that the pre-owned market can actually benefit them rather than deprive them of potential sales of new product – and why, especially in these straitened economic times, it is a good idea to highlight the fact that a quality wristwatch is more of an investment than an indulgence.
For this reason, we can expect to see some brands doing more to help the owners of pre-owned watches, much in the way that some high-end car marques are improving the service they offer to the owners of older, usually classic models.
Since the renaissance of Aston Martin in the late 1990s, for example, its early cars have soared in value to the point that the brand is about to open its own dealership at its ‘spiritual home’ of Newport Pagnell which will sell not only new and pre-owned cars from its current range but ‘heritage’ models, too – and provide the expertise, spares and engineering facilities to enable owners to keep them in perfect working order.
Omega has been the first watch brand to do something similar in opening an official vintage store in the heart of London – but it is becoming increasingly apparent that brands across the board are no longer quite so fearful of the pre-owned market and are coming to accept that its existence is an inevitability that should be capitalised upon and not ignored.
For buyers prepared to go the pre-owned route, meanwhile, opportunities have never been better. The buoyant market for new watches has resulted in the brands having to produce more models in greater numbers which, ultimately, results in a huge choice of used pieces as owners decide to upgrade, downgrade or simply cash-in – and, as with a new car, it is always comforting to let the original owner take that first hit of depreciation.
In addition, the rising price of material costs, often combined with an inability to meet demand, is ensuring that many pre-owned models are not only holding strong prices but, in certain cases, actually rising in value and proving to be genuinely good investments.
As one collector of pre-owned contemporary wristwatches recently told me: “Nowadays, there is only one type of luxury that’s worth considering, and that’s smart luxury – to me, that means a high-end watch that you can use and enjoy for years, but which you’ll always be able to sell to get you out of trouble.”
Wise words indeed…