As the year comes to an end, I would like to take this opportunity to take you on a retrospective journey of 2019 as well as a brief outlook of what 2020 has to offer.
First of all, I would like to thank all of our clients, our followers, our readers and our partners. Without you – this whole thing wouldn’t be that much fun.
Secondly, I think we can all agree that 2019 has been an exciting year for the entire watch industry. Sales have hit record high for most of the watch brands. A lot of stunning pieces have been introduced such as the Audemars Piguet Royal Oak 15202BC. On the other hand, we witnessed a world record selling price for the Patek Philippe Grandmaster Chime Ref. 6300A for USD 31 million at the Only Watch Charity Auction. Also, smaller independent watch brands such as H. Moser & Cie. gained brand awareness thanks to social media.
Despite the positive highlights in 2019, there is also a dark side to this industry.
Although I am happy that almost every watch brand hit its all-time high, this year comes with a bitter aftertaste for real watch aficionados. The hype generated by the industry left the shop windows empty especially when it comes to “The Big 3” meaning Rolex, Patek Philippe and Audemars Piguet. People who have never been into watches or are real watch aficionados suddenly claim waiting lists for the hot items. Why? Because they want to make a quick sell on the grey market and take advantage of the current hype.
Let’s take Rolex as an example since it is the most well-known watch brand around the globe. Entering a Rolex boutique or an AD (authorized dealer) and expecting to purchase a sports model in steel right away is next to impossible. And to be honest this feels wrong, because - as an analogy - it feels like entering the butcher and they don’t have any Entrecôte to sell.
I totally get the point that the Swiss watch brand is creating some artificial demand by limiting the quantity of watches being sold but is it really reasonable to have a waiting list for a Daytona Panda (ceramic bezel) for up to 7-10 years?!
I mean - it’s totally fine that the brand wants to stay exclusive; Hermes is doing it with its Birkin Bags and Ferrari with exclusive series like the Icona but there is a big difference between these two brands and Rolex. The Daytona Panda is the entry model of the Daytonas, whereas Birkin bag and the Icona series are the top-notch pieces you can have.
(By the way, I criticize the Daytona in this article as it the most desired watch from Rolex. Other brands like Patek Philippe and its entry level the 5711A are even worse. No open spots on the waiting list at the moment.)
So, would it really be that bad to increase supply and decrease waiting time to only two years for a Daytona Panda? Personally, I don’t think so given that they would still be an exclusive watch brand and in turn would have many more happy customers. At the same time, other sports models like the Datejust should be available with a waiting time of less than two months in my opinion.
The current Rolex crisis, as it was referred to in some newspapers, leaves a mark resulting in a grey market (also called secondary market or re-sell market) that is getting bigger and bigger. Yes, read it again. By reducing supply, Rolex itself creates a monster that it hates the most - the grey market. I mean - can you blame someone if he sells his watch for double the amount of the retail price!?! I don’t think so.
Finally, as a watch enthusiast I am sure you already heard that Rolex will increase its prices by 6-8% for every model in 2020. I am questioning whether this is really the right approach for the current situation. I foresee that many loyal customers will find this situation to be less than favorable and even downright unfair.
Is this Rolex’ answer to the grey market? More specifically, Rolex says ‘if people are willing to spend that amount of watches on the grey market, we can increase prices too’. But what will happen to the re-sell prices in practice is a mystery. I don’t see any reason why this should stop grey dealers to increase prices as well. Personally, I don’t see any issues with the re-sell market, my problem is with non-watch lovers who claim spots on the waiting list in order to take advantage of the hype.
At the end of the day I think this artificial demand (created by Rolex, Patek Philippe and other brand) is damaging indirectly the whole watch industry on the long-term. Although the strategy might be good for the next few years and while it will bring some huge profits, especially with the new price increase, it will ultimately bring some unintended consequences.
However, let’s see what 2020 will bring and I am excited to all the new people I will meet and the articles I will share with you. I wish all of you a year full of wonderful moments, health and success (and a lot of watches).
The Collectors Circle wishes you a Happy New Year.