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Watches are Hot Again. What Does This Mean for Luxury Consumers and Retailers?
The ringtone of the smartphone seemed to sound the death knell for the landline telephone, the camera, the portable music player, and the watch. Seeing “home” and “cell” listed on a form, as though they were still two different phone numbers, seems anachronistic now, and the digital cameras of the early 2000s seem as antiquated as bulky beige CRT monitors and wood paneling on station wagons, a symbol of a time gone by. On the other hand (or wrist), however, there’s the watch. Even as its utilitarian value waned, its symbolic power endured. Why is it that even as smartphones have relegated the digital camera and the iPod to the same dustbin of history as the Walkman and the fax machine, luxury watch brands are thriving?
What It Means for Consumers
There are two types of luxury watch buyers: those who see it as a luxury accessory and those who are making an investment. The two categories can overlap, and who comprises the first is changing. If all you want is to know what time it is, you have a phone for that. But a luxury watch is so much more than a timepiece. It is a functional accessory, something that can call back to bygone traditions or can signal belonging to a subculture that appreciates the fine craftsmanship and complex expertise of the watchmaker.
The investors, on the other hand, see the secondary market as a quick way to turn a profit, buying watches on the secondary market at prices up to five times greater than retail and looking to flip them for even more. That market grew exponentially throughout 2022 thanks to these buyers, fueled, as Victoria Gomelsky wrote for the New York Times, by stimulus checks and crypto money. Luxury watches, like sneakers or NFT “art,” became the locus of so many get-rich-quick schemes.
But the future of luxury watches lies with those newcomers to the luxury market, Gen Z. What they want from watches is the same thing they want from jewelry: beauty with meaning. Ethically sourced materials, environmentally sustainable practices, and the social conscience of a brand are just as important as the status that a brand conveys. We saw this most recently following Russia’s invasion of Ukraine, when Louis Vuitton, Swatch, and Rolex closed their stores in Russia. These companies know their consumers, and they know what their consumers expect from them.
What It Means for Retailers
With the madness of 2022 subsiding thanks in part to the crypto crash, the luxury watch market would seem poised for a downturn. But the industry was growing even before the secondary market began to heat up, and it is expected to remain strong even as it cools off. Luxury watchmakers often produce limited editions, which means their products will always have value on the secondary market, and the most sought-after models will always be difficult to find on the primary market. But a slowdown in investment buys is fine with retailers, who will sell out of their stock regardless and would rather sell to those who appreciate the craftsmanship of a luxury watch rather than to profit-driven speculators, anyway.
There are more people than ever in the former category, and many who initially saw watches solely as investments developed a love for them. With their customer base growing, luxury watch retailers are poised to grow in 2023, even with the looming threat of a recession. High-end luxury is an almost recession-proof business, but mid-priced luxury will have to work harder to forge connections with consumers
For the new Gen Z consumers, a luxury watch is less a statement of status or achievement and more a statement of identity and feeling like a part of something with a greater purpose. They will gravitate toward brands that move away from the ultra-masculine, ultra-wealthy branding of the past to something more inclusive and purposeful. Part of this move away from a masculine brand image will be new innovations in women’s watch design as well as more unisex designs that appeal to younger consumers’ ideas about masculinity, femininity, and everything in between.
The resale market for luxury watches soared in 2022, but it seems to be coming back down to earth in 2023. Sales in the primary market, however, remain stable, which is good news for retailers as they face uncertainty in the coming recession. As it is for all luxury retailers, watch retailers can come out even stronger by knowing and authentically relating to their consumers.