Luxurious watches have lengthy been wanted as a invaluable asset. That’s why Rolex, Patek Philippe and Cartier watch costs so closely adopted, as they ebb and circulate with folks’s urge for food for high-end spending.
However that’s not how Rolex’s CEO Jean-Frédéric Dufour needs issues to be. If something, he thinks it’s dangerous to consider watches as investments that steadily change in worth.
“I don’t like it when people compare watches with stocks. This sends the wrong message and is dangerous,” Rolex’s Dufour mentioned in an interview with Swiss outlet NZZ earlier this month. As an alternative, Rolex’s watches are extra akin to “products” than investments, he added.
Watches are sometimes considered as investments as a result of their worth can rise with time, and timepieces have adopted the increase and bust seen within the broader monetary markets prior to now, in accordance to Boston Consulting Group. Through the COVID-19 pandemic, watch costs had been surging, considerably in tandem with the inventory market highs.
When folks store for expensive watches, they typically include the mindset of buying an “investment piece,” Callum Patrick, the cofounder of Chronofinder, a luxurious watch resale market, instructed Fortune. In the end, watches are like “trophies” with a monetary return hooked up to them—and could be merchandise as a lot as they’re investments.
“A luxury watch is a huge purchase, and these watches are built to last,” Patrick mentioned. “There are ‘hot models’ that we sell day in [and] day out, and there are more niche models that you have to wait for the right collector to come along for. Both of these are worth what someone is willing to pay for it, while one is much more liquid than the other.”
Tick-tick-boom to bust for watches
Dufour’s feedback come simply when the world of watches has gone by way of a protracted interval of tumult as excessive rates of interest and financial pressures add to customers’ woes. The autumn in costs of luxurious watches by Rolex, Patek, Audemars Piguet and others has felt particularly spectacular because it adopted the highs of the COVID-19 pandemic when folks splurged on watch purchases.
The worth tag on secondhand watches has plunged almost 40% within the final two years, in keeping with London-based Subdial.
Following a increase in secondhand watch demand, the Swiss watch large started issuing certificates that mark Rolex watches’ authenticity in 2022. The following 12 months, Rolex made one other shock transfer by buying watch retailer Bucherer, marking a pivot in how the top-tier watch model will attain prospects.
Regardless of the industry-wide droop, Rolex has remained the dominant power on the earth of watches. The Swiss watchmaker raked in a report $11.5 billion in gross sales in 2023, up 11% from a 12 months earlier, in keeping with information compiled by Morgan Stanley and Swiss agency LuxeConsult revealed in February.
That doesn’t imply Rolex is freed from troubles, although. CEO Dufour mentioned in his interview that this 12 months shall be “challenging” as enter prices are nonetheless elevated and other people aren’t spending reluctantly.
“When markets weaken, as is the case now, retailers come under pressure to cut prices. This is extremely problematic because discounts damage emotional products like ours,” he mentioned.
It’s in the end the “very established and very powerful” manufacturers that stay within the customers’ conscience and that do greatest amid market volatility, mentioned Dufour.
“You can also see this from the fact that the resale value of these watches does not decrease,” he added.
