Luxury watches have always been a status symbol for those who can afford them, and their popularity shows no signs of slowing down. The luxury watch industry has seen a surge in the influence of social media personalities, or influencers as they would say. These influencers, who boast massive followings on popular social media platforms like Instagram and YouTube, have become a go-to for luxury watch brands seeking to expand their reach to new audiences. Collaborating with these influencers allows brands to tap into their expansive and engaged audiences, providing a significant boost to the promotion of new product launches and limited-edition models. Such a strategy provides a platform to cultivate a positive buzz around the brand, as well as amplify its marketing efforts on social media. From classic brands like Rolex and Patek Philippe to newer players like Richard Mille and Hublot, the world of high-end horology is constantly evolving and expanding. Despite the challenges posed by the COVID-19 pandemic, the luxury watch industry has continued to thrive, with many brands reporting strong sales and increasing demand for their products. As a lover of watches myself, I have thrived to understand what are the most elegant looking watches yet still keep up with the MSRP it was bought at, or even gain value at a persistent rate over the years, and why the increase of price seems to happen. Through the data scraping I have done through Chrono 24, I came to several interesting conclusions. According to the Fig 1. We can see that there was a drastic increase in the price of watches from 2019 till 2021.
Figure 1
Upon analyzing the trends and performance of luxury watches over the past few years, it becomes evident that the market for these timepieces can be quite volatile, with prices fluctuating significantly over short periods of time. As depicted in the line graph, even the “Holy Trinity” of watches – consisting of Patek Phillipe, Audemars Piguet, and Vacheron Constantin – has struggled to stabilize its prices on the grey market, which is characterized by the sale of watches outside of official retail channels. The Patek Phillipe Nautilus 5940, for instance, experienced an average drop of $100,000 in price, while Rolex watches dropped around $40,000 on average. This sudden decline in value can be attributed to various factors, including changes in consumer demand, global economic conditions, and shifts in the preferences of watch collectors. Interestingly, some watch manufacturers such as Bulgari and A. Lange & Söhne Lange did not experience the same hype trend as other watches did. Nevertheless, purchasing these luxury watches from the grey market allowed buyers to stay on the safe side as their prices remained relatively steady throughout the world inflation crisis.
I have Interviewed the known watch bidder account in Qatar, and Mr. Al Kaabi replied ” We saw a huge market structure shift from the beginning of 2019 till after Covid-19, Audemars, Patek Phillip, and Rolex prices went through the roof, we saw bids over a watch such as a panda Rolex Daytona reach over 200 thousand Qatari riyals, which is about 160% above MSRP. The trends and performance of luxury watches are subject to various market forces that can cause significant fluctuations in prices. While some watch manufacturers may experience hype trends that lead to drastic price increases, others may remain relatively stable.”
Figure 2.
Sales Comparision between the United States and Asia
We can clearly see that the United States of America is the primary market for luxury watches, especially for the “Holy Trinity” consisting of Patek Phillipe, Audemars Piguet, and Vacheron Constantin. The staggering $7.3 million in sales for Patek Phillipe alone in the United States is more than three times the selling rate of Asia (Fig 2), which highlights just how dense the market is in America. This surge in demand for luxury watches in the United States can be attributed to several factors, including the country’s robust economy and the high spending power of its citizens, as well as the country’s long-standing affinity for luxury goods. As a result, luxury watchmakers have focused their efforts on the American market, resulting in a highly competitive market for these timepieces. While Patek Phillipe and Rolex dominate the market in the United States, the remaining luxury watchmakers such as Audemars Piguet, Bulgari, and A. Lange & Söhne Lange seem to have a rivalry to see who can sell the most. Audemars Piguet, for example, has a difference of just around $40,000 in sales compared to its competitors. This highly competitive market not only highlights the appeal of luxury watches in the United States but also demonstrates the importance of brand recognition and marketing efforts in capturing market share.
Is the Market Really Filled with Watch Lovers?
The pie chart raises several questions about why the majority of the watches listed on the grey market are new and have not been used by their owners, even for a short period. This trend is particularly surprising as it suggests that some buyers may have purchased luxury watches with the intention of reselling them on the grey market for a profit, rather than enjoying their use as intended. It is possible that these watches were sold to non-profile customers, such as friends or associates of sales managers, and then split to be sold on the grey market. This scenario raises concerns about the transparency and ethics of such sales practices, particularly in light of the potential for price manipulation. Another possibility is that some buyers may have purchased these watches during a time of financial pressure, and later chose to sell them to recover their investment. However, given the high prices of luxury watches, it is unlikely that this explanation would account for the majority of the new watches on the grey market. Overall, the pie chart raises important questions about the motivations behind the sale of luxury watches on the grey market and the potential for unscrupulous sales practices. Further research and investigation may be necessary to fully understand this phenomenon and ensure greater transparency and accountability in the luxury watch market.
Fan Bases of Different Luxury Watchmakers and the Effect it would have on the Price of the Watch
Based on the map and legend, it appears that the luxury watch market is predominantly scattered across Asia, Europe, and North America. It’s intriguing to observe that Hong Kong and the US are the top two grey market sellers, yet there’s a significant contrast between the two, with the US leading the way in popularity for Patek Philippe and Audemars Piguet. In the Middle East, Vacheron Constantin seems to be a major contender with Europe. In Europe, the United Kingdom has the largest share of watches in the market, particularly with the Rolex Day
tona models. Thailand is another interesting market for luxury watches, with a significant interest in A. Lange & Söhne in the grey market compared to the rest of the world. This German brand is renowned for its precision and craftsmanship, and its watches are highly coveted by collectors and enthusiasts. Italy, on the other hand, has a substantial fan base for the Bulgari Octo. This watch has a distinctive design and is highly sought after by those who appreciate its unique aesthetic.
Methodology:
To develop my data scraping plan, I first identified the specific data I needed to collect to answer my research question. I determined that I needed information on luxury watches, including brand name, model name, and price. Next, I identified the data fields that were important to my analysis, such as the brand name and model name, and any additional fields that would be helpful, such as the price and condition. To ensure that I was collecting the most relevant data, I also included filters in my plan. These filters helped narrow down the results to only those watches that fit specific criteria, such as watch type, price range, and countries where the watches were listed. Overall, my data scraping plan was designed to collect the specific information I needed to answer my research question.
Data set Exel