THE BILLION-DOLLAR GREY MARKET IN WATCHES UPSETS BIG BRANDS
No one is immune to a bargain — not even those who can spend GBP 30,000 on a watch. At Watches of Switzerland, an authorised dealer, an Audemars Piguet Royal Oak automatic in rose gold sells for GBP 42,600, but the same watch is on offer at "grey market" website Chrono24 from US dealer Watch My Diamonds for USD 34,850 (GBP 27,227). It is impossible to ignore that the grey market is becoming a powerful force in the watch industry, which is worth USD 62.5bn, according to Euromonitor.
While resell marketplaces like Depop, GOAT or Stadium Goods are heating up the fashion industry, watch dealers like Chrono24 or Chronext are disrupting the timepiece market. They are are online marketplaces similar to eBay where dealers and consumers can meet, are two heavyweights in the sector. These platforms offer discounts of up to 30 - 40 per cent on new luxury watches, delivered overnight and offering responsive customer service. Doomed as “second-hand dealers” by the chief executive of Omega, global watch manufactures are forced to act. Bearing in mind that these are no small businesses. Chrono24 has listings for more than 300,000 new and used timepieces with a value of EUR 2.5bn, while upcoming Chronext, which has raised over USD 50m in venture capital, is expected to generate USD 130m in revenue this year.
While the majority of watch companies are still trying to ignore or diminish this so called "grey market", some of the "top, top brands are in a very open dialogue with us right now," says Tim Strack, CEO of Chrono24. One brand that has decided to work with the grey market is Frederique Constant, whose “affordable luxury” timepieces start from around USD 870. “We have been feeling the impact for two or three years that the grey market is getting stronger and stronger,” says Niels Eggerding, vice-president of sales at Frederique Constant. “It’s very hard to control your brand against that,” he says, with thousands of points of sale and distributors all potentially leaking. Likewise, MB&F and H.Moser & Cie, will also join in expanding to the secondary high-end goods market later this year. “It is important to control the sale of second-hand watches to protect the owners and the value of watches already in the market by keeping the grey market in check,” said H.Moser & Cie’s Edouard Meylan.
In sign of times, Swiss luxury watchmaker Audemars Piguet said it would launch a second-hand business this year, becoming the first big brand to announce plans to tap into a fast-growing market for pre-owned premium watches. The company told Reuters it had carried out a test run in one store in Geneva and would launch the business more widely at its outlets in Switzerland this year. If this proved successful, it said it would roll out the operation in the United States and Japan. “Second-hand is the next big thing in the watch industry,” Chief Executive Francois-Henry Bennahmias told Reuters in an interview at the SIHH watch fair in Geneva this week. Time will tell if Audemars Piguet's direct competitors, like Rolex, Hublot and Co., will follow the company’s lead.