Why everyone’s talking about pre-owned

Now Reading: Why everyone’s talking about pre-owned

Some say the secondary luxury watch market could soon be bigger than the primary market that feeds it – is that likely, and what would it mean?

By Dubai Watch Week

17 Dec, 2019

Could it happen? In recent weeks, the idea that the secondary luxury watch market, where pre-owned watch retailers operate, will soon be bigger than the primary watch market has gained some serious traction. It was left echoing in the corridors of Dubai Watch Week, having been a hot topic of conversation during the event.

But really – could it happen? And what would it mean for the watch industry if it did?

The growth of the pre-owned hasn’t come out of nowhere. A couple of years ago, Audemars Piguet chief executive François-Henry Bennahmias was quoted as saying it was the next big trend in watch retail. That now looks prescient.

Analysts believe sales of pre-owned watches will total $16 billion this year, and that the total market for second-hand luxury goods is growing by almost 10 per cent a year. The primary market is worth an estimated $50 billion a year. That would mean it will be at least a decade before secondary beats primary, but who’s to say secondary won’t grow faster still?

Sales of pre-owned luxury watches are part of a much wider trend for buying second-hand, upcycling and living sustainably. Eco-conscious consumers are finding new ways to feed their buying habits and are flocking to sites such as Xupes and The RealReal to get a guilt-free luxury fashion fix. What’s happening in watches is an extension of the trend.

But it’s more than that, too. In fact, there are three powerful reasons for the growth of pre-owned that have nothing to do with concerns for the environment.

Trade and upgrade
The new generation of pre-owned retailers say they’re giving consumers something they’ve not had before – easy access to the equity in their watches and fast access to an upgrade. They’re now on a big push to tell consumers their watch buying hobby just got more interesting, because with a trade-in that dream watch might be closer than they think.
Save, save, save
Much of the focus on pre-owned is on high-demand pieces such as Patek’s Nautilus and Rolex’s Daytona. Given the chronic shortages in supply of these pieces to primary retailers, you can understand why. But beyond those, pre-owned outlets are brimming with pieces only a few years old that are now for sale, as new and with a two-year warranty, for less than the list price. Discount culture in watch boutiques has all but dried up – pre-owned is replacing it.

3. Max the access

Those high-demand pieces may not be appearing in the window of your local jeweller any time soon, but pre-owned retailers say they’re taking in dozens of those Rolex and Patek stainless steel sports watches consumers are crying out for at the moment. Why join a waiting list when you can buy one pre-owned tomorrow? Because of the vast premiums they command, some will say – but that’s the consumer choice. It’s not just rare pieces, though. Discontinued pieces surface regularly on pre-owned websites, giving consumers a second chance to pick up a piece they missed first time around.

What does this mean for the watch industry? At Dubai Watch Week, WatchBox’s co-founder Danny Govberg said he believes primary and secondary watch sales are going to combine. He may have a point, but he’s also pushing his own agenda – WatchBox announced a partnership with Ahmed Seddiqi & Sons in the Middle East at last week’s event.

Primary retailers aren’t saying any different, though. They seem comfortable with the growth in pre-owned because it encourages new buyers into the space and gives existing watch owners a way of releasing the equity they have in their collections. To now, few buyers will have understood they can trade in their watches for cash or as leverage against a new watch with specialist companies, but that’s changing fast. The argument is that primary retailers who partner with secondary outlets could stimulate their business hugely.

The list and reach of specialist companies is growing, too. As well as WatchBox, WatchFinder and Chronext have deep inventories, while concepts such as Chrono24’s marketplace continue to develop. Between them, they give global access to pre-owned watches.

For consumers, two questions remain. Do we want to buy second-hand watches? And can we trust the sellers we’re buying them from? The answer to the first question will depend on where you see your watch story beginning. Some will always want new, while others will be comfortable owning an ‘as-new’ watch that comes with a two-year warranty, already the secondary market norm. The trade and upgrade concept plays to generation rent’s perceptions of ownership, too – ie it’s less tangible and more transient now.

Trust is harder. Pre-owned retailers will soon have to show the provenance, in detail, of every watch they sell if they are to sustain their growth. Is the watch authentic? Was it traded in? Is it a grey market piece? And if neither of these, where did it come from? Are you the pre-owned retailer accredited by the brands you're retailing? If not, why not? Transparency and authenticity are increasingly critical.

For now, the pre-owned market is certainly shaking up the business of watch buying and collecting. It opens up new possibilities, and because the secondary space is so digitally focused, it offers some serious convenience, too. Want a Rolex GMT Master II ‘Batman’ tomorrow? If you’ve got the extra cash to pay the premium, these guys are promising they can do it.

Pre-owned is here to stay, and it looks like it could create the biggest market shift of the next decade.