CLOS­ING THE LOOP

Watch brands are be­gin­ning to en­ter the pre-owned mar­ket for their time­pieces, with po­ten­tial in­dus­try-wide ef­fects.

The Peak (Malaysia) - - Contents - TEXT JAMIE TAN

Watch brands are be­gin­ning to en­ter the pre-owned mar­ket for their time­pieces, with po­ten­ti­tal in­dus­try­wide ef­fects.

Lower prices, side-step­ping that first hit of de­pre­ci­a­tion on a brand-new watch, or ob­tain­ing time­pieces that have gone out of pro­duc­tion: These are some lo­cal watch col­lec­tors’ oft-cited rea­sons for em­brac­ing the pre-owned time­piece mar­ket. Sales di­rec­tor Paul Cheong, who has been col­lect­ing time­pieces for some 15 years, of­ten scours web­sites for older pieces that you won’t see on re­tail shelves. He shares: “I don’t be­lieve in pay­ing a pre­mium for watches. Also, to­day, you won’t be able to find many of my watches new, such as those by Ger­ald Genta and Daniel Roth.”

Cheong is not alone. In the Trends Re­port 2018 pub­lished by the Fon­da­tion de la Haute Hor­logerie, fi­nan­cial con­sul­tancy Ke­pler Cheuvreux es­ti­mated the global mar­ket for sec­ond-hand watches to be worth USD5 bil­lion a year. Size aside, this seg­ment has posted an­nual growth rates of five per cent, out­per­form­ing the mar­ket for new watches.

BRANDS WANT IN These tan­ta­lis­ing fig­ures have not gone un­no­ticed by in­dus­try chiefs, sev­eral of whom have re­cently made state­ments about their plans to en­ter the pre-owned watch game. These in­clude Aude­mars Piguet, MB&F, Richard Mille and Bre­itling, although Richemont Group – the con­glom­er­ate be­hind brands like Jaeger-LeCoul­tre and Cartier – also made its in­ten­tions clear when it ac­quired Watchfinder, a UK-based pre-owned watch re­tailer, this June. No longer are brands con­tent with watch­ing from the side­lines.

For Aude­mars Piguet CEO Fran­coisHenry Ben­nah­mias, the main rea­son for

mov­ing the brand into the pre-owned mar­ket is to min­imise leav­ing money on the table. He is keen to cut out the mid­dle­man for the busi­ness, and en­gage with clients di­rectly through var­i­ous chan­nels. Says Ben­nah­mias: “I want to be there when you buy your AP watch, and help you sell it off when you want to trade it in for an­other one. Why would you go to an auc­tion house when you can come to us? These auc­tion houses will come to us (for in­for­ma­tion on the watches) any­way, and charge you for it. No, it’s about time we re­cap­ture this busi­ness, which could be 10 times big­ger than the one for new watches.”

While Aude­mars Piguet does not have firm plans yet, it has be­gun ex­per­i­ment­ing with dif­fer­ent ideas, such as trade-in pro­grammes, and does not rule out open­ing bou­tiques sell­ing pre-owned

time­pieces within the next three years. MB&F founder and CEO Max­i­m­il­ian Busser shares that his brand is build­ing a pre-owned depart­ment that will cu­rate outof-pro­duc­tion time­pieces by buy­ing them back, re­fur­bish­ing them, and re­selling them.

A FLOUR­ISH­ING WILD WEST Brands’ in­ter­est in en­ter­ing the sec­ond­hand fray is note­wor­thy – es­pe­cially when one con­sid­ers that, for the long­est time, most have shunned the pre-owned mar­ket for their time­pieces, pre­fer­ring to con­cen­trate on sell­ing new prod­ucts. With a cou­ple of ex­cep­tions: Vacheron Con­stantin, for ex­am­ple, ac­tively ac­quires se­lect vin­tage watches that it re­stores. Those time­pieces are then of­fered for sale, with a full war­ranty, in the brand’s Les Col­lec­tion­neurs col­lec­tion as a cu­rated se­lec­tion. Cartier, on the other hand, sup­ports its vin­tage and pre-owned time­pieces with a restora­tion ser­vice at its work­shop in down­town Geneva, al­beit on a lim­ited ba­sis, given the cost of such work. Oth­er­wise, this seg­ment of the in­dus­try

has been left wide open to pri­vate deal­ers off­line and on­line, In­ter­net plat­forms such as Carousell and eBay, and auc­tion houses – each, of course, with their own pros and cons. Con­sider auc­tion houses, for in­stance: once lim­ited to just vin­tage time­pieces, auc­tions are in­creas­ingly shift­ing towards mod­ern ones, with some lots go­ing un­der the ham­mer just a few years af­ter they were pur­chased brand new.

Ex­perts put ev­ery lot un­der scru­tiny here, so the prove­nance of each watch on auc­tion is more rig­or­ously as­cer­tained, as com­pared to one be­ing flipped by an un­known seller in an on­line mar­ket­place. On the flip side, auc­tion houses charge var­i­ous fees and pre­mi­ums that trans­late into ad­di­tional costs for both buyer and seller.

Largely left to its own de­vices, the pre-owned seg­ment of the watch mar­ket has flour­ished for var­i­ous rea­sons.

For a start, buy­ing and own­ing pre­owned lux­ury watches is no longer taboo; buy­ing and sell­ing sec­ond-hand time­pieces is now seen as a per­fectly vi­able way to own mul­ti­ple time­pieces. Ad­di­tion­ally, the se­condary mar­ket is of­ten the only way to ob­tain out-of­pro­duc­tion time­pieces, which some­times go for more than they did brand new.

Trans­ac­tion and in­for­ma­tion costs have also gone down sig­nif­i­cantly, on the back of rapidly de­vel­op­ing e-com­merce and In­ter­net trad­ing tech­nolo­gies. The adage of ‘ buy­ing the seller’ still ap­plies, whether one is deal­ing with a busi­ness or in­di­vid­ual, but it’s far eas­ier now to look up a seller’s trans­ac­tion his­tory to gauge their rep­u­ta­tion.

BEYOND IM­ME­DI­ATE GAINS Im­me­di­ate-profit mo­tive aside, there is one big dif­fer­ence be­tween what drives ex­ist­ing pre-owned watch deal­ers, and brands: For the lat­ter, con­trol­ling its pre-owned mar­ket is also about build­ing and pro­tect­ing the value of its name and its watches.

Busser con­sid­ers the per­for­mance of a brand’s pre-owned watches to be a sign of its strength. “If you sell 50,000 new pieces a year, but an ex­ist­ing client must sell his watch at 70 per cent off re­tail price on the pre-owned mar­ket, then your brand isn’t a strong one,” de­clares Busser. MB&F time­pieces rou­tinely ham­mer for over their re­tail prices, thanks to their lim­ited pro­duc­tion and strict ad­her­ence to it – un­like some brands that reis­sue pop­u­lar mod­els or ref­er­ences, a dis­con­tin­ued MB&F prod­uct re­mains so for­ever.

Even so, Busser still sees the need to ex­ert greater con­trol over the per­for­mance of his pre-owned prod­ucts. “Of course, dif­fer­ent pieces will have dif­fer­ent de­grees of de­sir­abil­ity over the years, but this is some­thing we want to work on and sup­port, and prob­a­bly at a loss. But that’s fine – this is part of brand­build­ing and not money-mak­ing.”

Jean-Claude Biver, head of watch­mak­ing at LVMH – which owns brands like Tag Heuer and Zenith – sees the pre-owned mar­ket as an in­di­rect de­ter­mi­nant of new watches’ suc­cess. Biver re­veals that Tag Heuer has set up a restora­tion depart­ment for its vin­tage watches, with a team in­side re­spon­si­ble for au­then­ti­cat­ing and cer­ti­fy­ing them, should own­ers re­quest it. “It pro­tects the vin­tage mar­ket and hence the his­tory and legacy of the brand,” says Biver, who added that “the more col­lec­tors are in­ter­ested in our brand’s his­tory, the more young peo­ple will be in­ter­ested in the brand’s fu­ture”.

THE WAY FOR­WARD With the var­i­ous brands adapt­ing dif­fer­ent strate­gies, the jury is still out on how the sec­ond-hand mar­ket will evolve – if at all. For watch buy­ers, this will al­most cer­tainly be a good thing, as in­creased com­pe­ti­tion leads to more choices and keener prices. On the other side of the fence, a brand that suc­cess­fully di­ver­si­fies into the pre-owned busi­ness will en­joy an ad­di­tional rev­enue source, with po­ten­tial syn­er­gies be­tween its new and pre-owned watch busi­nesses.

This may spell trou­ble for pre-owned watch re­tail­ers. Di­rect com­pe­ti­tion from brands may not sim­ply erode their busi­ness, but also ren­der them re­dun­dant. Af­ter all, a pre-owned Bre­itling time­piece that’s been of­fi­cially cer­ti­fied by Bre­itling it­self does look more at­trac­tive than one from a third­party re­tailer. To adapt, these re­tail­ers will need to dif­fer­en­ti­ate them­selves, whether in terms of pric­ing or other ser­vices.

Although it’s a com­mon ob­ser­va­tion that the watch in­dus­try changes at a glacial pace, it’s also true that the demon­stra­tion ef­fect is strong among the play­ers. Should just a few ma­jor brands find suc­cess with a tweaked busi­ness model in­volv­ing their pre­owned time­pieces, many oth­ers may quickly fol­low. When that hap­pens, a sea change will be upon us.

02 01,02 NEXT LAP Pic­tured here is the Aude­mars Piguet bou­tique at Ma­rina Bay Sands. Might we one day see a store like this, ex­clu­sively stock­ing pre-owned AP pieces? Pos­si­bly, says CEO Fran­cois-Henry Ben­nah­mias.

03 03 FINE VIN­TAGE Vacheron Con­stantin’s Les Col­lec­tion­neurs pro­gramme sees the brand ac­quir­ing its vin­tage pieces, restor­ing them, and sell­ing them.

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04,05 INDIE MOVE­MENT MB&F chief Max­i­m­il­ian Busser has pointed out that pieces like the Mu­sicMa­chine 3 have done well at auc­tion in past years. 06 KEEP­ING WATCH Jean-Claude Biver, head of watch­mak­ing at LVMH, is among the watch chiefs look­ing to en­ter the pre-owned watch mar­ket. 05

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