arious different actors have cut themselves a slice of the secondary market pie. Conspicuous by their absence are the watch brands themselves. Some (such as Zenith in recent years, while Rolex has just launched a CPO programme) are gradually making inroads but secondary sales are still only a tiny part of their business. The market has therefore grown organically, driven by a multitude of sources.

There are the non-specialist e-commerce platforms looking to burnish their image in the collectible and luxury market. The best example has to be eBay, partner to the recent Luxury Innovation Summit and the Re-Luxury fair in Geneva. There are marketplaces such as Chrono24 (Bernard Arnault is an investor) as well as platforms operated by groups (Richemont-owned Watchfinder & Co. is one). There are also fast-rising names such as WatchBox and A Collected Man that buy and sell their own inventory with the emphasis on the most exclusive models.

And there are the more traditional auction houses. The dominant players where watches are concerned are Phillips in Association with Bacs & Russo and Christie’s, the two constantly trading places for the number-one spot and all-time record prices per model. The deal between YNAP and Farfetch could also impact the secondary market landscape. The market for pre-owned watches is therefore a mix of traditional players and start-ups, luxury and tech companies, digital and phygital.

Launched in 1995 as a platform for buying and selling second-hand items, eBay is returning to this segment with a specific focus on collectibles such as watches, jewellery, trading cards and sneakers. It has introduced an authentication programme to reassure luxury buyers.

Each to its own

Each of these providers has its own way of doing business, down to the language it uses. The WatchBox model is that of a stock exchange. Visit its offices in Philadelphia and you’ll see “traders” hard at work on the “trading floor”. It’s a comparison the brand willingly owns. “What we do is entirely comparable to the stock market,” Patrik Hoffmann, Executive Vice President of WatchBox Switzerland, recently told us. “The people who work with the end customers are like portfolio managers.”

As on the stock market, this implies an additional level of transparency. “When Gen Z and millennials buy shares in a company, they want to know what they are investing in. When they buy a watch, they want to know who’s behind the brand. They do far more research now than in the past and this will influence what makers create going forward.”

WatchBox held an exhibition-sale of rare watches by F.P.Journe and De Bethune at the first Re-Luxury fair, held in Geneva in November 2022.

In contrast, a more traditional house such as Phillips seeks to distance itself from any such comparison. “Watch collecting isn’t the stock market. It’s about passion, expertise, the long term, not making a fast return on investment,” insists Alexandre Ghotbi, who is Head of Watches for Continental Europe and the Middle East. “A watch should never be seen solely from an investment point of view, even if this a growing consideration.”

Comparison, by Morgan Stanley with WatchCharts, of the S&P 500, Bitcoin and an index composed of several dozen collectible watches and brands, between January 2021 and September 2022. Globally speaking, watches outperformed the stock market and crypto currency and were considerably more stable. “The significant growth was mostly attributable to wealth creation during the pandemic, and a surge in investment appetite in collectibles/watches,” writes Morgan Stanley in its 3Q22 report.

Collectible, not second-hand

The one thing all these actors agree on is to banish the unglamorous “second-hand” label, testing linguistic pirouettes such as “pre-owned”, even “pre-loved”, before settling on “collectible watches” - regardless of whether these are first, second or fifteenth-hand.

While they all have a treasure at their disposal, the best-placed where big-ticket purchases are involved are the outlets that inspire the most confidence and credibility – but also the ones that offer rare specimens and are known for specialising in a particular maker: F.P.Journe and De Bethune at WatchBox (which acquired a majority stake in De Bethune); Patek Philippe dominates sales at Phillips while London-based A Collected Man has developed an interesting focus on British watchmakers such as Roger Smith.

The downturn observed since spring, particularly for the most in-demand brands, coincides with increased supply on the secondary market, as this diagram shows. “The signal for downturn first appeared in February 2022, when trading volume of the most in-demand watches of the “Big Three” dropped c.-33% MoM,” notes Morgan Stanley in its report.

“I like to make the comparison with the automotive industry,” says Patrik Hoffmann at WatchBox. “New car sales in Switzerland are in the region of 350,000 units a year. Used car sales are more than double that. The watch market is very similar to the car market and I’m sure the numbers are comparable, too. There is enormous potential. We’re not behind this. There is real demand from the end consumer.”

According to WatchCharts estimates, Rolex, Patek Philippe and Audemars Piguet (the “Big Three”) make up 71% of the total trading value in the secondary watch market, “as they produce the bulk of models most desired by consumers,” writes Morgan Stanley in its third quarter 2022 report on the secondary watch market.

Comparison, by Morgan Stanley with WatchCharts, of retail price and average resale price on the secondary market for a selection of watches per brand. Note that value retention for Vacheron Constantin was positive last year.

A foreseeable downswing

While this trajectory has been slowed by a fall in prices for the most in-demand models, following a peak during spring (see Morgan Stanley figures), Alexandre Ghotbi at Phillips remains optimistic: “The right watches with the right estimates, sold through the right platform, will always attract enthusiastic bidding.”

Exponential growth for large-series production had to end some time, Ghotbi believes: “When the MoonSwatch launched, we witnessed two weeks of the same kind of speculation, on a massive scale.” It was an extreme example of the speculative frenzy sweeping the watch market.

Notions of primary and secondary, sale and resale are combining into an “absolute”, which is the pursuit of a personal grail by collectors.

According to Morgan Stanley, the main drivers behind the overall downturn in the secondary watch market are tightening monetary policy, disruption of consumer sentiment globally, and wealth effect impacted by the fall in value of stock markets and other asset classes. In its report, the bank also notes that “quite a few secondary watch speculators are seeking to cash out on fear of further downturn.

Consequently, between March and July 2022, there was a significant amount of second-hand watch supply entering the market, as per WatchCharts data [see diagram] and as of September 2022, the total amount of available inventory of in-demand watches from the “Big Three” brands has nearly doubled vs. the beginning of this year.”

Alexandre Ghotbi, Head of Watches, Continental Europe and the Middle East at Phillips in Association with Bacs & Russo

“Private buyers or intermediaries were selling the most in-demand new models for small fortunes, fuelling speculation, and this is where prices have fallen,” Alexandre Ghotbi continues. “This is a seasonal correction in a highly speculative market. We hear talk of a crash in value, but there will always be a years-long waiting list for a new steel Royal Oak or a Nautilus, and resale prices continue to command a significant premium over catalogue prices.”

Patrik Hoffmann echoes this view: “It’s no secret that there’s been a market adjustment over recent months. The bubble has deflated but it hasn’t burst. I think this market normalisation is something we were all expecting and we’ll work with it, as will end customers. Collectibles were selling for three to four times their retail price and are still selling for twice or two and a half times retail price. Looking at the long-term situation, the trend is the same and the market overall is growing. We see no cause for alarm.”

Patrik Hoffmann, Executive Vice President of WatchBox Switzerland

Towards a merger

Ultimately, the trend is for a merging of the primary and secondary markets. Brands no longer hesitate to release a new model through a secondary-market actor. Zenith, for example, teamed up with Phillips and master watchmaker Kari Voutilainen for a series of hand-decorated models (although these were equipped with vintage calibres). Conversely, secondary-market providers are moving into the primary market, as illustrated by WatchBox’s majority stake in De Bethune.

Introduced in 2022, the Zenith X Voutilainen X Phillips limited edition of ten Cal 135-O platinum timepieces was an immediate success with collectors, selling in minutes. At its November auction, Phillips put an eleventh up for sale, a unique item with a niobium case and a salmon guilloché dial. All the proceeds went to the Susan G. Komen® Foundation for Breast Cancer.

Notions of primary and secondary, sale and resale appear to be combining into an “absolute”, which is the pursuit of a personal grail by hundreds of thousands of collectors of all ages, all backgrounds and all levels of wealth, from penniless to multi-millionaires. These multiple profiles are served by a market that is itself composed of many diverse sources.

“When I chat with our buyers and sellers, we never talk about price,” says Patrik Hoffmann. “They know the value, the price we’re selling the watch, but they have no idea what the original price is or was. When you buy shares on the stock market, you don’t know the nominal value. As Warren Buffett famously said: price is what you pay, value is what you get.”