A Retrospective on the Watch Industry

The last several years have been a roller coaster for watch collectors and the industry. Watches saw astronomical levels of appreciation in both general and secondary markets, with values exponentially outstripping retail price. This has created both challenges & opportunities for collectors and aficionados who care about the craft, quality, the craftsman before the price tag, like myself.

State of the Watch Industry Before 2020

High-end mechanical watches mean something different to buyers nowadays. While utility is still a must, it is no longer the driving force for purchases. A mechanical watch is now removed from the world of disposable utility electronics, and from its original intent of the watch as a tool. The public now increasingly accepts watches as pieces of art, design, self-expression, and status that deliver a message that newer smartwatches don’t fulfill.

This “new” way of viewing watches led to a flood of influencers within the industry creating what commonly became known as hype watches, basically defined as any timepiece that gains attention and admiration either due to its brand recognition, rarity, or intricate specifications & intended primarily as a status symbol.

Brands like Rolex, AP, Vacheron Constantin, Richard Mille, F.P. Journe, and others continuously saw more demand and exposure. This fervor had a trickle-down effect on new products, where select brands that were primarily private or independent in their operation saw an influx of interest for their watches, leading to long waitlists.

The surge in demand for new watches created the perfect storm, when watches became more difficult to buy, it set in motion even more fascination among this new segment of luxury buyers. All of this gave rise to the flipping and dealing culture, with dealers more interested in profits than in collecting unique timepieces. With certain secondary market dealers hoarding inventory of known desired products, it became increasingly harder for genuine collectors to get pieces at fair retail prices.

State of the Watch Industry In 2020

COVID lockdowns kicked off a very complicated time for the watch industry. Points of sale needed to close while simultaneously brands like Rolex prohibited authorized retailers from selling online. When lockdowns happened, brands were essentially closed for business.

In addition, the flow of raw materials and the availability of skilled workers were disrupted. The combination of specialized workers and parts needed in proximity with each other, and a process that cannot be easily replaced or automated was a recipe for slow production.

On top of all that we saw a unique combination that gave rise to the spending power of the individual in certain countries, caused by stimulus checks and drops in interest rates. This led to an influx of cash and, since lockdowns were still in effect, travel and leisure were no longer areas where people could spend their money, so those with the means looked towards discretionary collectibles, like watches. This just further added fuel to the already existing fire engulfing the watch market at the time.

State of the Watch Industry After 2022

This led the watch market to peak on the 12th of March 2022 at nearly $96,639, according to Watch Chart’s watch index, which takes the trading value of 60 watches taken from the top 10 luxury watch brands sorted and weighted by transaction value.

In the last two years as life began to operate more like pre-pandemic times, we saw a halt to the economic stimulus and the removal of lockdowns. This had a knock-on effect of causing flippers and watch investors to dump their inventory. Currently, hype watches in the secondary market have plummeted in value by nearly 40% since their peak in 2022.

If I had to guess, there are still some additional correcting that will likely take place as those who had wanted to be investors, influencers, and flippers are naturally weeded out. Moving forward I am excited to see this new generation of watch enthusiasts and to watch their wants and tastes evolve, seeing what new horologists they bolster.

Are there instances where the watch that you own can appreciate in value? Absolutely. That said, it is rare, and in my opinion, you should buy a watch because you enjoy it and you feel great when you're able to put it on, not based on future speculations of its price. Getting into watches to make money is nonsense to me, like any good collection, it’s about what it does for you – it’s about pride, about savoring an experience, about a moment, not about profit speculation.