The luxury watch market, particularly in the pre-owned segment, is experiencing a significant downturn, a sharp contrast to the demand surge witnessed during the COVID-19 pandemic. Renowned brands like Rolex and Patek Philippe have seen their prices in the secondary market fall to new two-year lows, reflecting changing consumer behavior and broader economic trends.
According to the Bloomberg Subdial Index, which tracks the pricing of the 50 most traded watches by value, there was a 1.8% drop in October, bringing the prices to their lowest since 2021. Over the last 24 months, the prices have declined by approximately 18%.
This slump in luxury timepieces is part of a broader luxury industry trend. Major conglomerates like LVMH and Kering have reported a slowdown in growth and revenues. LVMH's sales growth softened to 9% in the third quarter from 17% in the previous quarter, while Kering, owner of Gucci, saw a 9% drop in third-quarter revenues. These changes suggest a correction in the market post the pandemic-induced consumer spending boom.
During the pandemic, confined consumers with increased savings turned to luxury goods, boosting sales for high-end watch, bag, and apparel makers. Online platforms like Subdial, Chrono24, and Watchfinder facilitated access to the pre-owned watch market, further fueling demand. However, the recent downturn in stock markets and cryptocurrencies, coupled with economic pressures like high interest rates, has begun to impact the luxury watch market.
Despite the current slump, luxury watches have historically been a reliable store of value. A report by Boston Consulting Group in March highlighted their demand as alternate investments. Although prices declined in 2022, luxury watch prices have generally shown resilience and faster recovery compared to other financial and consumer product categories.
The current situation in the pre-owned luxury watch market might be transient, and the sector could see an upturn in the future, as luxury watches continue to be valued over time. The market dynamics, influenced by various economic and social factors, suggest that the luxury watch segment remains an intriguing and potentially resilient industry.