Luxury Watches: Why They Are Increasing in Popularity

The luxury watch industry is getting stronger than ever. Brands like Rolex, Audemars Piguet, Patek Philippe, Omega, among others, are getting a lot of attention among brand new item collectors or in the secondhand market. What is the reason for the bullish market? Is this just a temporary event or are we heading to a time of extreme boom in the industry? Let’s find out.

A lot of pundits who have an interest in luxury watches have noticed a seemingly unusual upward trend in the prices of such items. In just a span of two years (2019-21), auction houses have reported an increase in interest and willingness of buyers to pay for top-of-the-line timepieces like Rolex watches. People are willing to pay insanely high prices for the top brands. The phenomenon has skyrocketed the prices of luxury watches at all-time highs.

Based on our extensive research on this record-breaking event, we’ve arrived at the following conclusions. Here are the major reasons why luxury watches has risen in popularity in recent years:

The Covid-19 Pandemic Effect

Whether we like it or not, the Covid-19 global pandemic has affected the luxury watch industry in both positive and negative ways. The pandemic has cascading effects on the global economy as well as the behaviour and buying habits of consumers. These effects are still felt up to this day.

It was during the start of the pandemic wherein the spikes in the demand for luxury watches started. Some models of Rolex and Patek Philippe saw significant demand then it trickled to other models and brands during the following year.

The effect was probably due to the fact that manufacturers of luxury watches halted the production of their products which led to scarcity. As such watches were becoming less difficult to get hold of, they became more desirable to collectors and casual consumers.

The Shift in Marketing Strategies of Luxury Watch Companies

Online businesses were among the notable industries that survived the initial blow of the lockdowns. They instead have flourished, thanks to their brilliant marketing strategies. The big brands of the luxury watch industry have formulated great online strategies that included utilising social media, content creation, and other platforms to attract customers.

Their moves were successful as they expanded their reach and generated more excitement from collectors and the public as a whole. The public, especially the wealthy sector, has diverted their attention to the luxury watch market as their outdoor options were limited. 

The Market Has Caught the Attention of Investors, Speculators, and Scalpers

As the luxury watch market was starting to gain steam and momentum, current collectors, investors, trading speculators, and even scalpers gave a second look. While the supply was getting scarce, the demand for the products has risen. Even the current and latest releases of high-end watches that were recently taken out of circulation (by the manufacturers and investors) are now of extreme value.

The luxury watch industry now has a similar “store value” to the gemstones and metal markets. Investors and speculators from other industries have now entered the luxury watch market, purchasing watches at high prices, with the hope and anticipation the values will increase over time.

The scalpers and flippers, which comprise a small portion of the market have also taken advantage of the facts. The infusion of these types of customers has added to the wild occurrences that we are experiencing today.

The Law of Supply and Demand

This one is basic. As the supply of expensive timepieces drops and can’t cope up with the demands of the market, the prices soar to unprecedented levels, resulting in the situation we’re experiencing today.

Reports and discussions on luxury watch collectors’ forums were pretty much pointing to this issue. Retail stores have limited to no available stocks on hand. There are also accusations that some of the big brands are driving their prices up. But the actual situation is, such brands were just maintaining a “sense of exclusivity” thus keeping their prices high.

In addition, newer models are usually released as “Limited Edition” with only approximately 300 units produced. This added more to the luxury appeal towards investors and collectors. With the market so volatile at its current state, it is like adding gasoline to fire.

Conclusion

The state of the luxury watch industry hasn’t shown any indication that it’s slowing down. It is currently in a situation we can say is the “new norm”. Unless something drastic happens in the near future, this is the status quo that we have to accept. Do you see opportunities from the reasons presented above? Or, do you think all of these are just speculations that should be ignored? Share your thoughts with us.