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1、Luxury Preowned Watches,Your Time Has Come March 2023By Pierre Dupreelle,Sarah Willersdorf,Nicolas Llinas,Matthias Schuler,and Jim Brennan1 LUXURY PREOWNED WATCHES,YOUR TIME HAS COMELuxury Preowned Watches,Your Time Has ComeLuxury watches are in demand as alternative investments.Buyers are paying hi
2、gh premiums for preowned models from top brands such as Rolex,Patek Philippe,and Aude-mars Piguet,as well as from leading independents such as F.P.Journe and De Bethune,with the expectation that the value of these watches will continue to rise.They have reason to believe.Luxury watches have per-form
3、ed well,especially over the long term,in comparison with traditional investment categories.From August 2018 to January 2023,average prices in the secondhand market for top models from the three largest luxury brandsRolex,Patek Philippe,and Audemars Piguetrose at an annual rate of 20%,despite broader
4、 market downturns during the pandemic,compared with an annual rate of 8%for the S&P 500 index.Although prices declined during 2022,echoing declining stock market and cryptocurrency exchanges,watches have performed well relative to stocks.Luxury watch prices also outperformed the S&P during the 20072
5、009 recession and took less than two years to recov-er from the 2008 market crash,while many traditional financial categories and consumer products categories took longer.(See Exhibit 1.)The positive financial performance has attracted new buy-ers,fueling market growth.Preowned watch sales reached$2
6、2 billion in 2021,accounting for nearly one-third of the overall$75 billion luxury watch market.The segment is growing faster than the firsthand market,and that trend is likely to continue.(See Exhibit 2).The Investment Market for Watches Is GrowingThe secondhand watch market once evoked images of b
7、ack alley deals and discounts,with dubious authenticity and a high risk of fakes and fraud.Todays market is transparent,fueled by online information sharing,supported by authen-tication services,and composed of knowledgeable buyers and established sellers.The secondhand market is essen-tial for coll
8、ectors who seek rare and special watches,given that nearly 95%of watches are no longer in production.Younger customers are entering the market,inspired by the craftsmanship and mechanics of luxury watches,and lured by their investment performance.In a recent BCG survey of US consumers,watches perfor
9、med well in com-parison with traditional investments on a variety of mea-sures,including price,level of risk,portability,and price transparency and resilience.1 Overall,44%of US survey respondents said that they identify as collectors.Many buyers say they simply enjoy the thrill of hunting and findi
10、ng deals.Younger buyers are also attracted to watches because of the social element,both offline and online.Many collectors exchange information over Reddit and other forums and show off their acquisitions on networks such as Instagram and TikTok.The secondhand market has also benefited from the eme
11、rgence of collectors who have participated in other collectible or fandom categories with strong resale activity,such as sneakers.Part fashion,part status symbol,part mechanical art,luxury watches over the years have won admirers for their craftsmanship and style.Today,the secondhand watch market is
12、 commanding more recogni-tion than ever as a result of growing buyer interest and a shortage of the best models.Interestingly,the recent boom has less to do with style than with money.1.The survey,conducted in October 2022,focused on self-identified current buyers of luxury watches,and had a sample
13、size of 1,022 respondents.BOSTON CONSULTING GROUP +WATCHBOX 2Third-party online platforms such as WatchBox,Chrono24,and Watchfinder have promoted the markets growth,especially among Generation Z and millennial buyers who are comfortable buying online,by helping educate buyers,encouraging price trans
14、parency,and bringing buyers and sellers together.Online sales already exceed auction and store sales,and they are on a trajectory to account for close to 60%of the secondhand luxury watch market by 2026,according to our study.Wealthy investors increasingly seek alternative invest-ments to diversify
15、their portfolios and to hedge against inflation.For these and other investors,luxury watches stand out as a class of alternative assets because of the strong demand for them and because they have generally delivered strong price performance in the market over the past five to ten years.Exhibit 1-Lux
16、ury Watch Performance on the Secondhand Market Shows Resilience,Following the Growth of the S&P 500 and at Times Exceeding ItSources:Chrono24;Yahoo Finance;BCG analysis.Note:“Big three average”tracks the secondhand market price for Audemars Piguet(selected Royal Oak models),Patek Philippe(Nautilus,A
17、qua-naut,and Chronograph,Complications Annual Calendar models),and Rolex(Daytona,Submariner,and GMT Master models),indexed to their value in August 2018.“Independents average”tracks the secondhand market price of selected models from F.P.Journe,H.Moser&Cie.,and De Bethune,indexed to their value in A
18、ugust 2018.0200300400100January 2019AugustPerformance index2018July 2019January 2020July 2020July 2021January 2021January 2022January 2023July 2022Big three average20158CAGR(%)August 2018January 2023Independents averageS&P 5003 LUXURY PREOWNED WATCHES,YOUR TIME HAS COMEInvestors also invest in watch
19、es to diversify their portfolios.Watch prices have tended to hold up well over the long term and during market downturns,compared with tradi-tional financial investments,like stocks,and with other alternatives or collectibles.Buyers regard the category as a stable investment built on reputable brand
20、s and supported by a consumer base of high-net-worth individuals.In the ten-year period from 2013 to 2022,watches outperformed collectible assets such as jewelry,handbags,wine,art,and furniture,growing in value at an average annual rate of 7%and by 27%from 2020 to 2022according to indices that track
21、 these categories.(See Exhibit 3.)New Watch Scarcity Increases the Value of Preowned Watches The secondhand market used to be the place to go for bargains.That is still the case for certain watch models,but as some types of new watches have become nearly impossible to acquire through traditional ret
22、ail channelsowing to higher demand and reduced capacity coming out of the COVID-19 pandemicbuyers have a better chance of getting them through the secondhand market,albeit at a hefty premium.Whereas most items drop in price as soon as they leave the shop,luxury watches tend to do the opposite,with r
23、esale value typically increasing for hard-to-find models from desirable brands.Exhibit 2-Luxury Watches Represent a$75 Billion Market,of Which 30%Is Secondhand and GrowingSources:FHS;Altagamma;Euromonitor;expert interviews;BCG analysis.Note:Market size for 2022 is estimated on the basis of partial d
24、ata.Market growth from 2022 to 2026 and market size in 2026 are forecasts based on Swiss watch exports,company annual reports,Euromonitor,expert interviews,BCGs proprietary luxury market model,and BCG analysis.Data reported is for the total market,including entry-level luxury.Firsthand and secondhan
25、d luxury watch market($billions)208222435+7%+7%+6%+10%+9%+6%60%1015%7.2%6.1%20202021Firsthand luxury watchesSecondhand luxury watches2022E2026FCAGR20192026CAGR20222026Share of online sales 20264718BOSTON CONSULTING GROUP +WATCHBOX 4Investor attention has concentrated on a handf
26、ul of modelsPatek Philippe Nautilus,Audemars Piguet Royal Oak,and Rolex Daytona and GMT-Master IIfollowing strong growth in online consumer conversations.(See Exhibit 4.)On the secondhand market,these models typically fetch up to 200%of firsthand market prices.Indi-vidual Rolex Cosmograph Daytona wa
27、tches,with a retail price of$14,800,were selling recently on preowned watch exchanges for$24,250 to$38,500.The pandemic and related product scarcity have contribut-ed to the surge in unmet demand.In 2020,as sales in firsthand watch markets declined by 17%during the pan-demic,sales of preowned watche
28、s rose by 3%,according to our market analysis.Preowned luxury watches traded at 1.5 to 2 times their retail prices during the pandemic.(See Exhibit 5.)In our survey,29%of collectors reported paying more than the retail price for their most recent preowned watch,with top reasons citing new or minimal
29、-wear condi-tion(41%)and avoidance of long waiting lists in the first-hand market(40%).Exhibit 3-Among Alternative Asset Categories,Luxury Watches Have Demonstrated Consistent Growth over a Ten-Year Time Horizon Sources:Art Market Research proprietary indexes;Liv-ex;Yahoo Finance;Credit Suisse,BCG a
30、nalysis.1 Market price data is aggregated from market sentiment for a wide range of art,antiques,and collectibles traded at auction since 1975.Average price performance index for each alternative asset category is indexed to January 2005.Index data for handbags begins in 2009.Index data for wine is
31、tracked by Liv-ex(London International Vintner Exchange Fine Wine 1000 index).2 Comparisons are for the first half of each year.20062000720092000024720400600800Market price performance index1Art6077352
32、CAGR(%)220212022WineCarsWatchesJewelryHandbagsFurnitureS&P 5005 LUXURY PREOWNED WATCHES,YOUR TIME HAS COMEIndependent Brands Are Becoming Mainstream CollectiblesSeveral independent brands and modelsespecially those seen as high value,unique,or hard to findare performing strongly,too,including F.P.Jo
33、urne,De Bethune,and H.Moser&Cie.Sales are highest in the US and Europe,but the secondhand market is also active in Asia,where it has significant potential for continued growth.The market for independent watches benefits from the industrys limited production capacity,which enhances scarcity and colle
34、ctability.For buyers,elements of the appeal include the high level of craftsmanship and the artisanal nature of manufacturers operationswhich also make it difficult for the companies to increase production.Market perceptions of independent brands vary widely,but buyers tend to associate them with tr
35、aits such as engineer-ing and design excellence,timelessness,complexity,and exclusivity,according to our survey.Exhibit 4-Conversations Mentioning“Investing”Are Growing More Quickly for Watches Than for Other Analog Categories on both Instagram and TikTokSources:Social Standards,September 2022;BCG a
36、nalysis.Note:L12M=last 12 months.1 Growth or decline(relative change)of watches as a topic in investing conversations over the past 12 months,as of January 2023.Percentage of“investing”conversations that mention each asset type,TikTok vs Instagram(%)1WatchesTiktokInstagramNonfungible tokens(NFTs)Fur
37、nitureHandbagsJewelry055L12M average growing vs.one year prior in both Instagram and TikTokL12M average declining vs.one year prior in both Instagram and TikTokL12M average growing vs.one year prior in either Instagram or TikTok but not both5Sneakers and athletic footwearBOSTON CONSULTING
38、 GROUP +WATCHBOX 6Who Buys Luxury Watches?The typical luxury watch buyer is a high-income millennial or Generation X male,according to our survey.Individual buyers can be categorized in four general buyer types (see Exhibit 6):Classic Timeless.Classic buyers typically invest in tra-ditional financia
39、l assets and appreciate durable,credible products.They purchase across price ranges and seek classic or timeless watches with a strong brand heritage or a distinctive design.They tend to be comparatively low-frequency buyers,however,and are the least likely to engage with the secondary market.Fashio
40、nable Professional.Buyers in this category are highly educated,stylish,confident,and,on average,younger than other buyer types.They are likely to purchase entry-level luxury watches.Professional buyers favor watches that are stylish and trendy,high quality,or have an exclusive image.Such buyers purc
41、hase with moderate frequency,but are comparatively likely to buy a watch within the next 24 months.Sustainability con-cerns are often the reason for purchasing a preowned watch.This segment is the second-most engaged with the secondary market;more than 50%of fashionable professional consumers have b
42、ought a secondhand luxury watch in the past 24 months.Exhibit 5-Price Premiums on the Secondhand Market Reflect Imbalances Between Demand and SupplySources:Internal WatchBox data;FHS;Altagamma;analyst reports;Chrono24;expert interviews,BCG analysis.Note:Data tracks the average firsthand market(retai
43、l)price and the average secondhand market price across the following popular models:Aude-mars Piguet(selected Royal Oak models),Patek Philippe(Nautilus and Aquanaut),Rolex(Daytona,Submariner,and GMT Master models).1 All prices are indexed to the average retail price in the firsthand market in Januar
44、y 2018.2.1xretail3.0 xretail1.5xretail1.4xretail1.1xretail0.9xretail01234January 2020January 2018January 2022January 2019January 2021January 2023Average price history of twelve popular models1Firsthand market(retail)priceSecondhand market price7 LUXURY PREOWNED WATCHES,YOUR TIME HAS COME Luxury Watc
45、h Hobbyist.Hobbyist buyers prefer tech-nically complex watches,with a strong brand heritage in the super-luxury category,where watch value is generally expected to increase over time.Moderately frequent buyers,hobbyists(77%of whom are male)tend to be status-conscious and successful.Much of the pleas
46、ure they find in purchasing a secondhand watch is in the hunt for a special item.Collector/Investor.Members of this buyer segment are the most active buyer group,on average,favoring ultra-luxury watches at a higher price point than other segments prefer.They represent 44%of watch buyers and claim a
47、58%share of the market by value.This seg-ment is highly engaged with the secondary market,with nearly three-quarters having bought a secondhand piece in the past 24 months.Why Are They Buying?One major reason that the secondary market has grown is clearly that consumers seeking investment opportunit
48、ies are gravitating to it.In our survey,54%of Gen Z and young-er millennial buyers said that they had increased their spending on luxury watches during the previous 24 months,citing increased ease of buying and selling and more investment opportunities as their top reasons.Two-thirds,66%,said that t
49、he anticipated retained value or value growth of the watch influenced their decision to buy.Half of the watch buyers we surveyed said that they expect to spend more on luxury watches in the next 24 months in response to new models and confidence in rising market prices,an indication of continuing po
50、sitive momentum in the category and comparative price resilience despite the likely impending onset of a recession.Exhibit 6-Luxury Watch Buyers Fall into Four Key SegmentsSources:BCG US luxury watch survey,October 2022,n=1,022;BCG analysis.Classic timeless“True to myself,put-together,confident”Low
51、purchase frequencyPurchases luxury watches in different price rangesBuys new watches and values the credibility they provideHigh income,suburban/ruralFashionableprofessional“Stylish,attractive,confident”Skews younger than other segmentsHighly educatedModerate purchase frequencyPurchases entry-level
52、luxury watchesLuxury watchhobbyist “High status,successful,safe choice”Moderate purchase frequencyPurchases super-luxury watchesSeeks technically complex watchesCollector/investor“Rebellious,part of a tribe,in the know”High purchase frequencyPurchases ultra-luxury watchesOften resells for profitHigh
53、 income,young millennialBOSTON CONSULTING GROUP +WATCHBOX 8How Can Brands Engage with the Secondhand Watch Market?It may be time for companies to consider adopting an integrated strategy that builds on the secondhand mar-kets ability to drive sales and strengthen the firsthand markets reputation.The
54、 right approach can complement sales of new products,reinforce the brands value,and help the brand connect with future customers.Given that many secondhand buyers are younger,this market is also an area that companies can investigate with the ultimate goal of building brand loyalty in this rising de
55、mographic.Understanding true demand should be a priority for companies seeking to manage the supply chain and their brand in an important forum.Several large brands that initially regarded the secondhand watch business as a competitor and kept their distance from it have more recently recognized the
56、 potential of the secondhand market as a source of market insights and have begun to adopt an integrated strategy.For example,in 2018,Swiss luxury goods corporation Richemont SA,parent company of Cartier,purchased Watchfinder,Ltd.,a preowned watch seller with a strong online presence.Audemars Piguet
57、 has launched a preowned watch busi-ness,and some established retailers are now selling pre-owned watches.At the end of 2022,Rolex announced its own preowned watch authentication program,which it operates cooperatively with authorized jewelers.Rolexs official stamp of approval recalls the way the Ge
58、mological Institute of America certifies diamonds.This arrangement helps increase the value of preowned watches by certifying Rolex brand authenticity and whether any repairs were made with authorized parts.These investments are among the strategies for dealing with the secondhand market that compan
59、ies can adopt to extend their brand presence and customer engagement.Monitor and participate in the market.Luxury watch companies can actively monitor the secondhand market and manage relationships with auction houses and mar-ketplaces to protect their brand image.Efforts could in-clude investing in
60、 authentication services,blockchain technology(for provenance verification),appraisal pricing,and customer serviceall activities that could enable engagement with customers who might become lifelong fans of the brand.Engage with new buyers.The secondary market is a place where new buying patterns su
61、rface,and it presents opportu-nities to understand the appetites and expectations of Gen Z,young millennials,and investors.Brands can increase their market presence and activity to further educate con-sumers about quality and value.They can use feedback to inform their product design and brand messa
62、ging,and they can leverage user-generated content to strengthen messag-ing around the story of the brands products or to encourage the association of watches with investing.Enhance planning for increased demand resulting from secondhand growth.Brands can use different approaches within secondhand ch
63、annels to understand true demandfor example,by cross-checking customer waiting lists or by tracking secondary market price trends.They can then use the information to enhance sup-ply-and-demand tools,especially in the sales and opera-tions planning process to pressure test for scenarios that may lea
64、d to oversupply or stockouts.Invest in content,inspiration,and community build-ing.Companies can develop a community strategy,includ-ing building online communities for watch enthusiasts,where like-minded consumers can share knowledge.This might include investing in inspirational content across soci
65、al media and other digital platforms.Companies can digitize the brand experience via online avatars,NFTs,and other digital products to drive playful engagement and brand affinity.Encourage private investors to continue to view watches as an alternative to traditional asset classes.The secondhand mar
66、ket has shown long-term growth and is likely to continue to grow.Individuals and other private investors can use watches to diversify their investment portfolios,hedge against inflation,and reduce over exposure in traditional asset classes.In addition to value retention and growth potential,the luxu
67、ry watch market provides investors with sustainability benefits,longevity,portability,and personal enjoyment.Luxury watches are drawing new interest from buyers,not only as stylish accessories for the status-conscious,but as alternative assets for savvy investors.Watches have compared favorably with
68、 stocks as well as with alternative or collectible asset classesand buyers,especially newer watch fans in the millennial and Generation X demograph-ics,are taking notice.Thanks to high demand and short supply of the best watch models,prices are strong,waiting lists are long,and the secondhand market
69、 is burgeoning and becoming increasingly sophisticated.Forward-looking watch brands with their eye on long-term brand management are examining the benefits of integrating their firsthand and secondhand market strategies.9 LUXURY PREOWNED WATCHES,YOUR TIME HAS COMEAbout the Authors Pierre Dupreelle i
70、s a managing director and partner in the firms New York office.You may contact him by email at .Sarah Willersdorf is a managing director and partner in the firms New York office.You may contact her by email at .Nicolas Llinas is a principal in BCGs New York office.You may contact him by email at .Ma
71、tthias Schuler is a senior advisor to BCG in the global fashion and luxury area.You may contact him by email at .Jim Brennan is a managing director and senior partner in the New York office of Boston Consulting Group.You may contact him by email at .For Further ContactIf you would like to discuss th
72、is report,please contact the authors.Boston Consulting GroupBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we work clos
73、ely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives th
74、at question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,fueled by the goal of
75、helping our clients thrive and enabling them to make the world a better place.WatchBoxWatchBox is the worlds leading platform for collectible luxury timepieces,founded in 2017 by Justin Reis,Tay Liam Wee,and Danny Govberg.The company offers a curated selection of timepieces by the most respected wat
76、ch brands as well as emerging independent watchmakers through a managed inventory model,all certified authentic and backed by a two-year global warranty.With the support of trusted advisors,a dynamic media platform,digital infrastructure,and offices and showrooms worldwide,WatchBox delivers white-gl
77、ove service at scale to a vibrant global community of collectors.Learn more at .Boston Consulting Group 2023.All rights reserved.3/23 For information or permission to reprint,please contact BCG at .To find the latest BCG content and register to receive e-alerts on this topic or others,please visit .Follow Boston Consulting Group on Facebook and Twitter.LUXURY PREOWNED WATCHES,YOUR TIME HAS COME BOSTON CONSULTING GROUP +WATCHBOX