Jean-Frédéric Dufour, CEO of Rolex, has criticized the notion of treating luxury watches as investment assets, arguing that such perspectives are misguided and potentially harmful. In an interview with Swiss newspaper NZZ, Dufour expressed his disapproval of comparing high-end timepieces to financial assets like stocks, asserting that Rolex’s focus is on creating quality products rather than investment opportunities.
Dufour’s remarks come at a time when the secondary market for luxury watches has seen a significant decline following a period of rapid appreciation. The WatchCharts’ Overall Market Index, which monitors watch prices, surged by 72% between January 2021 and March 2022. This increase was largely driven by investors from the cryptocurrency and meme stock sectors seeking to diversify their holdings. However, since reaching its peak, the index has plummeted by 38%, contrasting with a 13% gain in the S&P 500 over the same timeframe.
The decline in watch prices coincides with the Federal Reserve’s interest rate hikes, which began in May 2022 and continued until mid-2023. The central bank’s decision to raise borrowing costs from near-zero levels to approximately 5% has dampened consumer demand for high-end goods, as higher interest rates generally encourage saving over spending.
Dufour, who has led Rolex since 2015, anticipates a challenging year ahead. He noted that while Rolex and other luxury watch brands like Patek Philippe and Audemars Piguet have enjoyed success in recent years, the current market conditions present difficulties. He cautioned that price cuts, which might seem like a solution to declining demand, could harm the perceived value of luxury watches. “This signals the end of a phase where all manufacturers thrived. During prosperous times, production often exceeds demand, and when the market weakens, as it is now, retailers face pressure to lower prices. This is problematic as discounts undermine the emotional value of products like ours,” Dufour explained.
A year ago, Patek Philippe’s chairman, Thierry Stern, also highlighted a slowing luxury watch market, indicating that even highly sought-after models like the Nautilus, which start around $30,000 and are produced in limited quantities, are not immune to market fluctuations.
