The luxury watch sector, which experienced a dramatic surge during the pandemic, is now witnessing a significant correction. Prices for premier brands like Rolex, Patek Philippe, and Audemars Piguet, which soared to unprecedented heights, have plummeted by approximately 30% from their pandemic peaks, marking a stark shift in the market.
Matt Culling, Managing Director at Global Watches in London, highlighted that the sharp decline was somewhat anticipated. “The downturn was kind of predictable,” he remarked, noting that Global Watches had ceased acquiring stock due to the rapid price increases.
Recent data reveals a substantial drop in average prices. Rolex, for instance, saw its average price decrease by 8% over the past year, settling at £20,768. Patek Philippe watches have fared worse, with their average price falling 14% to £114,973, according to New Bond Street Pawnbrokers.
Watches of Switzerland adjusted its revenue forecast for the year, projecting a range of £1.53 billion to £1.55 billion, down from the earlier estimate of £1.65 billion to £1.70 billion.
“The market bubble was unprecedented,” Culling added. “In the post-pandemic period, there was a surge of liquidity in the economy, leading to uncontrolled inflation. The rapid price escalations were unsustainable.”
The rapid price increase for Rolex watches, which rose by approximately 20% in the final quarter of 2021, indicated an inevitable market correction. Pre-owned Rolex prices have since corrected by about 30% from their peak levels.
Additionally, a decline in demand from Asian markets has further impacted watchmakers. February saw significant drops in demand, with mainland China and Hong Kong experiencing decreases of 25.4% and 19% respectively, as reported by the Federation of the Swiss Watch Industry.
Joel Faith, Director at Atlas Watches, observed that the market faced a dramatic downturn towards the end of last year. “We experienced the boom, then a sharp decline. However, business has picked up recently, and it seems the market has stabilized over the past few weeks.”
Culling remains cautiously optimistic. “There are signs of recovery with potential interest rate reductions and improved economic conditions. With energy prices falling and consumer confidence rebounding, we anticipate a gradual increase in prices after a period of consolidation.”
Looking ahead, Gen Z and women are emerging as pivotal forces in the luxury watch market. According to a Bain & Co study, these demographics are increasingly engaging with the watch market. Historically, women’s involvement in the luxury watch segment has been limited, but recent trends show a growing interest.
Claudia D’Arpizio, Senior Partner at Bain & Company, noted a notable shift towards women in the watch sector. “There has been a significant increase in interest from women, prompting brands to enhance their offerings and tailor marketing strategies to this demographic.”
Federica Levato, Senior Partner at Bain & Company, added that many brands are adapting by introducing gender-neutral designs and expanding their range of non-jewelry watches targeted at women.
Despite these trends, London’s watch shops have yet to fully reflect this shift. Faith observed a diverse customer base but anticipates that demand will rise as market stability returns. “Prices have bottomed out, and I believe we will see a resurgence in the coming months,” he said, though he cautioned that this recovery would not reach the heights of the pandemic-driven boom.
Overall, the luxury watch market is undergoing a period of adjustment following an unprecedented surge. While prices have dropped and market dynamics have shifted, emerging consumer trends offer a glimmer of hope for future growth.
