The luxury watch market, which saw unprecedented growth during the pandemic, is now experiencing a significant correction. Prices for leading brands like Rolex, Patek Philippe, and Audemars Piguet have plunged by approximately 30% from their pandemic-era highs, raising questions about the future of this once-booming sector.
According to Matt Culling, Managing Director at Global Watches in London, the downturn was anticipated. Culling noted that the rapid price increases led Global Watches to halt stock acquisitions. “The market conditions were unsustainable,” he said. “Prices surged so quickly that a correction was inevitable.”
Recent figures reflect the scale of the decline. Rolex’s average price has dropped by 8% over the past year, now standing at £20,768. Similarly, Patek Philippe watches have seen a 14% decrease, with an average price of £114,973, as reported by New Bond Street Pawnbrokers.
Watches of Switzerland has also revised its revenue expectations for the year, forecasting between £1.53 billion and £1.55 billion, down from the previous estimate of £1.65 billion to £1.70 billion. Culling attributed this correction to the rapid inflation and excessive liquidity that characterized the post-pandemic economy. “Prices were out of control, fueled by too much money chasing too few goods,” he explained.
The surge in Rolex prices, which increased by about 20% in the last quarter of 2021, set the stage for the current decline. Pre-owned Rolex watches have since corrected by approximately 30% from their peak.
The drop in demand from key Asian markets has further impacted the industry. Data from the Federation of the Swiss Watch Industry reveals a 25.4% decrease in mainland China and a 19% decrease in Hong Kong in February.
Joel Faith, Director at Atlas Watches, observed that the market experienced a sharp decline but noted recent improvements. “The market has stabilized in recent weeks,” he said. “I believe we’re seeing the beginning of a recovery.”
Culling also sees potential for a market rebound. “With interest rates possibly easing and improved economic conditions, we anticipate a gradual increase in prices. Historical trends suggest that, despite the recent turbulence, prices tend to rise over the long term,” he said.
The future may also be shaped by evolving consumer demographics. A Bain & Co study highlights the growing interest in watches among Gen Z and women, a demographic that has traditionally been less represented in the watch market. Claudia D’Arpizio, Senior Partner at Bain & Company, noted a shift towards greater female participation in watch purchasing.
Federica Levato, another Senior Partner at Bain & Company, added that many watchmakers are now targeting this demographic with gender-neutral designs and enhanced marketing efforts. “Brands are expanding their offerings to cater to both women and a broader audience, moving beyond traditional ‘jewel watches’ to more versatile designs,” Levato explained.
Despite these trends, London’s watch shops have not yet fully reflected this shift. Faith acknowledged a diverse clientele but remained optimistic. “While I believe we’re at the bottom of this market cycle, there’s potential for a resurgence. The previous boom was exceptional, but as the market finds its footing, we may see renewed interest,” he said.
However, Faith cautions that the next surge will likely not match the previous pandemic-era bubble. “Many were burned by the last boom, and lessons have been learned,” he concluded.
