Amidst the chaos and extreme uncertainty of our present circumstances, watch enthusiasts know one thing for sure: getting the watches we want has never been more difficult. Around the world, popular watches have become so scarce that they are no longer even displayed in stores. These are not limited edition models, mind you, but regular production core collection watches. As we and other observers have noted, some brands are no longer in the retail business… This state of affairs predates the pandemic, but lockdowns and other related measures have hurt supply, just as they have done across many sectors. Demand, on the other hand, has skyrocketed to unprecedented levels. Everyone wants what they cannot have, and the more out of reach some watches get, more and more hands stretch out for them.
Things have gotten so dire that brand executives are openly discussing it, and articles such as this are being written, even by the general press. The editors of WOW thought that the pandemic would tamp down both supply and demand, but we were only partially right. The inability of key brands to get watches onto waiting customer wrists has drawn the interest of speculators interested in easy money, and others who see watches as a reliable store of value. For collectors, this is a major issue because we often buy watches just for fun, or for intensely personal reasons. The editors of WOW Singapore and Thailand exchange frank views on the current situation.
Ashok Soman: Well it is a new year, but it seems like 2022 has inherited all the problems of 2021! And I’m only talking about watchmaking… It’s a poor way to start the year, but I’m so dismayed that my main section on this issue is all about lessons we should have learned in 2021. Turns out though that these problems have been developing for the last five years. Sounds a bit like the development time our watchmaking friends are always telling us about! I sincerely hope they have been spending their days since 2016 finding a solution to the unique situation we face as watch enthusiasts and collectors today. Instead of buying a watch, these days we would have to say that we are registering our interest!
Ruckdee Chotjinda: I was going to say something. Then when you said “registering our interest”, I am suddenly reminded of a remark made by a Thai friend of mine: Have money but cannot buy! He told me the waiting list for the Omega Speedmaster Calibre 321 in my country is so long I should not even bother to put my name in with the boutique. Reconfirming that is my go-to watch pusher at an authorised dealer who did not even offer to try and get one for me. In retrospect, this dramatic increase in demand for watches should be healthy for the industry? Or is it creating a bubble? There are so many areas to discuss I don’t even know where to start.
AS: I love that remark from your friend! It’s no longer about saving the money for that watch you always wanted to pull the trigger on… Now you have to pass the KYC level at the authorised dealers… When I think of it this way, it really reminds me of trying to set up one’s own stock trading account or something. You have to jump through hoops and pass tests, and fulfil all sorts of risk and compliance stuff besides.
RC: Yeah… I could not help but feel like I was applying for a job or getting the bank’s approval for my home loan.
AS: Indeed, it feels rude in a way! To answer your question then, I think there is no good way to begin but at the level of the store, and with what collecting watches means today.
So here is an example: I was at one authorised dealer just yesterday (relative to this discussion – Ed), and happened to overhear an animated discussion between one of the staff and a walk-in customer. The customer was asking about a watch he had seen advertised, but was told it was not available, even to try on. He found it difficult to understand why the model was being promoted when it was effectively sold out, and how it could have been sold out when there were no pre-orders and the model was just launched. Needless to say, the staff at the store had a hard time explaining this. I suspect we will have similar trouble addressing just those points!
RC: Good luck to that staff! You might have noticed that I am less vocal than you in my past writing. After all, a watch magazine is a business endeavour. And as I am just an employee, I have to be as balanced as possible between keeping the readers informed and keeping the brands happy, especially in my local social parameters. Discount, markup, waiting list, allocation and supply or scarcity in general are the topics I did not touch on in the past.
AS: I know we have been reluctant to talk about market conditions in our official capacities, but this is really the great challenge of our era. I mean the demand for collectible watches has survived — I should say is surviving — a black swan event, so it is unlikely to decline when the general situation returns to some semblance of normality. The opposite is more likely! So, my friend, tell me if you think watch collecting still qualifies as a hobby. Are we hobbyists, and are our magazines hobbyists titles?
RC: Watch collecting still qualifies as a hobby, but the arena is, if I may say, invaded by non-hobbyists who take pleasure in monetary appreciation and not the charms of the timepieces themselves. Our magazines should definitely remain hobbyist titles. There are enough Facebook pages and groups that present watches like hot stocks of the week!
AS: I’m really glad that you think this way; it seems that watch collecting as a hobby is not respectable if you are just in it for fun. Don’t get me wrong though, it is easier to consider buying certain watches because one is not so concerned about the price anymore. As I told a friend here, I no longer have to worry about my wife objecting to me buying watches!
RC: That makes two of us. Ha ha. I was even encouraged to exercise less restraint. She said I would buy those watches eventually so why pay more later.
AS: I guess the main problem for us is how to address the new collectors — I will call them this because I cannot call them investors — in a way that makes sense and that is useful to them too. Watchmaking is a cultural activity — the United Nations agrees with me! — so that means we have to present our thoughts and comments relative to that. I feel saddened that many of these new buyers are only interested in capital appreciation, while at the same time understanding that no one wants to lose money when making big ticket purchases.
RC: I would say nothing in life is free. We must pay for pleasure or comfort or whatever. I would chalk that up to the cost of ownership. And in the end, if we don’t sell the watches we bought, there is only unrealised loss and no realised loss.
AS: Before we get carried away, how do you think we should introduce new watches now? Starting upfront with a note about availability, for example? Should we explain why we are covering something that is not readily available? As you said, there are so many questions that it is hard to piece together a reasonable starting point.
RC: I will stick with my long standing mindset. I will still want to frame my narrative around what the watch has to offer and who it may be suitable for. These are facts that will not change too quickly. Availability is dependent upon production capacity and market demand… or should I say hype. How the price of one watch with a certain dial colour drives up the price of another watch with a similar dial colour is beyond me.
AS: Hahaha. Without pointing any fingers, I will repeat myself now and say that I’m still not convinced that green is a good mainstream colour for watch dials. Or straps. I agree with you that green is a bit of a challenge to match, in terms of whatever else you might be wearing — certainly too much of a challenge for most men, I suppose. Is it wrong to reject a dial colour because it does not work for you? I know that I speak as a person who until recently championed mainly black or white dials, just to be transparent there.
I also prefer those subtle touches on dials — like the violet of Moritz Grossman hands or the grain d’orge of the Parmigiani Fleurier Tonda PF — which are not obvious to a casual observer. Of course, this means that certain popular styles are out for me, but I will say that the very specific style of the so-called Pepsi Rolex GMT-Master II speaks to me far more than the Batman version, even if the former might earn me the approval of my peers. I like it because of childhood associations, in fact, which few will know or care about.
RC: I should be interested to hear more about that later when we have the time. But getting back to your comment about dial colour, I would say that, as a consumer, it is not wrong to reject any dial colour because it is our money and our wrist. We pay for what we like to see and to wear. The problem so far, if we can call it that, is when people want to pay for what other people like or approve of.
AS: Ah yes, the approval of others… Adrian Hailwood of Watchcollecting.com told me that he finds it maddening to meet and talk with people who are buying watches because of what they might be worth to the next owner rather than what they themselves might like. Personally, I like how he framed that because I would never buy something I do not like just because I have a ready buyer for it who will pay me a premium to sell it on.
RC: It has been a cycle. People wanting to buy something safe and established. People wanting to buy something different and distinguished. People wanting to buy something popular and unobtainable. I’m sure the next shift will come in due time. Once the craze subsides, there will most likely be a movement that promotes either non-conformity or personalisation or both.
AS: On what you said there about crazes, another observer (on Quora or a forum) who was formerly head of design at Longines noted that watch buyers today are aware that watchmakers cannot easily scale up production, even if they wanted to. This justifies the scarcity argument, and means that we will never return to pre-2016 levels. I myself think it really started when authorised dealers stopped selling watches above the list price, and the practice of discounting got phased out. If memory serves, this started a few years before the 40th anniversary of the Nautilus (which I like to cite as the turning point for the luxury sports watch).
RC: Hmmmm … Let me think. Yes, the trend for luxury sports watches did pick up around that time. But I felt the overall price pressure building some time before that. I thought it had to do with Chinese consumers buying a huge amount of watches?
AS: If nothing else, the pandemic has shown that watchmaking is Chinese traveller-proof! But yes, watchmaking is not built-up to handle the demand from emerging economies and scarcity is one result, just as that observer noted. Basically I agree that watchmakers did not account for the real demand out there — if Apple sells more than 30 million watches annually (43.1 million in 2020), and only a small percentage of that decides to buy something from one big Swiss name, there is no way that one company can meet the demand.
RC: Apple sells more than 30 million watches annually?! I need to follow the market more closely!!
AS: Apple basically outsells the entire Swiss watch trade! Proving, by the way, that the Swiss underestimate how big their pie really is; watchmaking is Switzerland’s third largest export component of GDP. I guess what I’m saying is that watchmaking needs to take up the conversation about expanding capacity again. The demand is real, and Covid-19 proves it.
RC: But some brands may be playing the scarcity card for certain models, which can backfire later on.
AS: Totally agree, and the market does too. This is why Rob Corder of WatchPro has started openly calling Rolex, Patek Philippe and Audemars Piguet investment-grade brands. It has not escaped our peers that any list of so-called “bankable” watches only includes independent firms. The common wisdom is that this is because publicly-traded groups need to answer to shareholders, and independents do not.
So you get Patek Philippe making its now-famous decision on Ref. 5711, and Audemars Piguet responding in a similar fashion with its current reference 15202ST Royal Oak ‘Jumbo’ (this will be replaced by a new reference for the 50th anniversary of the Royal Oak this year, which is reference 16202ST). It is hard to imagine any of the big groups responding in the same way. By the way, I’m not saying that any of this is positive news, to be clear; certainly all the above mentioned brands face pressure from our readers, and the watch-buying public at large.
RC: The pressure of not being able to produce enough is always better than the pressure of not being able to move inventory, right? Now with the supply being inadequate to quench the demand at the upper echelon, do you see a spillover effect in any way here? It looks like there is more money burning holes in people’s pockets than ever.
AS: You know, one guy for whom my respect continues to grow is Cartier CEO Cyrille Vigneron… When I met him for the first time in 2017, when he was fresh in his role, he predicted that people would buy fewer watches but focus on quality — meaning watches at higher price points of course. Needless to say, I was unconvinced, but he has been proven right.
Even the sustainability crowd are getting into this, by fuelling the demand for pre-owned watches. I am recommending the report from TheRealReal, an online marketplace for pre-owned high-end products, about this to my readers in the main section I mentioned earlier. It demonstrates that demand is strongest for watches such as the Submariner (with date) with this crowd, which advocates for reducing consumption. Anyway, that is one sort of spillover effect, although it is not without pitfalls. I imagine that the ocean of Submariner wannabes out there will also benefit from this!
RC: Sigh… Can you give me an example of something positive that you see out of this whole phenomenon in the past few years then?
AS: My hope is that all the folks lusting after popular models such as the Oyster Perpetual eventually find that there are other similar watches that are just as good. To be clear, I do not mean shifting from the Oyster Perpetual to the Datejust, which is what I’m told is happening! No, I mean there are amazing time-only models at all sorts of price points, from Nomos Glashutte to Vacheron Constantin. And then there is one brand I must mention that has done it right: Tissot.
RC: Ahhhh… You must be talking about the PRX. It is a big hit in my country, and I presume it is the same over there in Singapore if you bring Tissot up.
AS: It is indeed massively popular, and all this is good news for buyers I think. I am talking about both the quartz and the automatic versions. I’m told that the brand ran out of stock here for a while, but Tissot certainly does not intend to play the scarcity game so it fixed that problem. We need to see more watches like the PRX at that price point or somewhere in the CHF1,000 to 5,000 range. That is one way brands can capitalise on the popularity prize while making properly excellent watches.
RC: You are so right. And by sheer coincidence, I’ve just asked the local Tissot office here for a loan watch I could shoot before the New Year holidays. I haven’t found the time to post the picture on our social media accounts yet.
AS: Careful now, if you spend too much time with that watch you may find the urge to pull the trigger irresistible! The bracelet and the fit are quite extraordinary for that price point — better indeed than some examples in much higher price brackets. Of course, we featured it on our cover for the Autumn issue last year so I am biased.
RC: For aesthetics and price, I am all in for the quartz one with gold hands and markers on a white dial. I have always liked its look, even more so than the self-winding version that followed. But I am not getting the PRX because it wears too small on my wrist, at this time when some of the watches in my collection feel too big! I am probably the only person you know who loses weight during the lockdowns. My diet was forcibly “controlled” at home, unlike when I was out working.
Anyway, I think we are drifting farther off-topic here. Let me ask you this one thing: Do you see the market as a bubble waiting to burst? Or do you think it will more likely deflate in a less dramatic way?
AS: I will be brave here, and live with the consequences, because I foresee no bubble-bursting or deflating, as far as the overall situation goes. The reality for individual watch models will be different, of course, but virtually every professional or sports model from the likes of Rolex will require serious deliberation and patience because order lists are only growing longer. To me, these lists demonstrate demand, and a willingness to wait. I waited for my Rolex Oyster Perpetual Milgauss, and am now waiting on a couple of other pieces, and I did not find it difficult.
RC: Congratulations on the Milgauss! I don’t think I will have the same luck with the two Rolex models I wanted. After all, there are only so many watches produced in a year, and look at the size of my country’s population. The rich are not getting poorer either!
AS: On the other hand, I think I need to be clear on a few things that I find difficult to swallow. One is the appearance of brand new current year models in the pre-owned space; I think we have to expect people to trade watches, and hold out for the best value, but who buys a watch today and sells it today? This practice is both rapacious and repugnant, and what makes it worse is that collectors must be responsible; who else is in good enough standing with brands and retailers to already receive popular production models. Needless to say, I was horrified by the Antiquorum sale of the new-and-still-factory-sealed Patek Philippe Ref. 5711/1A.
RC: Is this part of the reason why online pre-owned market and other watch trading platforms are on the rise? I mean, flipping has never been as convenient and globally connected.
AS: I cannot claim to have any special knowledge here, at least none that I can substantiate. Clearly, the proposition that makes the secondary market so attractive is that recommended retail prices for many watches are wrong, in the sense that you get a better deal buying a pre-owned watch, typically.
RC: I never looked at it from this perspective before. Retail prices were set on the basis of the intrinsic value of the watches as believed by their manufacturers, not on market demand for specific models or dial colours, no?
AS: Well, in luxury no one talks about the price in a realistic way! But I think there are plenty of brands that support a perception of their prices. So going back to that irate customer I mentioned… Brands advertise to protect the value of their watches, not to promote them. By brands here I mean certain specific brands, but I won’t make any assertions about which ones! Did you never feel that brand advertising makes you feel good about your watches?
RC: They certainly do. And I am the kind of person who is more moved by simple, classic advertising than ambassadorship and celebrity endorsements. You can say I belong to the dying breed. I was always the minority in my market.
AS: To finish my point about pre-owned watches and prices, as we have seen, the price is also wrong in the other direction, meaning loads of collectors stand to profit from their hobby. They can also continue to profit from their hobby by using their privileges with authorised dealers to continue to feed the traders. This is the weird part of this pre-owned phenomenon because it is creating a separate market for watches, one where authorised dealers are like wholesalers! I think there is a successful business model here, in the sense that pre-owned cars are a legitimate business and only in that sense. I mean, can you imagine if second-hand cars were more valuable than brand new ones?
RC: That will be crazy! But then again, we do not really have a supply situation where current model cars are concerned. And unlike watches, there is no special speculation on the basis of colours for cars!
AS: I’m not touching any point on colours! I might be colour-blind at this point… Let me stop complaining with one last point: I cannot accept brands buying their own pieces back from traders and resellers, only to sell it back themselves at new and higher prices. I recall hearing about some scam years ago where authorised dealers would sell watches to another party — in reality a representative of said dealer — who would sell it at higher prices. I believe the right word for this practice has to be ‘corruption’…
I bring this up because I have publicly suggested a variation on this idea, except in my version the brand sells the watch at the retail price again. Basically, the brand would undercut the traders and resellers, thus reinforcing its own recommended retail price. It seemed a neat solution, but there is a cost to the brands of course. It is idealistic I know, and I do not expect anyone to actually do that!
RC: Is that malpractice in any way more contributive to the industry as a whole than unloading old inventory with ridiculous discounts in the grey market? I mean, the psychology of seeing your favourite brand going up in price is always better than to see it being unwanted?
AS: I think this is probably the most challenging time for the mental well-being of the watch collector! We actually still live with this sort of dumping, so while some watches just get cooler and more unattainable (at retail), others are simply too available. More than anything else, I think the message of buying what you love, or at least like, is getting lost. That really hurts, because it is what we do!
RC: That is so true. Going back five years maybe, I was asked like once a month which watches to buy like the hot stock of the week. Now I get the same question every week. All I can see is money but not passion. If watches were more liquid and available or volatile, this would have been a cryptocurrency market already. Lastly, Khun Ashok, to conclude this article, what would be your advice for the readers amidst all this heightened market sensitivity?
AS: Buy what you love! And if what you love is priced out of your reach, look for it on the secondary market. That market is there to allow more people to get into the passion for collecting watches. It is not meant to generate profits for collectors!
RC: Thank you, Khun Ashok. I hope the market regains some sense of normalcy soon so people who really appreciate watches for nonfinancial reasons can really enjoy their hobby once more. Stay safe and hope to finally see you again this year!
For more watch reads, click here.