Economic crisis or not, the last decade has shown a significant increase in the prices of many watches. Fuelled by a booming Asian market, many brands saw an opportunity to increase their margins by positioning themselves as more exclusive and up market. Those of us who had sufficient funds could insulate ourselves from this effect while others had to scramble to keep up with the increasing prices, and perhaps even sacrifice a watch or two to help fund a new one. Yet while it might be good business practice for the brands to increase prices when the marketplace offers room for this, (mind you they are all still in it for profit), it also poses a possible threat to the industry.
With increasing prices, the threshold for entering the market as a customer has also increased. Many of us will most likely remember our first watch, which in many cases was expensive, but just affordable enough, after saving hard and working harder. That first watch often retains an outsized importance, because it most likely started the passion that would lead to buying more watches, and making some of us into bonafide collectors.
Imagine then, if your first watch doubled in price and had been far more difficult to obtain. It’s not difficult in this scenario to imagine that some watch lovers among us might have been put off far enough to not even start this passion.
An novice in the world of watchmaking then, will most likely settle for a far less expensive watch and perhaps never enter the realms of higher watchmaking ever again. He will most certainly not enter the labyrinth of vintage watches, where nice examples can still be found at affordable prices, simply because of the amount of knowledge and guidance required to actually identify what is really worth going after, and what is a decent price, is an insurmountable barrier. Add to this the fact that price increases have also affected the used market, and we find that even there the threshold might be too high to obtain a used piece of the preferred brand.
Some do take action. When Jean-Frédéric Dufour took over as Zenith CEO from the Thierry Nataf, one of the first things he did was to create new collections and bring down the prices significantly. This way the brand could reconnect again to the many fans it lost, partially due to the changes in design initiated by Nataf, but also because many of them had difficulty affording the new, higher prices. Dufour’s strategy paid off big time, and reestablished Zenith as premier manufacture with a cult-like following. Justifiably, his talents have been identified by another big brand, with his recent appointment as the new CEO of watchmaking power house Rolex. Of course that doesn’t mean that he is going to apply the same strategy to Rolex portfolio.
Since entry-level models of premier brands can be difficult to afford, many first time watch buyers have to turn their wishes down a notch and go for a more affordable watch brand. Then one ends up with a Tissot or perhaps a Hamilton, brands that still offer bang-for-your-buck watches with price tags often only showing two zero’s. These brands can offer a step-stool for first time buyers and eventually turn them into collectors, some perhaps wondering off into the vintage world when enough knowledge has been gained. The future from here then is one of better possibilities when these first timers, now more experienced, can upgrade to more premium brands when their financial situation changes for the better.
Although the industry’s reaction to the market was indeed a logical one, especially in the field of watchmaking one always need to bank short term opportunities, but also prepare for a future where things might be quite different. Getting a new generation of customers and collectors involved is for certain one of them, with the responsibility for media outlets like REVOLUTION to educate them, and for the brands to ensure that with a bit of hard work they can obtain one of their models, instead of the need for a lottery ticket and a great deal of luck.
Eclectic taste in Haute Horlogerie, passion for diamond set watches, loves the classics