Two questions I am asked more than any others, particularly outside the UK (I write this on a 16-day, seven city tour of the United States) are how WatchPro began and what are the trends shaping the watch business today.
These questions came up again recently when I was asked to be a guest speaker at a customer evening for Frank Adams, a multi-generational jeweller in Albany, the state capital of New York.
Frank Adams just opened a new showroom where fine and bridal jewellery are sold alongside anchor brand Rolex plus Tudor, Grand Seiko and Longines.
Having delivered a speech to an audience of its loyal customers, I thought I could give the presentation a wider airing (efficiency being key to survival in today’s media landscape) by tweaking it for WatchPro magazine and here online.
What is WatchPro?
WatchPro is like Forbes or Fortune magazine for watch lovers and people in the watch business. It is read by tens of thousands of executives in the industry and hundreds of thousands of enthusiasts and collectors.
The latest analysis from SimilarWeb, a service where you can compare traffic to websites over a certain scale, has WatchPro.com as the fourth largest watch title in the world, and closing in on the excellent Hodinkee, Fratello and aBlogtoWatch thanks to our opinionated style and inquisitive nature.
WatchPro’s mission is to try to put the pieces of a jigsaw together so that WatchPro readers can see the whole picture of what is happening in the global watch world.
The only problem is that, as fast as we put the pieces of the puzzle together, the super-sensitive Swiss are trying to get them off the table and only show you the sanitised vision they want you to see. They like WatchPro’s opinionated style, as long as they agree with those opinions.
But we now live in a world with much more data about both new and pre-owned watches. And we are bombarded with the crazy views of Youtube and Tick Tok stars feeding their hysteria to an insatiable audience.
I like to think I bring a bit more sanity to the conversation, but I like to be challenged and set straight when people disagree.
How the watch world works
I was invited to Albany to share my views on what I saw at Watches and Wonders in Geneva, and what that week tells us about the current state of the industry.
First, a bit about the economic environment that has shaped the approach of watchmakers, and here I am going to quote Danny Govberg, who co-founded WatchBox and masterminded the merger with Govberg, Radcliffe and Hyde Park Jewelers in the United States to create The 1916 Company.
He told me at the end of last year that the Western market for luxury watches, particularly in the United States, had been skimming the stratosphere at Mach 2 since the pandemic, but 2024 is seeing the flight descend to normal cruising altitude and speed.
Slowing down to 500 miles per hour and cruising at 40,000 feet feels like a shocking slow down, but it is really just a return to normal, and this is the market we are in today.
It is this more normal market that I think we saw reflected in the watches that were unveiled in Geneva.
The mission for watchmakers and their retail businesses this year is to maintain the value of sales while expecting the volume of sales to dip, particularly in the mid-market.
From what I saw at Watches and Wonders, most manufacturers are adopting a high-low strategy that widens the base of customers at the lower priced, volume, end of their range while looking to keep their richest customers spending on rare, ultra-premium pieces.
This isn’t particularly new, but there was a marked move away from the mid-market, £3,000 to £10,000, price segment; what we might call the squeezed middle.
Why do watch prices keep rising?
Over the past 20 years, we have seen luxury brands making fewer and fewer watches but relentlessly increasing their average prices. They have done this in a few ways.
First, playing the currency game. Right now, the Japanese Yen is historically weak, which means visitors to Japan from countries with stronger currencies can get bargains there.
I remember a similar situation, with joy, when there were two dollars to the British pound. I would go to New York after Thanksgiving and could not believe the bargains to be found.
Luxury brands do not want price differentiation between markets, so they increase prices in the country with the weaker currency. When another currency gets stronger, they increase prices in that country.
They say this is fair, I am not so sure. After all, they could cut prices in countries with weaker currencies to solve the issue. They never do.
Blaming a strong Swiss Franc is another doozy, as is blaming commodity prices like the high price of gold. All this is a one-way ratchet to raise prices to compensate for falling volumes.
Changing the specification of core collection watches is another wheeze to charge more. I could choose any brand, but Rolex and Tudor are masters of the art.
They can raise the average price of every Black Bay or Submariner they sell with tweaks like moving from all-steel to a bi-colour steel and gold. A leather or fabric strap can be swapped for a bracelet. An aluminium bezel becomes ceramic.
You get the idea. Work out how much each spec change costs and compare that to the increase in price it triggers. The manufacturer always makes better margins.
Limited Editions are a pet peeve of mine, because they are often more about marketing than adding more meaningful value for customers.
LEs are more expensive to produce in low runs, but the mark-ups bring tears to my eyes and raise the average price for a brand. They can also set new higher price expectations for a brand, a process known as anchoring, which can make core collections look comparatively cheap.
In a cooler market, you need a laser focus on profitability (sales are vanity, profits are sanity), and this led to far fewer new watches being launched this year, particularly from Rolex, which has easy wins to bank by producing the watches with the longest waiting lists.
These waiting lists are, effectively, promissory notes just waiting to be cashed, so churning out these bestsellers is sound business.
Rolex only launched one watch in steel at Watches and Wonders, the GMT with a black and grey bezel, which means it does not need to retool any machinery or divert any watchmakers away from the watches with the longest waiting lists: Pepsis, Batmen, etc.
We saw all of these tricks, and more, deployed by watchmakers in Geneva.
Manufacturers recognise that entry level prices need to be more realistic in the current market, and this actually translated into fewer watches launched into the volume end of the luxury sector.
To illustrate this, I will turn to a brilliant piece by Cam Wolf at GQ USA, who did some number crunching after returning from Watches and Wonders by analysing what he personally noticed during visits to the 19 biggest brands at the show.
Out of the 72 biggest releases from 19 brands including Rolex, Tudor, Patek, IWC, TAG Heuer and Cartier, only 20 had stainless steel cases.
To put that into perspective, in 2023, Rolex and Tudor, alone, launched 14 watches in steel.
Rolex only added one watch in steel this year, the black and grey GMT Master II. It was also the only watch costing under $30,000 from the brand.
This does not mean there will be fewer steel watches on sale this year. Not at all. I heard throughout an eight-city tour of retailers in the United States that authorised dealers have been allocated a higher proportion of steel watches from Rolex, and fewer gem-set pieces or models in precious metals.
Rolex is making more of the steel tool watches that have the longest waiting lists and it is more efficient to do this with existing models than to start making something new.
An increase in the volume of less expensive watches is balanced by launching top end pieces in precious metals with embellishments like diamonds and other gems, more complications and funky dials made from meteorite rock, etc.
Back to Rolex and you saw this in a slew of solid gold Daytonas with diamond bezels and mother of pearl dials. We also got a solid gold DeapSea and rose gold models in the Sky-Dweller and Day Date families.
Look at all the volume brands – Cartier, Omega, TAG Heuer, Longines – and and you will see this high low strategy in the 2024 product lines.
The high low strategy needs really rich people to buy the really expensive watches at prices north of £50,000. These customers are also the target for the jewellery watchmakers, which really turned it on at Watches and Wonders.
Piaget, which is celebrating its 150th anniversary this year, reworked some classic vintage watches dripping in diamonds. The ultra wealthy will keep spending if you give them a good enough reason, and Piaget had some real beauties with radical seventies styling. “It is a year to shine and sparkle and get back to glamour!” Candy Udell, matriarch of London Jewelers, exclaimed at Watches and Wonders.
When I first started writing about watches, retailers would tell me they could sell watches in any colour, as long as it was blue, black or white. They also said they could sell watches of any shape, as long as it was round.
I think Rolex changed the story on colour when it updated its Oyster Perpetual collection in 2020.
Pale blue, pink, coral and green were suddenly cool, and almost every brand followed as they realised that multiple colours meant multiple sales as people wanted one of each.
A cooler market has made the brands more conservative in 2024, and I saw fewer watches in the more funky colours.
We are not back to a bland palette of colours, but the blow out of green watches from a few years ago and last year’s hysteria about Barbie pink, has faded. That said, if you get a chance to add the pink-dialed Tudor Black Bay Chrono to your collection, grab it.
The post-pandemic boom, coupled with an obsession with vintage styling, saw a much more ambitious approach to shapes.
Cartier provides the obvious examples with crazy auction prices for 1970s Crash and Baignoire watches leading to booming sales in modern day equivalents.
We may be past the peak for this trend in the most unusual shapes, but it has morphed into a more subtle movement for smaller, slimmer, dressier watches in square, rectangular or tonneau-shaped cases.
You might have noticed Patek Philippe shining a light on its Ellipse family, which hits all the right notes.
More dressy, classical watches are definitely trending, and is part of a longer-term shift away from chunky sports watches, which have dominated for a decade.
Sports-Lux watches (big divers like Submariners and more svelte lines like the Royal Oak and Nautilus, are still hot, but we may be past the peak. (just look at secondary market prices tanking since 2022).
The mix may not change dramatically, but the movement is towards smaller watches. 38m seems to be the sweet spot, not least because it is a perfect gender-neutral size, and allows men and women to share the same watch.
Looking ahead, a trend that I think will blow up in the coming years is mid-century minimalism.
After World War II, inexpensive watches were produced in vast quantities. Usually hand-wound, which meant they could be slimmer than automatics, much smaller at maybe 32-35mm and with simple uncomplicated dials, they sold in their hundreds of millions.
You can pick these up on eBay for a few hundred dollars today and I see these vintage examples on the wrists of watch journalists all the time today.
Longines was a massive volume manufacturer in the 1950s and does a brilliant job of reissuing some of its classics.
If you want to jump on this trend now, look back at the archives of Bulova, Timex, Cartier, Omega, Rolex and Junghans for inspiration.
Buy vintage, or buy the reissues, you will look ahead of the pack.
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