According to a recent report by Boston Consulting Group (BCG), The so-called "Big 3" pre-owned watches—Rolex, Patek Philippe, And Audemars Piguet—have outperformed the S&P 500, The major US large-cap index, In terms of growth over the past five years. BCG's luxury watch resale market report states that from August 2018 to January 2023, The annual average growth rate of the "Big 3" in the resale market was 20%, While the S&P 500 grew by 8% during the same period. Despite a significant downturn in the luxury watch resale market in 2022, The average returns remain high.

Comparison of Annual Average Growth Rates: BIG3 Pre-owned Luxury Watches vs. S&P 500

The average for the Big 3 watches refers to the resale market prices of Audemars Piguet Royal Oak, Patek Philippe Nautilus, Aquanaut, Rolex Daytona, Submariner, And GMT-Master.

Physical Asset Market Index

Investors sometimes choose watches as an alternative investment to diversify their portfolios. Watches tend to maintain their value even during market downturns, And are rated higher compared to other stable physical assets such as art, Wine, Cars, Jewelry, Handbags, And furniture. The asset value of luxury watches boasted an annual average growth rate of 27% from 2021 to 2022. Wine, Which showed the next highest value increase, Had a growth rate of 18%, Marking a significant gap compared to watches.

Rapid Growth of the Watch Resale Market

Luxury Watch Market Growth Rate

Thanks to the strong returns of luxury watches, The watch resale market is also experiencing significant growth. In 2021, The size of the watch resale market reached $22 billion, Accounting for one-third of the total luxury watch market, Which was valued at $75 billion. The growth rate of the resale market is much faster than that of the retail market, And BCG predicts that by 2026, The total watch market will exceed $100 billion.

Reasons for Purchasing Resale Watches

During the pandemic, Demand increased while supply decreased, Leading to notable growth in the pre-owned market. According to a survey, 29% of collectors purchased watches at prices higher than retail, Citing reasons such as acquiring unworn or best-condition watches (41%) and avoiding long waitlists at retail stores (40%).

Increasing Number of Young Watch Investors
and the Expanding Online Watch Resale Market

The number of young customers entering the market, Attracted by the investment value of luxury watches, Is on the rise. According to a survey, 54% of MZ generation respondents increased their luxury watch consumption over the past 24 months, Citing "greater ease of transactions and investment opportunities" as the main reasons. Among them, 66% said that the potential for value retention and growth influenced their purchase decisions. Additionally, Half of the respondents stated that, Due to confidence in new models and price increases, They plan to invest more in luxury watches within the next 24 months. Despite economic downturns, Participation continues to grow, Driven by the sustained growth rate of the market.
BCG notes that the resale culture has evolved from a "secretive private transaction" image to a transparent resale market. Information shared online, Appraisal services, Skilled experts, And market transparency are factors that increase trust among young investors. Thanks to the MZ generation's trust in digital transactions, It is estimated that by 2026, 60% of watch resale transactions will be conducted online.

Luxury Brands Entering the Resale Market

To target the growing base of young consumers, Brands that previously kept their distance from the resale market are now recognizing its growth potential and starting to participate. In 2018, Richemont Group acquired the well-known online pre-owned watch retailer Watchfinder, Ltd., And Audemars Piguet launched its own pre-owned watch business. In 2022, Rolex also launched a similar certified pre-owned watch program and is collaborating with official dealers.

Luxury watches have emerged as a smart alternative asset, Beyond being accessories for status-conscious consumers. Watches have shown higher value compared to stocks and other physical assets, Drawing particular attention from the MZ generation. Due to high demand and limited supply of popular watch models, The resale market is rapidly growing and maturing. Forward-thinking watch brands continue to research integrated retail and resale market strategies for long-term brand management.

This article is based on BCG's < Luxury Preowned Watches, Your time has come>.

Source: https://www.bcg.com/publications/2023/luxury-watch-market-trends