COVID-19

Pandemic is giving the luxury watch market its moment

Nova Safo Oct 5, 2020
Heard on: Marketplace
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Watchmaker Kit Moc works on a piece at the Second Time Around Watch Co. in Beverly Hills. Nova Safo/Marketplace
COVID-19

Pandemic is giving the luxury watch market its moment

Nova Safo Oct 5, 2020
Watchmaker Kit Moc works on a piece at the Second Time Around Watch Co. in Beverly Hills. Nova Safo/Marketplace
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Paul Bragan calls the 20 watches in his collection “mechanical art.” 

The senior partner at a consumer research firm in Arlington, Virginia, has spent the pandemic cooped up at home and is using his free time to consume voluminous online content about luxury and vintage watches — the high-priced realm of brands such as Rolex and Patek Philippe, which are experiencing a remarkable resurgence at a time economies around the world are struggling to regain lost ground. 

“In March and April, when I was talking to other collector friends, one of the common questions we’d ask each other was ‘What rabbit hole are you down … these last few days?’” Bragan said. 

Collectors, bored and curious newcomers, and high-income earners who did not spend money on summer vacations are fueling demand in watches that cost thousands of dollars — and sometimes six figures. Most of the watches are Swiss made, and according to the Federation of the Swiss Watch Industry, exports of watches costing more than $3,000 are now essentially back to where they were last year, down a mere 0.1%. 

At Second Time Around Watch Co. in Beverly Hills, sales associate Leo Kim, right, and owner Jon Goldfarb aid a customer. (Nova Safo/Marketplace)

WatchBox, an online buyer and seller of luxury watches, is reporting a similar phenomenon. In the first half of this year, it sold about 48% more watches costing between $50,000 and $100,000 than in the comparable period in 2019, a spokesperson said. Its earnings have grown more than 25% in the first half of 2020. 

“We, like most people, thought the world was going to end, and markets were going to crash, and everything was going to sell off,” said Mike Manjos, global head of trading at Watchbox, about the early days of the pandemic lockdowns in March, when there was an initial dip in sales. “And then demand just started growing and growing and growing.”

The company, which operates globally and does most of its business online, sold a Patek Philippe this year for about $700,000. 

Luxury brands have taken note. With brick-and-mortar stores closed over the summer, some relied on splashy Apple-like product unveilings on YouTube, Instagram and elsewhere to generate excitement about their new offerings. 

Reginald Brack, a watch industry analyst at The NPD Group, said the staid luxury brand industry — both Swiss and Japanese — is doing a better job reaching customers online through social media. And some of the excitement the brands are generating is spilling over to new customers, not just those who are already collectors. 

“The major auction houses that have been conducting weekly luxury sales in watches and jewelry have been reporting that a big percentage of those new customers are new to the brand,” Brack said. 

Jon Goldfarb, owner of Second Time Around Watch Company. (Nova Safo/Marketplace)

Demand is so great that even some brick-and-mortar stores, such as the Second Time Around Watch Company in Beverly Hills, are getting a boost — and the shop’s online presence is helping. 

Since March, owner Jon Goldfarb has seen foot traffic drop precipitously around his shop, where there are restaurants and other draws. But his website and Instagram page, filled with photos of his shop’s latest vintage offerings, have kept the customers coming and buying. 

“A lot of people that physically come into the store found us through our online stuff, but they want to physically touch and feel the watch,” said Goldfarb, who estimates that about 70% of his business now originates online — a modest increase from pre-pandemic levels. 

“I will say that a lot of these other businesses that have a brick and mortar store, some of them are only doing appointments or they’re closing completely,” Goldfarb said. 

Less expensive watches are also struggling. Exports of watches that cost under $200 are down 43.5%, according to the Federation of the Swiss Watch Industry. 

“The rich are getting richer and the poor are getting poorer, meaning that that luxury segment is doing extremely well at 3,000 plus, and it’s actually had twice as fast of a recovery as the remaining market,” Brack said. 

COVID-19 Economy FAQs

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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