Here is an interesting round table discussion on blockchain tech and the benefits of blockchain passports for luxury watches. For the brands, it’s a definite win because they are getting lots of customer information and they know that the watch is genuine, and has a service history when it comes to PX time, plus they have a reason to make contact with the buyer to update that passport. For consumers, the benefit is that you can buy pre-owned watches with more confidence. But you lose some privacy, as brands know which models you own, what you can afford to spend, credit score and more details like your address for example.
If there is a data breach then blockchain passports for AP, Rolex or Vacheron would be extremely valuable records to trade on the dark web. History suggests that most databases are hackable, or rogue staff in an organisation may leak info under duress perhaps. That said, conventional paper records at watch repair shops, jewellers or authorised dealerships are arguably less secure than a blockchain passport – and we all seem happy with the status quo.
If you have time time spare there is the Origyn YouTube video discussion;
I only ask the question because according to trade magazine WatchPro, one quarter of the entire Swiss watch industry is Rolex sales. The UK is arguably one of the most Rolex obsessed markets in the world, as the 2020 launch of the new Oyster, GMT and Subs showed. Flippers who managed to bri-sorry, get allocated a much prized Submariner were able to sell it on for around 50-80% above the RRP, depending on the dial colour, bezel etc.
Recently UK retailer Goldsmiths announced that it was rolling out a new store concept, based on Mayors of Miami, where watch brands would have dedicated zones. This offers consumers the chance to look at particular brands in detail. The danger with this idea is that it mirrors the disaster that is the Premiership in English football – all the money, marketing and top talent is concentrated on a handful of brands. Goldsmiths will have Rolex, Breitling, Omega, Cartier, TAG and Tudor – which is of course part of Rolex. You could say it’s Rolex-Lite, but that does minimise how good a Tudor Black Bay is in terms of value when compared to a Rolex Sub; same build quality for half the price, some might say.
But this focus on a handful of brands, with Rolex as the `One Watch To Rule Them All’ is going to damage the market in the end. Because history teaches us that every bubble, whether it’s a UK housing market, Tesla, South Sea, tulip bulbs or spices, will go pop eventually. When it does, then confidence is buying luxury watches as an investment will largely evaporate. It will have a catastrophic effect on watch retailing, as chains like Goldsmiths, Beaverbrooks and Watches of Switzerland depend on luxury Rolex and other watch sales to help keep them afloat, now that the government has decided that house arrest is a good idea long term. Footfall is NEVER coming back to pre-lockdown levels, and many older people – who make up a high percentage of luxury Rolex buyers – don’t trust the inetrnet. They also don’t want their Rolex purchase data to be held online either, as they rightly assume that various thieves and accomplices will hack that info at some point, leaving them vulnerable to house burglary or card fraud.
The final reason why Rolex domination is a bad thing is that it stifles innovation, to the extent where many of their watches are often quite boring. The Oyster range really needs a kick up the rear, as it’s becoming the Honda Jazz of the watch world; safe, steady, reliable but entirely uninteresting to any serious watch collector. There is nothing to talk about if you own an Oyster, exept its value.
Rolex don’t really do anything left field, quirky or challenging in their range, except perhaps the Milgauss, which is a 1950s idea still in production for some bizaarre reason. Personally, I like the Milgauss because I love the blue dial, but you have to admit that it’s a one-trick pony as a modern watch. Rolex could be creating some 21st century ground-breaking watchmaking tech instead, not just anti-magnetic as regards digital devices, but with tourbillions, liquid-powered chrono functions, or maybe a MODshop where well-heeled customers could order truly one-off Rolex models, created in the same way that Bamford London are doing. But better, with all the resources that a global brand can bring to bear.
When you are number one there’s only way you can go, and that is down. Change and development is necessary, despite the risks associated with it. Rolex is in a sweet spot right now – apart from the ongoing customer anger concerning waiting lists. Demand could not really be any higher and it is consistently voted the number one brand in any marketing survey you read. It is amazing that so many people believe that Rolex is the best watch in the world, despite the obvious truth to anyone who has taken their watches apart. They are not the very best, but they are brilliant at mass production to a very high level. But resting on those laurels is not a strategy for long term progress and it will also damage the entire watch industry when consumers decide that buying a Rolex is no longer as safe an investment as buying a Premium Bond.
Maybe that’s the future, the Rolex Fantasy Share Index? You basically mine your Rolex data like Bitcoin and when you get to GMT III level you cash in. Stranger things have happened…
Documents have been filed in Chicago USA which could – in theory – see a full scale jury trial of senior Rolex dealership directors accused of racketeering. Yep, that old Capone era felony is still on the books! The case revolves around three former employees of CDP, an authorised Rolex dealership, who tried to blow the whistle on grey market Rolex sales, waiting lists and all the other stuff that is well known to Rolex buyers aorund the world. In short, it is a huge can of worms which could damage the Rolex reputation if aired in detail.
This is an extract from the court documents; “The heart of the Scheme was a conspiracy by the Defendants to illegally sell Rolex watches to foreign grey market resellers in order to enrich themselves. In order to further the Scheme, the Defendants conspired to violate numerous federal and state laws including but not limited to racketeering, money laundering, mail, wire, immigration, and credit card fraud, and Illinois sales tax evasion.”
To summarise the document, the employees complained about the grey sales situation, then refused to join in with the schemes, and were then fired. The plaintiffs then allege that a Chinese national was subsequently employed to organise grey market watch sales, and worked in the US without the correct immigration paperwork.
The problem for Rolex here, and to a lesser extent AP and Patek, who also enjoy the luxury of having demand for certain watches outstrip supply, is that it inevitably encourages dealers to consider the grey market. Everyone in the watch and jewellery business has favourite customers, usually high spending self-made men nad women, who appreciate personal service and a lack of waiting around when they want something new. It’s human nature; money talks.
But how much reputational damage could this case cause to Rolex by exposing the situation that EVERYONE in the watch industry knows about, but is not widely known amongst the general public. Mistakenly, many ordinary people believe thay can walk into a Rolex shop and buy a new Submariner or GMT 2 – just like that. Cash, card or finance and have it in their hand that day. To learn that dealers are involved in shipping watches around the world, via dubious middlemen and online brokers, who are selling on new watches that are briefly owned by flippers, is going to do lasting damage.
In short, once lost, trust is hard to recover.
CDP has been in the watch and jewellery business since 1837, so it will be hard for Rolex to pull the franchise. But if this nasty case goes to court, then they will have no other choice. How can any manufacturer back dealers who are doing business like this? You cannot, it is morally indefensible and that is why this case will never go to trial in our opinion. The best resolution will be an out of court settlement to the three ex-employees, plus the firing of the Chinese sales guy.
The sooner the better, for all concerned, not just CDP.
We took a look at the Cadmore online auction, which is fast approaching and has some interesting watches on offer.
A 2010 Panerai Luminor with box and papers is worth a look, especially if you can get it for about £2600-£3200, as it is in mint condition. A new one is about five grand, so with the auction fees on top a final cost of £3600 isn’t too bad. If you like pocket watches there are several on offer and the silver Kendal and Dent, with a hefty 48mm case size is a good buy if you can get it for under £60 – assuming it works. There is no description on the auction website, so we don’t know.
An 18ct gold Rolex Datejust is another one that could be worth a look, although the gold Rolex is a bit of a Del Boy vibe these days. Good condition judging by the photos. No box or paperwork though. Say £2700 all in? Yep that’s where we would be too.
There is also a very blingy diamond bezel Rolex Datejust, no box or papers, but very nice condition.
More at the Cadmore website here. Auction is taking place next Monday.
If you want to sell a luxury Swiss watch then an auction can be a good way to do it, especially as the Covid restrictions make visiting watch dealers shops a non-starter. But what about the fees? Some auctions can take a hefty 15-30% from the sale price, in commission, buyers premiums, catalogue photos, secure packaging and consignment charges etc. so your Rolex Sub only realised say £7500, instead of the £10000 you thought it sold for on the day. Well, have a look at Watch Collecting, who aim to do a better job for sellers.
Welcome to Watch Collecting. A new 24/7 online auction platform devoted to collectible watches. We are preparing to shake up the auction industry with our first auctions in March 2021. Following the success of Collecting Cars, the team have been hard at work optimising the experience for watches.
Our fees are straight forward. Sellers receive 100% of the winning bid whilst buyers are charged a 6% fee on their winning bid (£600 minimum). Below are some examples of watches already consigned to our first auctions, will yours be next?
Verdict: If you own a seriously expensive watch then this is worth considering, as the savings are huge if you have a Daytona, Patek Nautilus or AP Royal Oak in your safe.
As the pandemic eased throughout 2020 watch sales began to recover in the summer and were boosted again as retailers and manufacturers upped their online game last year.
The latest stats from the Swiss watch makers Federation for November are interesting reading, because they show how the strong push towards online retailing helped the big prestige brands end the year on a positive note. Apart from China, demand from the UK was also very strong, which is surprising given the supposed economic hardship caused by Covid. Maybe those Bounceback loans have been invested in Rolexes and new company Mercs?
Here’s some info from the press office;
The decline in Swiss watch exports has gradually slowed over the last few months. They almost reached equilibrium during November, with a slight fall of 3.2%, compared with November 2019. This performance can be mainly explained by China’s return to strength, following a less dynamic October. Over 11 months, Switzerland has seen a 23.5% decline in its watch exports.
Bi-metal watches stood out in November, with positive trends in both value and the number of items. Export turnover for steel watches remained steady, while products made from precious metals declined significantly. Volumes were affected by a sharp decline in the Other materials and Other metals categories, as well as by the contraction in steel watches. Watches priced at less than 200 francs (export price) saw a marked decline, particularly in the number of items.
Performance by value in the 200-500 francs range was average, with watches priced at over 3,000 francs in a similar position. The latter saw an increase in the number of items compared with 2019, for the first time since February. The 500-3,000 francs range remained at the same level as a year ago.
As in the period from June to September, the less steep decline at the global level in November was mainly due to the very strong performance posted by China (+69.5%), following a temporary lull in October (though still with +15.1% growth). Over a third of the main direct markets for watch exports also saw an upswing, however, helping to soften the downward trend to some extent. Among them, the United Kingdom (+21.8%), Taiwan (+18.5%) and Russia (+36.3%) were notable for steady growth. Conversely, other key markets continued to see more or less sharp declines, including the United States (-2.8%), Hong Kong (-14.0% in spite of a highly favourable base effect), Germany (-1.1%), Singapore (-31.9%), the United Arab Emirates (-3.7%), Italy (-27.8%) and France (-29.0%).
For decades, the UK mainstream £50-£1500 watch retail sector has been domimated by big jewellery chain stores; H Samuel/Ernest Jones, Goldsmiths, Chisholm Hunter, Fraser Hart and Beaverbrooks. But that old fashioned retailing via bricks and mortar stores, often located inside shopping malls, is facing a Covid reality check. It doesn’t work very well in a pandemic and when the hysteria about Covid-19 finally subsides and people realise you can never defeat a virus, you just live with it, then all those stores will have to be ruthlessly audited in terms of operating profit margin against the online sales portals that big chains have rapidly expanded during lockdowns.
The results will highlight how much it costs to keep shops open, pay staff, security, insurance, rates, rents etc. and contrast those overheads to an online sale of a Michael Kors, Raymond Weil or TAG despatched from a warehouse somewhere near the M42.
More importantly, all brands – not just the Swiss – have realised during Covid that they can sell their watches direct to the public, they don’t need retailers. In fact, many brands have seen huge increases of over 60% in terms of sales volumes.
This is the real reson why major disruption is going to take place in 2021. I’ve heard on the retail grapevine that Seiko are no longer accepting any requests from shops, independent or chain stores, to stock their watches. Fact is, Seiko don’t need retailers, the brand name and its values are well established. Seiko, like other brands, already has its own boutique, single make stores. The Swiss are also well advanced with this strategy of course and it can only be a matter of time before Rolex decide to ring-fence their brand by pulling all franchises and setting up their own dedicated network of flagship stores in London, Edinburgh, Manchester, Birmingham and perhaps another three or four locations. Once they have that empire in place, then Watches of Switzerland should start getting nervous, twitchy even. Maybe that’s one reason why Watches of Switzerland has recenly launched an online store with Vee24, see the press release here.
In truth, for many prestige brands you only need between one and three UK service centres to deal with warranty and servicing, and then sell most of your stock online. People who want a Submariner or Daytona know exactly what they want; the case size, colour, model year, bracelet type etc. They don’t need a guy – or a girl -in a waistcoat and embrodered shirt telling them that the new movement now has a 70 hour reserve and improved superlume. They don’t care! They just want to own a Rolex.
But that’s top end of watch retail you say, the 10K-20K stuff, surely you can’t sell £100 Timex watches online and say `go bollocks’ to all the watch shops. Of course you can, and many of those mid-market brands will have no choice than to embrace online only and end their dealer network.
Let me give you one example; Sekonda/Accurist/Limit are distributed by one company, who have a team of sales reps on the road, all earning circa 30K, plus company car to maintain, stock to insure etc. The watches sell wholesale for about 50% of the retail price, so a £100 Accurist is 50 quid to the dealer – so long as they buy at least 25 watches, or 50 examples of the Manager’s Specials, which are half price. So the UK distributor of a Sekonda Seksy that retails for £100 may actually get about £30 for that item, once all the costs of distribution are factored in.
The alternative is that you set up a website, hire say 4/5 staff who all live at home with their parents and pay them 22K a year each to run the site, pack the watches and deal with basic warranty problems like replacing a watch crushed by the third party courier company driver. That courier company charge you about £3 per item to deliver within 3 working days, £5 for 24 hour express delivery. Suddenly, you are getting £100 retail for that Sekonda Seksy watch – not the retailer – and your distribution costs have dropped dramatically, plus you no longer have to worry about retailers undercutting each other, because YOU set the UK price, countrywide. You just boosted your profit margin by about 20-30%, trebles all round for the shareholders and directors.
Yes, there will always be independent watch shops that deal in pre-owned Swiss and some entry level watch enthusiast brands like say Hamilton, Tissot or Zodiac. You can make a living in a wealthy town like Brighton, Hale in Cheshire, Keswick, Stirling, Penzance, St Helier etc. Or a brand could sell mainstream sub £300 watches at retail outlet villages like Bicester or Cheshire Oaks, where people go for a leisure day out and so are open to being marketed to, and sold to, by people who know and love their product. But all those mall based watch/jewellery shops at Intu Trafford Centre, Westfields, Merry Hill Dudley etc. are doomed because our whole way of life is changing. Governments are determined to isolate us, control and mask us, restrict our movements with cycle lanes, suburban roadblocks, ULEZ charges in city centres etc. all in the name of climate change.
What do you think that will do to shopping habits? It will destroy them. It will will force us to buy more online.
Prediction: The chain store closures will begin in February, and continue throughout 2021. Swiss brands will announce more branded boutiques, launch slicker websites, loyalty/rewards clubs, their own apps complete with insurance partners, QR coded, private courier tracking of packages etc. By late 2022 one – maybe two – of the big jewellery store chains is bound to go bust once Richemont Group, Swatch, Breitling, Rolex and the other big brands all pull their products. That decision is inevitable, in fact the Swiss are gearing up for it as their launch of blockchain backed, coded watch ID shows – you only need that strict customer ID process if online is going to be your preferred retail channel.
Without those high margin watches the big jewellers will not be able to afford to keep their shops open, even with rent reductions offerd by cash-strapped Mall owners. Fact is, the staff, business rates, insurance, CT/VAT, security costs etc are so immense that High Street retailing can only work if you’re selling £15-25K worth of stock per day on average. When you remove a brand like Tudor or Rolex from the window, you also remove one of the primary reasons for customers to visit the store in-person.
The Rolex watch market has its own rules, mainly unwritten and often propelled by rumours as much as real demand from collectors. It’s kinda like the stock market; lots of companies and rich guys are constantly hedging their bets to try and beat the next spike in demand, and that drives the price of the stock higher. Or lower if a new Rolex model appears and nobody wants the 2019 range.
Then you have people who essentially trade in Rolex futures. They have a client list, they know which client will pay roughy XXXX amount for their grail Rolex, and so they try to locate one. Generally dealers, from international authorised shops, to eBay traders, these guys have a vested interest in talking up the long term cash profit that MIGHT be achieved on historic Rolex models, as well as the modern stuff. So you’ll see You Tube videos, blogs, magazine features and so on bigging up Daytonas, Submariners, various GMTs, even the odd Explorer. If a Rolex has some kind of authentic celebrity or movie connection then that adds to its future value…generally. That may not apply if Bill Cosby or Jimmy Savile owned it.
We had a look around at the latest Rolex Oyster Perpetual prices, after the recent release of the new 36mm and 41mm models. The first thing to note is that demand is wayyyy stronger for the 41mm case sizes. No surprise. Next though, it was interesting to see that the yellow dial Oyster was being touted at just over £8000 by one dealer, which is about 4K up on the RRP. Maybe it’s time to think out of the box if you don’t want to wait for a Submariner or GMT model from the 2020 range?
Certainly the offbeat dial colours won’t atrract the same attention as green, black or champagne. People tend to be risk averse when it comes to investing in Rolex watches, because the safe play suits most collectors. But rare models eventually tend to go for big money, because there are low numbers available in say a decade, and some wealthy collectors would like a full set, kind of like cigarette cards but with a 100K buy in price.
MAYBE A 34mm ROLEX IS WORTH BUYING?
OK, I hear you, a 34mm case size is too girly nowadays, but consider the rarity factor here. The latest 34mm Rolex Oyster Perpetual has a brand new movement for 2020, in the shape of the Cal 2232. So this is a debut year, always worth bearing in mnd for future collector/auction value. It has a 55 hour power reserve and a Syloxi hairpsring inside, which looks very much like a traditional metal balance wheel assembly. I like that rather than the Parachrom balance spring Rolex movements, because although silicon is more efficient in terms of conserving energy from mainspring to second hand, for me, it lacks romance, craft, engineering kudos.
Just worth looking at this one, especially in Sunray Blue, which is arguably the most handsome of the Oyster 34 range imho. It has an understated elegance, lacking a day/date window, or any extra bling in the bezel. Bit boring perhaps, but for me a design classic that will never go out of fashion, which a vivid green Hulk might do.
There y’go, place your bets Rolex futures traders.
While big fashion events across Paris, Milan, New York and London have been cancelled or postponed, plus watch trade shows such as Baselworld cancelled, sales across retailers have declined in some key markets. Chinese consumers account for over 45% percent of the global spends on luxury goods, translating into an 80% growth from this country alone. Against this backdrop, sales of luxury watches are expected to decline in the short-term.
Other important factors which will remain evergreen as powerful growth drivers include ubiquity of watches as an acceptable fashion accessory. Swiss-made luxury watches will continue to dominate the global watch market during this period also supported by superior technology, quality, design, tradition and craftsmanship.
Certainly in the UK the market has proved resilient, with Beaverbrooks reporting record watch sales recently and other jewellers reporting constant phone enquiries for the new refreshed Rolex Submariner, Skydweller and Oyster Perpetual models. There have record auction prices realised for Rolex Daytona and vintage Submariner models as well, which suggests that watches remain an important investment avenue for the wealthy.
Their latest financials show sales at £12.4 billion for the year to March 31, while net profit fell 34 percent to £813 million. Still pretty decent some might say, although Richemont noted that sales overall fell 18 percent Jan-March 2020, mainly down to the Covid-19 pandemic.
Of course Richemont now have to try and build up sales in person again, via its network of franchised dealers across the world. That could be difficult for the rest of this year, depending on whether Corona returns and causes another lockdown in key markets in November/December.
On the upside, Richemont owns Watchfinder.co.uk, which they bought back in 2018, so the switch to selling luxury watches online should gather speed. The only hurdle for many collectors is getting a fair PX price for their luxury watch online. The process of separating fakes from real Cartier, Breitling, Rolex or Patek models is very tricky, and requires lots of staff training plus a physical examination of the watch and paperwork at some stage.
Challenges ahead for sure. Not just for Richemont either.