Watches in a post-COVID world

Almost poetically, after posting the previous story about the kickstarter-launched Furlan Marri (FM) watch, someone posted one for sale on Chrono24. It is unworn and listed for £809. Remember, it was originally sold for as low as 305 Swiss Francs (~£240), and sales were not limited during the Kickstarter campaign. Anyone was free to purchase one of these watches for a period of approximately one month before the campaign ended.

So what is going on here? Seemingly, this person is cashing in on the FOMO being experienced by people who see it all over social media and may not have heard about it before, or people who decided not to get one, but now regret this decision and want to board the bandwagon. Why else would anyone pay just under 4x for a watch whose original value was debatable in the first place?

As Instagram’s favourite imbecile (@so.frech) so eloquently puts it, FOMO now has a tangible opportunity cost, measurable in hard currency. This is precisely the reason some people bought it in the first place too i.e. spend a somewhat negligible sum of money (in the context of affluent watch collectors, this is the price of a strap) and potentially make many multiples of your original ‘investment’ for doing nothing, while enjoying the chance to feed the inner beast, hungry for that ‘new watch alert’ feeling (and hashtag!).

So… FM is hyped, and maybe people bought it for the wrong reasons, and perhaps they won’t wear it much, or at all – that’s been covered already. What this particular post is about, is a broader perspective on the state of ‘collecting’, and this example just seems to highlight the issue, which is why I bothered mentioning it again.

How we collect

I was speaking to D (@doobooloo) after the original FM post about how we collect, and our behaviours with regards to monitoring our own exposure to influence through social media and fellow collectors. He explained how he has refined his own habits over time, such as keeping certain new pieces ‘private’ to enjoy for himself without seeking the social media validation to affirm his choices. This resonated with me, and I did this myself with the Breguet 3237 purchase; simply didn’t share it on social media for about 3-4 weeks – and it was a satisfying approach quite frankly. Contrast this with the opposite, where I live-streamed the Bulgari Octo purchase, and people are compelled to congratulate you and you feel the affirmation that comes with this sort of thing – leaves you wondering if you can be sure about how exactly YOU personally feel about the piece, independent of the external validation etc.

He also explained how he’s focused on his own discipline – buying watches which he truly, deeply loves – and with the mindset of never wanting to sell it. This helps to ignore the value ‘potential’, but it made us focus on how this is almost fuelling a new breed of collector; I will go into this later.

Outside of social media, I have found that my favourite pieces are ones I can wear easily, without recognition – mostly because this lowers the risk of theft. As certain watches attain hype-status, two things happen; Values rise, and recognition becomes more likely. When I got the Vacheron 4500V, I used to wear it openly, because I got it at a discount, and nobody cared about it, and therefore would-be thieves weren’t really on the lookout for it either. Now, 9 months later, it trades at 50% over retail and is vastly more recognisable; as a result, I wear it less frequently and always under a sleeve. This is truly unfortunate, but not unusual in most parts of the world, as @watchtaster has been highlighting in his recent stories.

Now, the truth is, there is a certain amount of validation you might feel when you see your watches appreciate in value to unthinkable heights; You might feel really smart for picking a winner – but this feeling is fleeting because you quickly realise it isn’t real money, and in order to realise a gain, you have to sell the watch. This is where buying watches which you don’t plan to sell, will keep you from attaching too much weight to the market value – regardless of which direction it goes.

That, however, is easier said than done – and brings us to the crux of the post. Before social media turned everyone into watch dealers, there was little to no difference between buying a luxury car, or buying a luxury watch. You went into the store, bought a watch, and it depreciated once you put it on. This was expected, and normal – you then proceeded to use it, enjoy it, and live your life. As a result, people with less disposable income didn’t give a damn about buying luxury watches because it was… well, a luxury they couldn’t afford.

Then, as the hype trends began, there was an opportunity for people who arguably couldn’t afford these watches, to buy them anyway. They could enjoy it for a period, and then sell them for the same money they paid, or even a small profit. This led to people not being able to fully wear and enjoy the watches, because condition DIRECTLY affected the value. This also created a new class of collector – people who never bought a watch expecting it to depreciate… arguably, any watch which DID depreciate, would never make it onto their radar. I say this is a new class of collector, because they started allocating money they couldn’t afford to lose, to watches they otherwise would never have bought (in a world with ‘normal’ luxury goods depreciation).

What I think this led to, was more and more brands tackling their product strategy with this exact phenomenon in mind. We saw this give rise to several Certified Pre-Owned (CPO) programmes, particularly with independents, but even bigger brands did it directly e.g. Richemont buying Watchfinder in 2018, which was arguably a pioneering move in the ‘big brand’ arena. This was defensive – protecting the secondary market value, and ensuring that a major criteria for the new age collector was met.

Moreover, there was also more talk about ‘limited editions’ – independents doing short batches never to be sold again… perhaps ensuring that the laws of supply and demand kicked in, and value was preserved by virtue of the low supply. The demand was arguably fuelled only by the new mentality of collectors… “if I don’t get this now, I will miss out, and then it will be priced higher on the secondary market” – yes, FOMO. Problem is, the releases came so thick and fast, that collectors were left scratching their heads about which bandwagon to jump on… something I talked about in another recent post about the evolution of watch collecting, and the decision fatigue that is setting in. Incidentally, this is another reason the FM launch was so clever – the price was so low that people almost had no decision to make… ‘no brainer’ as it were.

So what?

In a world where you have a wave of new collectors who see depreciation as the enemy, and brands trying to protect secondary value by limiting supply and somehow controlling prices – how does one navigate the journey?

The inherent problem with the game for almost all players, is that funds are finite. You can’t really afford a particular watch, but if you buy well today, you might be able to sell later for a higher price, and use these funds to buy what you really want. The problem with this logic is, the game has an infinite number of levels. No sooner than you reach that next level, you realise that the subsequent one is potentially within reach. This is precisely why watch collecting is often referred to by collectors as an incurable disease.

So @doobooloo proposes one solution – buy watches you like… but only ones you can actually afford, with money you can afford to lose; Do so with the intention that you will never ever sell it. This might mean you have to delay a purchase so you can save up, rather than selling a watch… Now, you will think that seems daft… since you might argue that on any given day, the watch you want is something you would rather own than the watch you have… but the key is to distinguish between seeing the watches as ‘tradable assets’ versus ‘personal heirlooms’.

If you don’t do it this way, you might be signing up to the squirrel wheel of buying your next watch with one eye on the subsequent watch after that… this unfortunately continues ad infinitem. What this also does is limit you to buying watches which are less likely to depreciate… vastly limiting your potential option pool, and likely increasing your wait times, since this is exactly the type of watch which the dealers and speculators want to buy also.

For brands, I think this presents an opportunity. I know countless collectors who love certain brands, and would buy their watches regardless of depreciation – their goal ought to be, to convert more collectors into brand lovers, rather than just watch buyers who pick a certain watch because they liked the look of that particular reference. The brands can take inspiration from the collecting world, to create more of the watches which people want, but also to focus on R&D and create things which collectors didn’t even know they wanted – Steve Jobs famously did this with the iPhone, and revolutionised an entire industry with the idea of no tactile keyboards on a mobile phone. Oftentimes collectors don’t really know what they want, and the boredom leads to them getting excited about insignificant changes like a dial colour variation – this sort of laziness with innovation can be overcome, but only if there is appetite to spend money on true innovation. I would argue that’s what Bulgari did with the Octo Finissimo range, and the 7 world records they hold are a testament to that innovation.

After re-reading this post I feel it is a bit long winded and waffly – sorry about that Let me summarise: either buy without the intention to sell, making value irrelevant … or buy with value in mind, but realise that road has no end and you will probably struggle to get what you want, when you want it. Finally for brands – try and win over the hearts of collectors rather than trying to preempt the desire for value retention; engage more to hear what they think they want, try and deliver this, but also focus on true innovation to try and bring them products they didn’t even know they wanted.

All thoughts and feedback are welcomed; I concede this wasn’t my best post 🙂

F

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