A Study On Secondary Watch Market Performance And Rise Of Certified Pre-Owned

It’s uncommon for anyone or anything other than Benjamin Button to get better with age, both in terms of desirability and sheer adorableness. But this delectable anomaly has a parallel in the watch market where for years now, pre-owned Rolex timepieces have often outstripped their retail counterparts in market prices. This is particularly due to the high demand and relatively limited supply on the retail forefront. By avoiding long waiting lists notorious with the firsthand space, and getting hands on authentic pieces with minimal-wear condition, buyers are fueling an exceptional growth for the secondary watch sector. This market is projected to be the fastest-growing segment of the industry, reaching $29 to $32 billion in sales by 2025, as per a survey by the Boston Consulting Group.

While only a few brands garner value appreciation on the secondary forefront, the essence of better value for money and the so-called “unobtanium” models becoming obtainable, has theoretically shifted the scales in favor of the pre-owned. It’s the reason why we seldom come across the word ‘used’ in the pre-owned market space, where every listing carries a higher regard as a commodity among collector communities.

In a bid to control a significant share of the impressive total transactional value of the secondary watch segment, brands are embracing the trend of making certified pre-owned examples available to buyers via a selection of authorized dealers. These examples are then designated as “CPO” or certified pre-owned.

While we’ve sort of highlighted the ‘why’ of this nuanced establishment of interest for the resale space, we’ll delve deeper into the principal drivers of this trend and what’s in it for the collectors. But first, we understand the market and fascination for pre-owned.

Why Pre-Loved is Loved?

Jonathan Swift, the writer best known for Gulliver's Travels, once famously quoted, “everything old is new again.” Today, we not only rediscover the joy of the old, but the heightened significance and purpose they assume in our contemporary lives. Given the fact that almost 95% of watches are no longer in production, seeking the rare and special pieces from the past makes the adage resonate profoundly with watch collecting trends. Here, for the past few years, the secondary market has recorded a CAGR of +9% (estimated for 2022-2026), this is 3% faster than the firsthand segment. Also impressively, of the $75 Billion overall luxury watches market, more than 30% is accounted for by pre-owned.

Fueled by the free flow of online information, authenticated by reliable services and populated by informed buyers and established sellers, today's pre-owned watches market operates with unprecedented transparency. This traditionally niche segment of the luxury watch market, once confined to auction houses and a select few dealers, has experienced a remarkable shift, becoming increasingly mainstream, with savings to be made.

On his thoughts about the growth and significance of pre-owned, Amol Nayak (@the_mole), a well-established collector with over 25 years in the know-how beautifully remarked, “Pre-owned allows you get into a higher echelon of exclusive watches, which at retail are inaccessible. The ability to purchase the watch without breaking the bank is the true prestige of collecting vintage or pre-owned. With a lot of stock floating around, the depth of the secondary market allows you to get all watches in all types of conditions and in diverse price categories.”

He further adds, “There’s a growing clarity with dealers as well, who share whether the watch is worn or unworn, polished or unpolished. Everything is very much transparent. As there’s more comfort in authenticity, quality as well as condition, with 20-30% savings in target, the pre-owned sector is rapidly growing.” Also, “Manufacturers have to be able to differentiate between older and newer models. For brands where the product evolution is subtle, such as Rolex or IWC, getting into pre-owned is a sensible choice. You not only avail a heavy discount, but get a watch that at every level feels similar to the offerings from a modern catalog.” The elevated pricing for the latter is also a catalyst for the popularity of pre-owned, “For mass market penetration, brands must price their products as commodities and not like grail entities. People buying pre-owned cherish better value on all fronts.”

Of course, among the principal drivers is the growing volume of online sales, which have already surpassed traditional auction and store sales. As projected, the online sales will account for almost 60% of the total second-hand luxury watch transactions by 2026. In a talk with The Hour Markers, Gopal Asthana, CEO of Tata CliQ on launch of its pre-owned online venture ReLoved expressed the following about the role of e-commerce, “The pre-owned category in India has witnessed a significant surge in popularity and acceptance. There’s been an increase in digital adoption among people who now understand the convenience and accessibility offered by e-commerce, as well as the safety and ease of returning products, which has encouraged people to switch to online platforms to shop.”
 

While the pandemic-induced surge in second-hand luxury watch sales peaked in the spring of 2022, the market persists in a state of strength. Compared to pre-COVID levels, prices remain significantly higher. Also, as investors seek alternative assets to diversify portfolios, luxury watches offer a compelling proposition: strong demand, consistent price appreciation as observed over the past decade, and a reputation for stability during market downturns. With the added appeal of ‘value’ in terms of landing significant pieces, the rewards of collecting pre-owned remain multi-faceted.

Brands Integrating with The Secondary Market: The Rise of Certified Pre-Owned

No longer is the secondary market, a foe for prominent industry players. The total transactional value of this segment is impossible to ignore. Brands are exploring integrated strategies that leverage the second-hand market's potential to drive sales and reinforce the primary market's brand reputation. With trust as the founding asset in driving comfort in pre-owned authenticity and quality, nearly 70% of all pre-owned consumers would prefer to purchase second-hand directly from the brands or brand-appointed channels. Amol seconds it by expressing, “There is comfort in buying Rolex from Rolex! If the pricing is justified, go for it.”

In this bid, prominent brands have embraced the trend of certified pre-owned. A CPO program allows a brand to make available for purchase pre-owned examples of its products with added value for the pre-owned watch buyers. This value lies in brand-approved authentication of the pieces and comprehensive warranty-coverage. No program created more buzz in the industry than when Rolex announced their CPO program in December 2022. While there’s the aspect of significant market capital, as already discussed above, and that receives maximum coverage, for Rolex’s CPO program, there’s another aspect of it. For Rolex, there have been far too many years that customers have been sent out the dealer’s door empty handed. The problem with this is that they could sell them a watch which Rolex and the dealer could make money out of, but they aren’t!

While waitlists maintain exclusivity, they also drive buyer frustration forcing them to opt for rival brands or explore pre-owned. As this prospect is hurting the dealers and the brand to some extent, CPO provides a fix. This offers authorized dealers an alternative against buyers leaving the store empty handed. While they can’t offer the new model, they now can sell a Rolex-certified pre-owned example of the same, thus enhancing experiences, although marginally pricier than regular grey market offerings. Mohammed Abdulmagied Seddiqi, CEO of Ahmed Seddiqi & Sons remarked the following, “This (Rolex CPO) not only enhances our overall offering but also creates an exciting new platform for watch enthusiasts to pursue their passion for exceptional timepieces.”

Moreover, there’s value involved and the added benefit of authenticity, accompanied by an international two-year guarantee. There’s also the advantage of resale back to the program, and all this allows buyers to stay in network with the dealer. It’s like having a Rolex-certified pre-owned fill your wrists until you get an allocation for the brand-new example at list price. Such a relief, or not?

Well, there’re debatable prospects.

Rolex can and will service any Rolex model. This comes with a check of its authenticity, quality and expert servicing. With the CPO program, the only difference is the white-tag, the booklet and a box. So, is the added premium of CPO worth it? That’s something to explore and investigate later.

CPO is fundamentally appealing to those who prioritize convenience and perceived value. The perception of “being better” is often reinforced by the brand's certification process and is a significant driver of consumer choice. In the larger context of the watch industry, many prominent brands have launched their in-house certified pre-owned programs influenced by the second-hand market’s total value.

F.P. Journe launched its CPO program “Patrimoine” in 2016, Urwerk has an official CPO program operational since 2019 and Cartier too has a CPO program which relies on collaborations with third-party partners. MB&F has its CPO program since 2018 and Richard Mille too has been operating its own in-house pre-owned certification program since 2015. Audemars Piguet is in the test phase of its secondary market program and Vacheron Constantin has very recently joined the ever-growing list of brands with CPO programs. Meanwhile, Zenith and Longines also operate certified-pre-owned programs.

Jaeger-LeCoultre announced “The Collectibles” program in 2023 through which they curate a collection of prominent vintage pieces, authenticated and restored in-house. Large-scale retailers like Bucherer too have started their own CPO program where they curate a wide selection of brands.

Now comes the case of non-existence of certified-pre owned programs for many brands, prominent being Omega and IWC. Having a CPO program testifies the brand’s confidence in the quality of its products. Not having a brand-approved CPO program can negatively impact the perfection of quality or service for such manufacturers. Going forward, this could be a driver for integration of more brands into the realm of pre-owned by development of in-house CPO programs.

To conclude

Well, there’s a perpetual demand for pre-owned watches India and globally. Thanks to the spike in desirability as well as pricing of first-hand volumes and owing to the inherent production restriction for the same, the demand and supply ends of the scale are remarkably imbalanced. Hence, we are witnessing a burgeoning growth of the secondary segment of the watch market. The nuanced interest of key industry players in the pre-owned market imbues an element of sophistication into a traditionally unorganized sector. How the CPO programs will impact collector experiences as well as the secondary segment pricing over a long-term, is something that warrants close attention.