PARIS — As economies nosedive and stock markets crumble, major watch brands are hoping their most expensive collectable pieces will help cushion the financial blow.
Executives are counting on the top end to drive business, as the truly rich prove less affected by recession than middle-class buyers. The same is not expected for the $3,000 to $5,000 segment, which executives expect to suffer the most. Already signs of that segment’s ill health have started to accumulate.
LVMH Moët Hennessy Louis Vuitton said weak sales of Tag Heuer’s lower-end watches were responsible for a 2 percent like-for-like decline of timepiece sales in the third quarter. Hermès said its third-quarter watch sales declined 13 percent, which analysts said didn’t bode well for the rest of the Swiss industry.
“The above-$25,000 segment isn’t totally immune to what’s going on,” said Larry Boland, president of Piaget North America. “But it is much less affected. The upper end of the market is the most resilient in recessionary times.”
Larry Pettinelli, president of Patek Philippe USA, said, “Collectors are certainly scrutinizing their buying. However collectors continue to pursue and are willing to remain on waiting lists for complicated timepieces. Market fluctuations less affect individuals who can afford a higher-level timepiece.”
Thierry Oulevay, president of Jean Dunand, which creates one-of-a-kind watches starting at $400,000, said, “Like the art market at the top end, the business for exceptional watches is still strong, despite a real slowdown. Watch collectors are simply becoming more cautious, more patient, before investing in a timepiece of this nature.”
With the rise of the economy, the number of small niche brands catering to collectors proliferated. The likes of Richard Mille, F.P. Journe and Greubel Forsey profited from demand from the newly rich around the world. Yet these brands, because of their small production, are hardly representative of the health of the market as a whole.
Mille and Journe, two of the best-known names among collectors, produce only 1,500 pieces a year. Waiting lists for their products are as long as five years. Greubel Forsey, an even smaller player, produces a mere 80 pieces a year.
The ultralimited nature of the most expensive Swiss watches explains why executives, for the moment, are relatively serene in the face of the financial storm. Many houses continue to struggle to fill orders placed a couple of years ago and it takes years to even develop a new movement.
“When we launch a new movement it requires five to six years of investment,” said Angelo Bonati, chief executive officer of Panerai. “The market was running faster than the industry in the last five years. Swiss watch exports were growing at double digits. The industry was not able to keep up.”
“We’re still behind in production,” said Boland, who noted that several of the watches Piaget introduced earlier this year have yet been delivered. “For those of us who have been in the industry for such a long time, we didn’t expect the boom to last forever. What’s going on today may give us some breathing room to catch up.”
Even if watch collectors are still spending, executives have noticed some slowdown, especially in the U.S. and Europe. They expect collectors to become more demanding in their buying patterns. Some believe styles will become less showy, which would represent a departure from the blinged-out, oversize watches that were hot the last couple of years.
“The economic downturn and subsequent cleansing of the market is eliminating the demand for ‘trend’ pieces,” said Pettinelli of Patek. “We find that interest is returning to classic styles. Buyers are beginning to think long term, asking themselves: ‘Is this piece going to be relevant in 20 years?’”
Marcia Mazzocchi, president for the U.S. at A. Lange & Sohne, said, “There is an ever-increasing demand for challenging complications featuring truly innovative technical solutions. Collectors are looking for exclusivity, timepieces that are limited by definition or production capacity.”
Retailers have also noticed demand for rarity. Andrew J. Block, executive vice president of U.S. jeweler Tourneau, said the chain has noticed a “dramatic uptick” in vintage watch sales.
“My feeling is that many consumers are picking up on the watch heritage factor as an investment,” said Block. “We’re not just selling to collectors. All types of consumers have picked up on the value proposition, even though some units are selling for more than new. We’ve also sold some dramatic pieces to collectors that went well above the original selling price.”
Speculation has yet to cool entirely among the most covetable limited editions. Panerai’s PAM 203, a watch released in a run of 150 that sold for 17,000 euros originally, today sells for as much as $100,000, or 79,492 euros at current exchange, only a couple of years after its launch.
Executives believe that as money pools dry up, however, the speculation game will cool.
“It’s the real collectors that want to keep the pieces that will be left,” said Bonati. “Speculators won’t find clients [to turn the watches].”
The crisis is even being felt at auction.
“The market seems to have stopped growing but definitely not weakened for the most appreciated brands: Patek Philippe, Rolex, Breguet, Omega and Vacheron Constantin,” said Osvaldo Patrizzi, who runs the Antiquorum auction business in Geneva that specializes in rare watches. “Collectors are looking for high quality and condition. They are paying greater attention to quality and service.”
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye