Luxury watch brands have always liked the concept of a waiting list and the exclusivity it often indicates to potential buyers.
But as lists become more common and grow in both length and duration, some in the industry have warned of growing frustration among consumers who have money in their pockets but are told to wait, wait, wait a bit. more for the desires of their hearts.
Various lists are said to stretch for years, even decades. Pre-owned website Watchmaster recently reported that Rolex’s listing for its GMT-Master II with a red and blue bezel, dubbed “Pepsi,” stretches 20 years.
Others, however, say the lists are being created by brands and retailers to create hype, increase demand and inflate perceptions of value.
“Producers have found that limiting supply, creating the impression of scarcity and waiting lists, improves brand integrity,” Jon Cox, head of Swiss equities at financial services company Kepler, wrote in an email. Cheuvreux. Brands have also been trying to control the gray market, where unauthorized dealers sell surplus watches at discounts because, he wrote, “with stable prices on the secondary market, this increases the value of the watch.”
A June listing thread on rolexforums.com described very different sales experiences. One member, posting as storm66, wrote that the wait for a “Pepsi” had been “4 years, 1 month, 2 weeks, and 1 day…”
But another, posting as Blanch, described going to an authorized dealer in Las Vegas and picking up another high-demand Rolex, the 36-millimeter Oyster Perpetual with a turquoise dial, without any delay. “Same day check-in and check-out,” the post said, adding that authorized dealers “say there is no stock. They do indeed have stock in the rear. If they didn’t, they wouldn’t have armed guards out front. It’s a matter of building a relationship.”
Does that mean some new customers will never get the watches they want, even if they can afford them and are willing to wait?
“Our retailers maintain wish lists primarily for loyal customers,” Adrian Lurshay, managing director of Patek Philippe’s UK subsidiary, wrote in an email, adding that, at least in Britain, “as demand for all watches of our collection has increased significantly, the wish lists now cover most of the references”.
Cox said such practices risk alienating customers. “In some cases, limiting supply and creating the impression of shortages and waiting lists has gone too far,” she said. “Waiting for years will encourage speculators rather than watch enthusiasts, who will ultimately look for another watch.”
Brands and retailers, however, denied that the situation is being manipulated. “There is no waiting list strategy at Omega,” said Raynald Aeschlimann, its president and chief executive officer, adding that the brand had about 10 references waiting list. “These lists are due to the incredible success of our iconic watches. My goal is to shorten the waiting list. We want everyone to be able to get a watch in no time.”
“It can be a frustration”
Waiting lists are nothing new. Demand from Rolex, Audemars Piguet and Patek Philippe has outstripped supply for years, producing the kind of clamor that made the Patek Nautilus Ref. 5711 a cult object, even after it was discontinued last year. But something has changed.
In addition to Omega, brands as diverse as Zenith, IWC, Cartier, Girard-Perregaux, and H. Moser & Cie now have waiting lists. And executives say that despite global concerns about inflation and rising costs of living, the lists aren’t getting any shorter.
“There are a lot more products on waiting lists now, and the waiting times for customers are longer,” said Brian Duffy, chief executive of watch and jewelery retailer group Watches of Switzerland, which has resorted to displaying what it is labeled as “display only”. Rolex collections in their windows. Visitors can try on the watches, but are limited to “registering interest” when it comes to shopping.
“It can be frustrating for consumers,” Duffy acknowledged.
Some have argued that the pandemic caused the imbalance between supply and demand for luxury Swiss watches. According to the Federation of the Swiss Watch Industry, exports plummeted to 13.8 million in 2020 (from 20.6 million units in 2019) after many brands closed their factories for a couple of months earlier that year. Last year, that number increased, but only to 15.7 million.
Mr. Duffy said he thinks something else contributed to the waiting list phenomenon: “I really think it’s an accident of conservatism. The Swiss mentality has created this category. There is no compromise in quality, resulting in an unwillingness to react in a short period of time. It’s not at all deliberate or manipulative.”
Analysts said luxury brands are smart to keep lists. “Being overwhelmed by demand is an indication that your brand is highly desirable, which is a very nice problem,” Luca Solca, a luxury analyst at research firm Sanford C. Bernstein, wrote in an email. “All good companies are careful not to make their most iconic products ubiquitous, because this would trivialize them and sink their appeal.”
And Wilhelm Schmid, CEO of high-end German watch brand A. Lange & Söhne, said waiting lists actually help regulate the market. (His company makes just 5,500 watches a year and has backorders for his Lange 1 and Odysseus models.)
“There’s really nothing wrong with waiting lists, other than people wanting to change clocks quickly,” he said. “Imagine if there were no waiting lists. If the clock goes to the first knocker, would that make people a lot happier? sure not Resale would dictate the market.”
The secondary market for watches has been booming. Prices are unregulated, creating a kind of Wild West universe where impatient consumers can buy rare or in-demand watches, even those still in production, paying many times more than retail.
For example, on Chrono24, a site specializing in pre-owned watch sales, examples of the green-dialed Patek Philippe Nautilus 5711 introduced last year with a retail price of just under $35,000, are listed for more than half a million. Dollars. (However, there are signs that the secondary market has been cooling in recent months, a change that some analysts linked to falling cryptocurrency values.)
Sky-high pricing is part of the culture of “switching” (buy retail and sell what the market supports), a practice that brands discourage. Julien Tornare, CEO of Zenith, said it had become increasingly necessary to blacklist customers who spin clocks for quick profits. “If it happens once, it’s usually someone who’s going to be blacklisted,” he said. “That’s the informal rule.”
The brands also exclude retailers that sell to flippers, a threat that can make businesses based on relationships with big-name brands wary of new and unknown customers. “We need to support our longtime customers, but it’s also extremely important to be able to create new ones,” said Mark Udell, owner of London Jewelers, an independent chain of luxury watch retailers in the United States. “So it’s critical that we get good data on the person looking for the watch.”
an instant world
With many customers still unaware that they may not be able to buy the watch at the retailer’s window, several sales representatives, though none of them would agree to be identified, said tense encounters with impatient customers have increased.
And Oliver Müller, founder of Swiss luxury consultancy LuxeConsult, wrote in an email: “Customers are frustrated and angry at brands they suspect of holding up supplies.”
Mr. Duffy said he has had to retrain staff members to work with promises instead of products. “One of our biggest goals is to give customers the confidence that they will get the product,” he said. “Exhibition collections help build that trust and keep customers from inflating the secondary market.”
Brands say they are aware of the problem for retailers. “Managing expectations is very difficult,” said Omega’s Mr. Aeschlimann. “We live in an instant world, and when people see a new product, they want it.”
A question routinely asked of the watch industry: Why not just increase production?
Brands said that is easier said than done. “It’s not that we don’t want to do business,” said Mr. Schmid of A. Lange & Söhne. “It is the hands that built these watches, and our capacity is restricted by the man-hours we have to work with. If we want to grow by 10 percent, that means we need to recruit 50 great people. And that will take five years.”
For brands new to waiting list management, the phenomenon has been a mixed blessing.
“This shows that we are doing a good job,” said Mr. Tornare of Zenith, which, for the first time, has waiting lists for some of the products it has introduced over the last 18 months.
“But there are limits,” he added. “After a certain waiting time, end customers can feel a kind of arrogance. We have to be careful as an industry.”
Mr. Tornare said he was having some success keeping the lead time for new parts like the Chronomaster Sport and Defy Skyline to around six months, noting, “I would never tell a customer they can’t buy our brand.”
And he said he was doing what he could to capitalize on the sudden popularity. “Global demand is more than triple what we can supply,” she said. “We are developing production and we should be able to grow 15 to 20 percent in each of the next few years.” He said that this year, production would rise to around 25,000 watches, an increase of nearly 20 percent from the 2021 total.
If there’s one thing most of the watch world agrees on, it’s that waiting lists aren’t going to go away.
“A moderation in demand would be a good thing,” said Mr. Duffy of the Swiss Watches Group. “But I don’t think the dynamics of the disparity in supply and demand will change, even in the event of an economic downturn. The industry is very well positioned and their product lasts forever.”
Mr. Udell of London Jewelers agreed. “The demand for some product is so much greater than the supply that even if it falls a little bit, it will still be well above what we can offer,” he said. “The harder it is to get something, the more people want it.”
But not everyone felt the spiraling demand and soaring prices would last. “At some point, there will be a severe market correction,” LuxeConsult’s Müller wrote. “But brands, big or small, that manage to balance keeping the market hungry without making customers too frustrated have a bright future ahead of them.”
Source: www.nytimes.com