Gray, White, Secondary: How The Watch Market Works

Gray, White, Secondary: How The Watch Market Works
Gray, White, Secondary: How The Watch Market Works

Video: Gray, White, Secondary: How The Watch Market Works

Video: The TRUTH About Grey Market Watch Dealers | Paul Thorpe is Wrong 2022, November
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If we start from the understanding that buying a good mechanical watch of a well-known Swiss, German, Japanese or other brand origin is a serious investment (albeit in your own good mood), then, as in the case of buying securities, you need to study the issue of price. It just so happened that watches with a price tag X are rarely sold for X money, much more often it is X minus Y, and often Y is a significant figure. The fact that the modern buyer of expensive watches does not want to pay the amount at the stated retail price is to blame for the gray market existing in parallel with the official one and the secondary market. In our country with a special climate, this is a synergistic option - secondary gray.

In the watch industry, the gray market is retail outlets (including online stores) where brand new watches are sold, but these stores are not brand-authorized retail locations. In the classic version, the authorized retail channel works according to the following scheme: the brand produces watches and sells them to official distributors around the world. The distributor then sells the watch to authorized retailers, who in turn sell to retail customers. In some cases, the distributor has its own retail network.

Gray retail has existed for many decades, but it was the development of the Internet that gave it an impetus so strong that large brands, previously denying the “gray influence” as a negative factor, a couple of years ago began to talk about it as one of the main threats to the watch industry. Moreover, no one acknowledged that this threat was largely the work of their own hands. After all, how do new watches (novelties and not yet used) get to gray dealers? Of course, from white dealers and from the manufacturers themselves. The gray side of the trade is almost the only chance for a brand or retailer to get rid of unsold collections from previous years or fresh, but in the long term, poorly sold models.

Photo: Chris Goodney / Bloomberg via Getty Images
Photo: Chris Goodney / Bloomberg via Getty Images

© Chris Goodney / Bloomberg via Getty Images

Turning to gray retail with an offer to buy out assortment in bulk at low prices created a volume of cash and freed up showcases for collections that needed to be sold at the moment. The practice of imposing a mandatory assortment on official retail outlets often led to the accumulation of unrealized positions at the seller, and in order to confirm the official status, it is required to purchase new items annually using the proceeds received. So the gray sellers received a decent assortment, which they offered with significant discounts to those who did not consider it shameful to buy a watch in a store on the street adjacent to the "central" street.

Until recently, the problem of the gray market was not so acute only because it was possible to compare the price at the official and the gray point only by visiting both (if you knew about its existence at all). Quick access to information on prices and offers via the Internet brought the conflict to a new level. Now the client in the official boutique, where they ask for, for example, 754 thousand rubles for watches of a well-known brand, quotes an offer that he found on the site where the same watch is offered for 536 thousand rubles, which is almost 30% cheaper. A retailer must try very hard not to lose a customer, because he has already developed his own idea of ​​a "fair" - more affordable - price.

Attempts to control the fate of watches that have left the ancestral home of the manufacture have been made recently. For example, Patek Philippe has drastically reduced its worldwide shipments of the most sought-after models to increase attention and revive demand; the Audemars Piguet brand has radically redefined its distribution system, breaking numerous licensing agreements and concentrating on sales in mono-brand boutiques.

Photo: John Keeble / Getty Images
Photo: John Keeble / Getty Images

© John Keeble / Getty Images

These steps, however, are aimed not only at containing the gray market for new product sales, but also to strengthen control over used models. In June of this year, the Richemont group first entered the "territory" of used luxury watches: the luxury concern acquired the British online store Watchfinder & Co, which has been operating in the secondary watch market for 15 years. And the manufacturers themselves (primarily small independent brands) decided to try themselves in the "secondary" business. The pioneer was François-Paul Journe, who developed a special program to buy back his discontinued models (in particular, Vagabondage 2010) from collectors for further resale through the official website. MB&F, Audemars Piguet, H. Moser & Cie. Followed suit, offering their customers the right service. One side,It is a direct buyout of used watches for subsequent maintenance, repair and resale through official channels, on the other hand, the sale of secondary collectible models from long-sold series to customers with an updated warranty, service, and sometimes a certificate of authenticity.

Photo: John Keeble / Getty Images
Photo: John Keeble / Getty Images

© John Keeble / Getty Images

So far, the turnover of the secondary watch market is more than seven times less than the new market - 5 billion Swiss francs against almost 40 billion. But the primary market stagnates and falls, while the secondary market is growing rapidly. This is facilitated by sales in the US, UK and Japan. It has long become customary among car owners to purchase or exchange an old car for a new one (with a surcharge), because such a scheme more than anything else supports the sale of new cars by official dealers. Obviously, this should become the norm in the watch trade as well.

What dangers await those who want to buy watches of expensive brands on the secondary market? Perhaps the same as when buying any expensive product that has passed through third parties. The origin is important. Seller reputation is a key factor, whether it's an online platform (like eBay) or a thrift store. By the way, eBay recently expanded its eBay Authenticate program. Now, in addition to the 100% authentic handbags of fashion brands, users are now offered a wide selection of popular watch models with the “tested” mark as a guarantee of purity of origin. Among them, Patek Philippe, Omega, Audemars Piguet, Breitling, Panerai and, of course, Rolex, which have visited someone's wrist, are the most popular watches in this online store. So there are already fewer counterfeits in the secondary market.>

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