Surging The Price Of Luxury Watches: Dubai, United Arab Emirates – The recent pandemic outbreak has made substantial changes in market patterns worldwide in a negative light. Among all of them, the luxury watch market was the one highly expected to crash. Close to the speculation, the luxury watch market did witness an initial dip in sales around the early months of the pandemic, in March 2020. However, the consequent lockdown announcements in different parts of the world led to the formation of an exciting demand pattern that led to an unforeseen surge in the price of luxury watches.
Commenting on this sudden price surge, Jay Barker, founder & manager of Cagau, a leading luxury watch customisation firm in Dubai, said, “During the outbreak of Covid and consequent lockdowns, not just the demand for luxury watches but luxury goods in general increased rapidly. Many people also started putting money out of their banks into other assets, especially those they can enjoy and wear and those that can grow in value- like luxury watches. So it’s of no doubt that the surge in luxury watch prices amidst the pandemic resulted predominantly because of the impacts of lockdown savings on the demand and supply curves of the luxury watch market.”
Barker explained that in normal market conditions, the supply of luxury watches, especially from famous brands like Rolex, Patek Philippe, and Audemars Piguet, are controlled by families and not investors. These brands have been maintaining this limited supply pattern for more than a century, as they perform on a super long-term view that values brand reputation higher than short-term profits. Even under normal and healthy market conditions, for example, pre-pandemic market conditions, the demand for luxury watches has consistently surpassed the supply- maintaining a shortage of supply in the market. The high prices at which luxury watches were sold before the pandemic was said to be under this perfectly healthy, limited supply market condition.
He continued, “When the pandemic shock was settling in along with lockdown announcements in different parts of the world, factories & retail premises were forced to shut down, imports & exports were banned, and the person-hours spent on luxury watchmaking reduced. This has contributed to the fact that not many pieces from these brands were manufactured during the lockdown, thereby surging the demand way higher than it normally would be in a healthy market condition. As a result, the already limited supply of luxury watches narrowed further, creating a noticeable supply shortage in the luxury watch market.”
In parallel to these lockdown patterns, some experts believe that many people started saving money that they otherwise would spend on socialising at luxury dinners, parties, and outings. Similarly, high-income earners who have a strong appetite for spending abroad on vacations, travelling, and other expensive experiences had to cut down their plans because of the consequent lockdowns. As a result, people in the pandemic-stricken world had plenty of accumulated savings, naturally making luxury watches a feasible choice to spend them on, increasing their demand. But, as the supply in the pandemic-induced luxury watch market narrowed further than it used to under healthy limited supply conditions, there was a substantial excess demand in the market- inevitably surging the prices of luxury watches up until now.
Slightly deviating from these views, Barker believes some new lockdown habits to be one of the main factors contributing to this spending spree. He said, “Obviously, with the pandemic, people were forced to stay home – with no option left other than browsing the web all day. This has made people educate themselves and learn a lot especially using platforms like Youtube. As a result, people during the lockdown increased their exposure to things like asset value perception of luxury watches and how luxury watches act as an investment, thereby naturally directing them to spend their savings on luxury watches.”
During the lockdown and the mid-pandemic phases in general, the pre-owned market witnessed a significant demand and price surge for soon-to-be-retired luxury watch models and limited editions. Especially timepieces like Audemars Piguet Royal Oak Jumbo Ref. 15202ST, Patek Philippe Nautilus Ref. 5711, and the Rolex Explorer II 216570 were tagged at a higher rate in the pre-owned market than they were bought. When basing this incident, Barker’s viewpoint on people getting more educated about luxury timepieces and their value perceptions during the lockdown turns out to be true. And this could very well be a reason why people started spending their savings on luxury pieces, which in turn surged their demands and prices.
“The increasing online awareness and self-learning during lockdown are also one of the reasons why we experienced a spike in our online sales, despite the reducing foot traffic to our stores. We believe that the majority of the online sales we got during the mid-pandemic stage were organically from new customers who recently got educated on the luxury market segment and how luxury watches act as investments.” Barker added.
He also comprehends that during the lockdown, many people have also learned new money-making skills, which would have increased their disposal income, thereby contributing to a surge in demand for luxury watches and their relative prices.
In line with this market evolution, it is also suspected that the impact of lockdown savings surging the prices of luxury watches had an influence on the widespread knowledge of luxury watch customisation. It’s believed that the luxury watch customisation market was near trending when the pandemic outbreak in early 2020. As a result, excited customers who wanted to own a bespoke luxury timepiece used their savings. In addition, owning something unique that reflects one’s persona and not settling for a general piece also made it easier for people to choose luxury watches as an ideal means of spending their lockdown savings, thereby surging the demand and prices of luxury watches. However, Barker doesn’t credit it to have much of an impact on Cagau’s sales as they experienced consistent sales even during the early stages of the pandemic before people would have accumulated lockdown savings.
For more information about Cagau, please visit- https://cagau.com/