In Watches, 2017 Was a Turning Point

In 2017, Donald J. Trump took office as the 45th president of the United States, the #MeToo movement coalesced and North Korea conducted its most powerful nuclear weapons test to date, deepening tensions with the West.

Watch industry experts say the year was also a turning point — in luxury timepiece sales.

“That was the exact moment when the secondary market starts to go wild,” Oliver R. Müller, founder of LuxeConsult, a watch consultancy based near Lausanne, Switzerland, said. “In 2017, you saw a huge acceleration of sales of new watches, which triggered the secondary market.”

Factors that fueled demand for luxury mechanical watches — especially key models from the big four brands of Rolex, Audemars Piguet, Patek Philippe and Richard Mille — included the growing influence of social media; the rise of internet dealers like the pre-owned specialist WatchBox; and the first widespread effects of the 2015 introduction of the Apple Watch.

When the smartwatch debuted, “there was a lot of buzz that sooner or later mechanical watches are doomed,” Paul Boutros, head of watches in the Americas division at the auction house Phillips, said. “Well, a year and a half later, we learn the Apple Watch has actually been good for sales. It got everyone wearing wristwatches.”

The splashiest call to action, however, was the October 2017 auction of Paul Newman’s Rolex Daytona at Phillips for $17.8 million in total. “You have a one-in-a-billion famous person, a super powerful brand name, a super popular model and a shockingly high price,” Mr. Boutros said. “That combination was so potent that it just exploded around the world and got many people talking about watches.”

Behind the scenes, the supply side was also changing. A number of local independent brands — including Ming and William Wood — were founded in 2017, reflecting the growing maturity of tech tools like Shopify, which allowed owners to sell their timepieces directly to consumers, William Rohr, founder of the independent brand Massena LAB, explained on a recent call.

Among established brands, 2017 marked a turning point in their approach to distribution. Tim Bender, owner of Fog City Vintage, a pre-owned dealer in San Mateo, Calif., said the 2016 introduction of the Rolex Daytona with a black ceramic bezel sparked so much demand — and subsequent interest on the secondary market — that it inspired Rolex to make “a more conscious effort” to better manage the way it allocated its most prized models to retailers. (Rolex did not reply to a request for comment.)

And at Compagnie Financière Richemont, owner of Cartier, IWC and nine other luxury watchmakers, an ambitious inventory buyback program, intended to remove excess watches from wholesale channels, concluded in 2017, and was deemed a success.

The Richemont program was indicative of a growing understanding among luxury watchmakers that they needed to tighten supplies of new watches if they hoped to improve their presence on the gray market, the industry’s term for digital sites that make unauthorized sales of genuine products. “People started to understand brands had no interest in increasing their production,” Mr. Müller said. “The equation for any luxury brand is scarcity on the market at all times.

“In 2017, you could still, at the beginning, buy most of the so-called ‘trophy’ or iconic watches at reasonable prices,” he added. “That was already a good sign for the value retention of watches: When you buy a watch from the main blue-chip brands, at least it doesn’t lose value. That was 2017. We move on and the market starts asking for more and more watches. Then comes the pandemic.”

After the first wave of lockdowns in 2020, watch lovers, bored at home and flush with stimulus cash, kick-started the most spectacular bull run in the industry’s history. With so many models unavailable at retail (where showcases had been stripped of merchandise), secondhand prices began to climb. At the peak of the market, in early 2022, key pieces were trading for five times their retail value.

The poster child of the supply-demand imbalance seeded in 2017 was undoubtedly the Tiffany Blue dial version of Patek’s highly coveted Ref. 5711 Nautilus, a 170-piece limited edition introduced in December 2021, each priced at $52,635. According to several dealers interviewed in March 2022, the steel model was worth $3 million in secondary channels.

Despite a market correction triggered by the Russian invasion of Ukraine and the crypto collapse last year — secondary prices have fallen by as much as 50 percent on so-called “hype” watches, including the Rolex Daytona — many industry experts said watches have fared better than stocks and Bitcoin have since 2017.

“The watch market has just shown it’s a lot more resilient than economic cycles,” Mr. Müller said. “I don’t know how it will behave long term, but recent history shows it’s an asset class resilient to changes.”