Spurred by growing competition from a new, more trusted breed of online retailer, however, the Swiss houses have reached an inflection point in their relationship with used timepieces: regulate their distribution and sale or lose out to third-party dealers.
Credit Yana Paskova for The New York Times
“We have a multibillion-dollar market of pre-owned that is the opposite of under control,” said Aurel Bacs, the auctioneer who leads Phillips’ watch department through his consulting firm, Bacs & Russo.
He cited the example of someone buying a 20-year-old watch by Vacheron Constantin or Patek Philippe “from the internet.”
“The brands don’t stand behind it because it hasn’t gone through their workshops, but they can’t be happy about it,” Mr. Bacs said. “Every watch that doesn’t satisfy the owner doesn’t reflect well on their brand.”
More important, industry experts say that every time a consumer sells or trades a fine watch — a phenomenon that happens with increasing regularity as a result of the information and price transparency now available online — the wearer’s next watch purchase is more likely to benefit the dealer that facilitated the transaction rather than the brand that manufactured the timepiece.
“If you can create a certified secondary market then it’s going to change a lot of the dynamic in the gray market,” said Edouard Meylan, chief executive of the boutique Swiss brand H. Moser & Cie, which plans to start selling certified pre-owned models on its website this year. “Our responsibility is to ensure the long-term value of the products we sell.”
Jean-Claude Biver, president of the LVMH Watch Division and chief executive of Tag Heuer, said that the topic of pre-owned sales had preoccupied him over the past year, but that the brand’s first priority must be mastering e-commerce because the pre-owned business “will be run mostly through online.”
“The secondhand market will be the next move,” he said, even as he acknowledged that the interest in pre-owned timepieces is still largely an American phenomenon. “I’m 100 percent sure we will do it. But I cannot tell you when.”
The German brand A. Lange & Söhne has been working on the secondhand sale issue for two and a half years, said its chief executive, Wilhelm Schmid. “I know in depth the challenges,” added Mr. Schmid, a former BMW executive. “Cash flow, markups, residual value, platforms to resell it. And on top of that you have to run your normal business. We are prepared to jump on it if necessary. But at the moment, I’d clearly label this as important but not urgent.”
The lack of urgency owes something to the fact that the secondhand market appears to be working reasonably well without the brands’ explicit involvement. Thanks to the proliferation of trustworthy websites specializing in pre-owned merchandise — including “never worn” models that come directly from brands’ overstock — people already have outlets to buy and sell used timepieces.
In November, for example, there was the debut of WatchBox, a global e-commerce platform for buying, selling and trading pre-owned luxury watches that is backed by CMIA Capital Partners, a Singapore-based private equity firm.
Equipped with sophisticated pricing algorithms and teams of in-house watchmakers, these e-tailers say it is only a matter of time before brands recognize the sites as allies in the pre-owned watch business.
“Take the car industry about 15 years ago,” said Tirath Kamdar, who founded the pre-owned watch and jewelry site TrueFacet in 2014 with Chris Chan. “Back in the day, you’d go to these little used car lots and you brought your own mechanic. And it was a hassle. This is what we face now as you go up and down New York’s 47th Street, or eBay.”
With the help of Andrew Block, a former Tourneau executive who was named president of TrueFacet in June, Mr. Kamdar is working hard to convince Swiss brands that the secondary market will not cannibalize new watch sales. Instead, he said, it will grow their brands’ perceived value, especially among recycling-obsessed millennials.
“The European brands don’t completely get the U.S. consumer,” Mr. Kamdar said. “They have been dependent on offline retail, and offline retail is shutting down at a great pace. The younger generation who has money — they’re not looking to shop the same way their grandparents did. They’re looking to buy pre-owned, not new.”
The Geneva-based independent watchmaker François-Paul Journe came to the same conclusion in November 2016, when he announced the F.P. Journe Patrimoine service, allowing buyers to purchase timepieces from collections that are no longer in production. The brand restores the watches as new and sells them again, complete with a three-year warranty.
The British watchmaker Bremont experimented with a similar concept in May, when it teamed with the pre-owned watch e-tailer Crown & Caliber for what they called a first-of-its-kind pilot program. For a month, consumers could use the website to exchange any of their timepieces, regardless of brand, for cash or for a store credit at the Bremont boutique in New York.
“It came about because a lot of people are trading our limited editions,” said Giles English, co-founder of Bremont. “Ideally, they’d like to go into our boutique and buy a secondhand watch. So we talked to Crown & Caliber about formalizing something.”
Although the trial was a success, Mr. English said, it was just a test as the obstacles to a permanent secondhand business are considerable. “Everyone is walking on eggshells because they don’t want to upset their retail chain,” he said.
An even thornier issue, especially for brands guilty of overproducing inventory, is resolving their watches’ poor performance in secondary channels.
As Mr. Bacs said, “The absolute bitter truth is that some watches are selling above retail and some are selling at a fraction of retail — maybe 20 percent of the retail price — after five years. No manufacturer wants to tell that to its owner.
“The fact that for 20 years we have all talked about it and nobody has yet found a solution means it’s tricky,” he said of the secondary market. “If a brand gets it right in today’s market, meaning they don’t lose money, they have revolutionized the landscape.”