We are all living through an unprecedented crisis. The COVID-19 pandemic and the extreme measures taken by most governments to slow its spread are affecting us all, in some cases with tragic results. We’re adjusting to this new way of living and conducting business as best we can, but there have been – and will continue to be – far-reaching impacts resulting from these lockdown measures. However, this horrible situation is also bringing out the best in us. People are working together to help those in need. They’re finding new ways to communicate and socialize, and they suddenly have the opportunity to spend more time with their families, not to mention get up and exercise.
Many are in the fortunate position of having secure employment and the ability to work from home without too much interruption. Sadly, this is not the case for everyone. For example, we know this is a particularly challenging time for our dealers around the world. The current restrictions mean they have had to close their brick-and-mortar stores until further notice and are now more dependent on online business than ever before. That being the case, Chrono24 is doing everything we can to support them through this crisis. We are reducing fees and offering them special opportunities so they can continue offering our visitors the chance to purchase great watches.
At the same time, we’re being inundated with questions about the state of the market, the impact this is having on supply and pricing, and what things might look like after this awful period in our history passes. We’ve put together the 5 most commonly asked questions below, along with answers based on the data we have been able to extract from our marketplace so far. You can also find a letter from our CEO, Tim Stracke, along with some FAQs about current watch sales on Chrono24, here.
There are certainly more important things to think about than luxury watches at times like these. That said, we could all do with a little distraction, something to help us pass the time while we stay inside. What could be better than sharing in a passion that offers a way to connect with our fellow human beings? Hopefully you find the following information insightful and helpful. And, if you’re able support one of the thousands of small businesses that list their watches on Chrono24, please do so. They really need it right now.
1. What affect is the crisis having on the watch market?
This is a broad question with far-reaching implications. The big picture is that things are tough, just like they are for most industries. All the major trade shows have been canceled or postponed. Most brick-and-mortar retailers around the world have shut temporarily, from major groups like Watches of Switzerland and Wempe to single-store family operations. Some of the smaller players do not have the infrastructure in place to effectively sell watches through their own websites, and this is having a knock-on effect on their sales. New watch launches have also been significantly curtailed. As a result, the unconfirmed reports we have from the luxury industry suggest that sales have dropped by 80-100% for retailers.
By contrast, weekly sales on the Chrono24 platform are down 15–20% compared to before COVID-19. However, there are also early signs of recovery as people begin to come to terms with our new reality. Daily sessions – defined as a visit to one of Chrono24’s local sites or whenever a user opens the Chrono24 app – are starting to creep back up. More importantly, daily checkouts – defined as the start of a transaction on our platform – are recovering, suggesting that some degree of confidence is returning to the market.
One unexpected benefit emerging from these expansive lockdowns is that those who have secure employment are now finding themselves with greater disposable income. This is because they are not having to pay (expensive) school or childcare fees, nor are they going out to gyms, clubs, or fancy dinners – or really anywhere that requires you to spend a lot of money. Likewise, they’re unable carry out expensive renovations on their homes or purchase new property. The only place, really, to give your credit card a workout is online. As things settle into some sort of routine and people get more comfortable with this new way of life (however temporary it may be), we are cautiously optimistic that online sales for our dealers will slowly but surely start to increase.
2. What is happening with prices?
Prices have been somewhat unpredictable so far. What we can say is that we are seeing more price increases and decreases than before the crisis began. Requests for watches under $10,000 have been hit harder than watches in higher price segments. This is being driven by multiple factors, some of which are related and some of which are not. A number of Swiss watch manufacturers have implemented temporary pauses on production, and it is likely that this will have a domino effect down the supply chain later on. However, it’s not yet clear what they will be, given that most authorized boutiques have closed their physical locations but are still open for trade online, and in some cases for individual in-store appointments. As such, we could run into issues with stock shortages or surpluses, depending on how buyers behave during this time.
Given the data available on Chrono24, as well as the unconfirmed reports coming out of the luxury watch industry, we know that the primary market has seen a significant drop in sales activity during this period. This means inventory won’t be turning over as quickly as usual. But again, it’s too early to say how long this slump will last, as recovery rates seem to vary by country. Another factor affecting prices is the individual circumstances of our dealers. As with any industry, some businesses are in stronger positions than others and can afford to ride out the storm without resorting to price reductions. Likewise, there will be some natural price adjustments based on revised demand.
Prices for iconic models that were in high demand pre-coronavirus, such as the Rolex Pepsi and the Patek Philippe Nautilus, have remained steady. This is likely to continue, particularly if there are concerns that new supply of these key models to the market will be further constrained by manufacturer shutdowns. Those who have the available funds might also see this as an opportunity to acquire their long-coveted grail watch. We will be keeping track of this and update you accordingly in the future.
3. What impact has this had on listings on Chrono24?
Our data indicates that the number of listings on Chrono24 remains unaffected by the coronavirus thus far. We don’t expect this to change. In fact, if anything, we anticipate the number of listings will increase as more dealers turn to our online platform to sell their watches.
4. What influence are closed borders having on sales?
Our current data shows that the coronavirus is not having an impact on cross-border transactions. That being said, we cannot comment as to whether any shipments entering certain countries are subject to greater scrutiny due to quarantine measures. However, the anecdotal evidence suggests that both buyers and sellers are still comfortable doing business abroad. Our customer service team is working hard to ensure a smooth experience for both sellers and buyers.
5. Where is the industry headed?
Let’s be clear: Although we are seeing promising early signs of recovery on Chrono24 (particularly in those countries where the population feels the authorities are taking the right steps to get the outbreak under control), there will be widespread impacts on the industry as a result of this crisis. Global transaction volumes will likely remain down in the short term. Those companies in a better place to ride out a prolonged drought in sales will take the opportunity to acquire their less fortunate competitors once this is over, while other companies will simply have to shut down permanently.
However, we believe that the key shift will be toward online transactions. Our CEO, Tim Stracke, explained how we believe this next wave of innovation will unfold in a recent interview with WatchPro:
“…the digitization of an entire population has never occurred as fast as it has in the last 3 weeks. 50% of all students globally are studying at home, many of them using online communication. And a significant portion of the global workforce is working from home using video calls and cloud solutions. The experience has been very promising not only for Chrono24 but also for many other businesses. While stores are closed, people are continuing to shop online. Buying and selling online has become the new norm for how watches and other goods are traded. This may sound harsh, but the coronavirus crisis will even speed up the process of online retail replacing traditional retail. All of this will have a lasting effect on the society, and most of it for the better.”
We are still in a period of great uncertainty. The only thing we can be sure of is change itself. So, take care of yourself and your loved ones, and ride out this crisis as best you can. We will continue to update this article over the coming weeks as any relevant information or trends come to light.