watch market update

Fratello Talks: Watch Market Update — Summer 2024

Getting a feel for the facts and figures

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Welcome to this latest episode of the Fratello Talks podcast! This week, Nacho, RJ, and Daan have prepared a watch market update for you. We often like to circle back to this topic as things evolve and change. The guys go through the facts and figures (so you don’t have to) and summarize different trends and patterns, breaking it all down with their unique industry insights. We’ve all heard talk of a slump in the market, but is it actually the case? Are the speculative buyers backing out? And what does the current state of things mean for collectors and enthusiasts? All that and more in this week’s episode. But before answering those questions, it’s time for a wrist check!

Wrist check

It has happened again, and all three guys are wearing Omega watches. Daan has opted for his Speedy (ref. 310.30.42.50.01.001), which, for those who aren’t familiar with Omega reference numbers, is the latest version of the Moonwatch with a Hesalite crystal. He is currently using it to test out a Delugs Delcro strap. If you want to read his thoughts on these comfy and convenient straps, check out his article here.

If Thor has his hammer, then RJ’s weapon of choice is the mighty PloProf. It’s also his go-to summer watch. Today, he’s wearing it on the OEM rubber strap in bright orange, as he is supporting the Dutch football team, which, at the time of recording, is still participating in the 2024 European Cup. Three cheers for Oranje!

Finally, Nacho is wearing his Omega Seamaster (ref. 2254.50.00) from 2006. This classic dive watch is still a favorite and has now been swapped onto a NATO strap, making it ready for all kinds of summer activities. This particular dark green strap is a Five Eye NATO from Watches of Espionage.

Fratello Talks: Watch Market Update — Summer 2024

Never before has the watch market been as closely analyzed as today. You don’t have to look far to find all sorts of facts and figures. And you may not even have to look at all to find self-proclaimed experts preaching their predictions on the next hype watch to invest in on TikTok or YouTube shorts. However, we chose to follow a slightly more academic approach. We put RJ in charge of crunching the numbers and distilling some insights. In today’s episode, we discuss some of the recent happenings, shine a light on what we think of the current situation, and make some educated guesses about what the future will bring.

Tune in to the episode, and leave your thoughts and questions in the comments below. Tune in next week for a new episode of Fratello Talks!

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Fratello Talks: Watch Market Update — Summer 2024

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FateAmenableToChange says:

Jul 18, 2024 at 11:12

What I’m missing in this episode is greed. We’re not calling out downright greed. Take Richemont. Their EBIDTA is through the roof, over the last four years. What 2024 will bring, I do not know, but this is just a large corporation that raised prices across the board because they cater to a group of richer luxury buyers that will make money no matter what the economy does.

This price raising was done because shareholders demanded it, and it’s a typical corporate spreadsheet move. Quite frankly, if you take a watch like the JLC Reverso, which jumped up from 7000 Euros in 2021 to now 11.500 for exactly the same watch. It’s far above and beyond the inflation numbers, and they didn’t do anything about the spec or build. So it’s exactly what it is: A shareholder value optimising tactic that increases EBIDTA in the short term.

Let me close by saying that you go to the wrong watch get togethers. There’s a good amount of folks on the Dutch forum that will come with the weird and the wonderful. Anything from GS to Kurono to Ebel, odd Eterna’s, funky 1940s chronographs and all of that.

Reply
1. Richard says:
  
  Jul 28, 2024 at 02:19
  
  These price increases are having an effect – it’s driving consumers away from JLC. I’m a member of watch enthusiast groups in Detroit and NYC, and among the 100+ members I see on a regular basis, none have purchased JLCs, and none have plans to do so. Many of these members are in their 30s, with no kids, no mortgage and tons of disposable income. Yet they feel like they’re priced out because they know precisely how much those watches cost just 18 months ago.
  
  In the last 12 months, I’ve also had SAs candidly tell me that they are struggling to sell JLCs at retail.
  
  My solution? I do all of my shopping on C24.
  
  Reply
Serious_Panther says:

Jul 18, 2024 at 11:16

“spreadsheet people”, haha. Well put.

Reply
VC
Victor777 says:

Jul 18, 2024 at 15:46

I think the industry is still searching for a bottom, and the recently announced Q2 results by LVMH and Richemont caused their stock prices to drop dramatically. Rolex buyers no longer beat the S&P500, and that’s a good thing. The dynamics are changing, so Fratelli can start bargain hunting, but let’s accept that it’s not us who really move the needle. The low end is decimated by hommage brands and a Cambrian explosion of microbrands that offer tremendous value for young buyers entering the space. Entry-level luxury with mid-market prices is taking the hardest hit, and I hear of inventory glut and extended summer shutdowns throughout the supply chain. What brands should worry about is that younger generations and even boomers are now more interested in experiential stuff and Instagramable moments rather than material possessions. I work mainly with tech companies where young people have maximum purchasing power, yet they’re perfectly happy with their smartwatches. I can see an economic slowdown (very likely) further widening the poor/rich gap and the potential for consolidation, and M&A. For example, Arnault took a non-trivial personal stake in Richemont, and the rumor mill is going crazy around the apparent lack of succession planning chez Richemont. The high horology segment will continue to shrug this off, but the mid to high-end bracket is where I see further carnage. It’s not schadenfreude, but to some extent, I’d like to see the McKinsey consultants kicked out and more funds allocated to product development and innovation. Interesting times, indeed, and in addition to available data you should also take the pulse on Reddit. The various subs, by brand, have the highest level of relevant user engagement of all media channels. I say relevant because those are people who actually buy/own the product, and that’s where I see a significant drop in interest in “special” editions and new releases. I will be speaking at a major crypto event in August, and I’ll be doing a lot of wrist-checking. If crypto bros stop buying bling, that will be another important leading indicator to add to the other metrics.
Have an incredibly average summer! Oh, and please give Daan a coffee next time ;-)))))

Reply
1. SnoopysMK40 says:
  
  Jul 18, 2024 at 17:23
  
  Couldn’t agree more. Well said, especially regarding the “McKinsey” types, who are equally out of place in this market as they (should be) in health care and other segments where this greed only leads to worse outcomes.
  
  Reply
  1. VC
    Victor777 says:
    
    Jul 18, 2024 at 18:57
    
    Thanks! Of course, my mini-rant applies to other verticals, and I’ve experienced a couple of downsizings at the hands of Private Equity. They have the balls to call it right-sizing! Nothing is sacred nowadays, but at least in this domain, we still have the power to “vote” with our wallets.
    
    Reply
2. Richard says:
  
  Jul 20, 2024 at 04:05
  
  I think brands need to worry about where they will find the next generation of watch enthusiasts. And I mean those younger than 25. Most of the young adults and kids I know (maybe all) either use their phone to tell time, or have been raised with an Apple Watch attached to their arm. How many of those are suddenly going to decide they like mechanical watches?
  
  Sure there will always be folks in their 30s, 40s and beyond who love mechanical watches like we do, but I see the brands having to sell to a declining population of potential buyers. I’ve never visited Asia, so maybe things are different there?
  
  Reply
AK
AlexK says:

Jul 18, 2024 at 17:00

Price is what you pay, value is what you get.

If a product is over subscribed, it’s price rises. Vendors rising prices not accepted by consumers would create gluts and discounting. Seems customers are willing to pay up. Secondary market prices above primary indicate some watches are not priced high enough.

Reply
CM
Tchadrainwater says:

Jul 19, 2024 at 07:18

These news make me soooooooooooo happy, the more decimation the better, the prices hike the AD games have to be Karma coming back. I love it.

Reply
Luís says:

Jul 19, 2024 at 19:07

Another great episode. Thank you.

Reply

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