Luxury Timepieces in the US

2021 DEVELOPMENTS

Luxury timepieces begins recovery, but pandemic continues to have a negative impact

Luxury timepieces saw its sharpest current value decline in recent history in 2020, which was a result of efforts to mitigate the spread of COVID-19, including travel restrictions, store closures, and other limitations on in-store shopping. Both men’s and women’s luxury timepieces rebounded to growth in 2021.

Lack of need amidst increased time spent at home continues to limit sales

Further hampering sales of luxury timepieces throughout 2020 and much of 2021 was a lack of consumer need. This was not only during lockdowns and quarantines, but throughout the rest of these years, as consumers continued to spend significantly more time at home than in typical years.

Continued travel restrictions lead top players to court tourists in their home markets

In addition to store closures and changing consumer priorities, luxury timepieces brands, including the 2020 category leader Rolex, which has a limited presence on e-commerce, were especially challenged by both domestic and international travel restrictions, which prevented many of their key customers from purchasing luxury timepieces in stores in major US cities. Although most domestic travel restrictions were eased in the first half of 2021 alongside the rollout of COVID-19 vaccines, restrictions barring many foreign nationals from entering the US, which remained in place until November 2021, prevented many potential purchasers of luxury timepieces from buying products in the US throughout the majority of 2021.

PROSPECTS AND OPPORTUNITIES

Value sales recovery to come before volume, amidst rising unit prices

Driven by renewed interest in classic designs, efforts by leading brands to expand their advertising and distribution presence in the US, and the ability of luxury timepieces to appreciate in value, thus making them an investment, both men’s and women’s luxury timepieces enjoyed several years of strong growth in the years leading up to the pandemic. While the limitations on in-store shopping and tourist spending as a result of the pandemic severely dented sales throughout 2020 and much of 2021, luxury timepieces is expected to rebound to its 2019 level of current value sales by 2023, as in-store shopping and travel and tourism recover fully.

Given supply and environmental concerns, consumers increasingly turn to resale

Luxury timepieces brands, including Rolex and Patek Philippe, continue to limit production in spite of high demand in order to ensure the rarity of their products. With this happening at the same time that consumers are increasingly seeking more sustainable means of consumption, growth in the resale market for luxury timepieces accelerated in recent years.

Brands and retailers overhaul their investments in digital merchandising

Dramatic growth was seen in e-commerce penetration in luxury timepieces during the pandemic. It was many consumers’ only available, or vastly preferred, sales channel for these products throughout much of 2020 and 2021 due to COVID-19-related restrictions, while many consumers became increasingly comfortable shopping for and purchasing high-value watches online, with many doing so for the first time.