HWe struggle to explain why, but Tom Exton has harbored a fascination with watches since he was a child. Over the years, he has used it to tell the time, do his calculations and even change the television channel. He sketched drawings of the luxury watches he dreamed of owning one day, so when his fitness business took off in 2012, the first extravaganza he indulged in was a £3,500 green Rolex Submariner, the first many such purchases.
Now in their thirties, Exton has bought around 40 watches, from vintage Swatches to luxury watches from Richard Mille and FP Journe. He estimates his collection, safely stored in a safe away from home, has swelled in value to almost £1million. This year.
“I’m more of a hoarder than a trader, but I’ve never lost money on a watch,” said Exton, who flaunts his latest purchases to hundreds of thousands of social media followers, playing a small role in the industry boom.
Per capita, Britons spend more on luxury watches than all other Europeans and more than three times as much as Americans, according to Goldman Sachs. Such sustained demand for products that even in normal times are extremely slow to produce has made luxury watches a Covid-era bubble that has yet to burst.
But those hoping to find a Rolex or a Patek Philippe under the tree this year may be disappointed: the waiting lists go on for years.
“We have many, many more customers for seven-figure watches than we have available stock. I’ve never had a time like this in 30 years in the industry,” said Jamie Bennett, of luxury jeweler Boodles on London’s New Bond Street.
The question is: how much longer can luxury watches defy gravity?
The resilience of the traditional Swiss watch industry, which thrived in the age of smartphones and Apple Watches, is in many ways a marvel. The dominant player, Rolex, could so easily have been a British success story.
Hans Wilsdorf and his brother-in-law Alfred Davis founded Wilsdorf and Davis, the business that would become Rolex, in Hatton Garden, London’s jewelery district, in 1905. Their business grew rapidly, settling in the tax haven of Switzerland when the British government levied huge taxes on luxury goods after World War I.
Switzerland’s neutral status gave its watch industry a quasi-monopolistic position after the Second World War, but the advent of quartz watches in the 1970s plunged it into an existential crisis. Brands such as Seiko and Casio have developed battery-powered digital watches that undermine those produced by their old-school Swiss counterparts. Switzerland’s award-winning industry has shrunk from 1,600 manufacturers to 600, resulting in the loss of around 62,000 jobs.
Mechanical watches have retained appeal for a loyal group of affluent consumers, and the perceived value in craftsmanship has helped turn them into luxury status symbols today.
The Quartz Crisis also devastated what was left of the British watch industry, but brothers Nick and Giles English are among a handful of businessmen on a mission to rejuvenate the national watch industry. Their company Bremont produces top-of-the-line parts at its sprawling manufacturing facility near Henley-on-Thames, Oxfordshire. Inside, around 70 watchmakers assemble, polish and check Bremont watches by hand.
Bremont’s more complex watches, such as the “shamelessly over-engineered” £7,995 Supernova, contain around 300 components. Giles English said delivery times for almost all components had doubled or tripled, blaming some of the blame for industry supply shortages on layoffs at the start of Covid, when a 21% plunge in exports left Swiss watchmakers worrying about their future. “It takes seven years to train a watchmaker – you can’t just turn them on and off,” he said.
Despite the continued disruption, Bremont’s sales are on track to grow 20% this year, and it plans to double its retail stores to about 25 over the next two years.
Bremont’s growth is no exception. Last week, Watches of Switzerland, the UK’s largest luxury watch retailer, reported interim sales of £765 million, underlying growth of 23%, mainly driven by strong demand for America. Pre-tax profits rose 28% to £83m. Since its stock market debut in 2019, its shares have nearly tripled to 842.50p, valuing Watches of Switzerland at £2.1bn and marking it as one of the few successful street floats of recent years.
Three-quarters of luxury watches are purchased by a customer who was on a waiting list – and the lists of most wanted Rolex, Patek Philippe and Audemars Piguet watches have been stretching for several years at Watches of Switzerland. Bennett of Boodles said even the most basic Patek Philippe models take eight months to manufacture.
There is also a fortune that can be gleaned from flipping watches on the second-hand market. Anyone lucky enough to pick up a Patek Philippe Nautilus 5711, which retails for £30,000, can sell it for three times as much amid rumors it will be discontinued, according to Subdial, which tracks the secondary market.
“We do everything we can to avoid selling to pinball machines,” Watches of Switzerland boss Brian Duffy said. “Obviously we are not special investigators, but we want to sell to people who will like and appreciate the watches.”
In October, Harrods boss Michael Ward hailed the growth of the luxury watch market as a “phenomenon” and said the luxury department store was looking at potential buyers.
“If you want to buy a Patek Philippe, you have to bring your watch collection to a store to show you’re a serious collector and not just a dealer,” Ward said.
Many buyers are in it for the long haul. History shows that in times of double-digit inflation, a high-end watch can be a good buy. The retail price of a Rolex Submariner has risen at a compound annual rate of 7% over the past 50 years, according to analysts at investment bank Stifel.
At auction this year, Sotheby’s has seen record prices paid for luxury watches, including when a Swiss buyer paid $2.1m (£1.7m) for an Audemars Piguet Royal Oak from the collection personal touch of the late designer Gerald Genta.
“If you work in banking or finance, it’s very important to show a bit and prove that you’ve done well,” said Mikael Wallhagen, who trained as a watchmaker in Switzerland before becoming responsible for watches. in Europe for Sotheby’s.
Subdial data shows the price of a pre-owned Patek Philippe Nautilus jumped 50% to £143,518 in three months, and the price of a Rolex Daytona jumped 29% to £33,450. But the value of these “hype watches” has dissipated this year, a sign that the heat is coming out of the market.
As the second-hand market falters, exports of new Swiss watches have risen another 11.9% this year, although growth in October slowed to 6.7%. And although sales of all luxury goods have held up well against a broader spending squeeze, rising mortgage rates next year are expected to dampen UK demand.
Still, watchmakers have customers all over the world, and demand from elites in the Middle East and America, who don’t have to worry about soaring energy bills, should remain strong. And at some point the Chinese, who have propelled the luxury market for years, will be allowed to resume their shopping sprees in boutiques in London and Paris.