Luxury watches are undoubtedly boy toys, proven by how often they are flaunted on Instagram alongside neon-coloured sports cars, vast boats and private planes.
In the spectrum of boy toys, watches are typically the most accessible, as they can be had for relatively affordable sums. And they are the most convenient – no garage needed, no huge living room for high-end hi-fi nor an airfield.
Over the last decade, however, watches became toys for boys with very deep pockets. The retail prices of luxury watches have risen between three- and five-fold, simply because demand was overwhelming. That put them out of the reach of many, enhancing their status as Instagram-worthy trophies.
That has ground to a halt today, and even gone in reverse in some cases. Horological boy toys are now a lot more accessible.
This is a result of the watch industry’s reaction to the slowdown in business, driven by multiple factors, including the harsh crackdown on corruption and kickbacks in China. Watchmakers’ response to that has been to reduce prices, introduce cheaper products, or both.
As the Swiss franc jumped by a shocking margin in January after the Swiss National Bank lifted its currency cap, pundits predicted watch prices would rise. I was among the sceptics – given the poor demand, giving up some margin would be more prudent than raising prices. Because watchmakers make a decent margin on their timepieces, most can absorb some of the currency effects and still keep their heads above water.
That has proven right in some cases, most notably with Patek Philippe. In February, the grand old Geneva firm announced price cuts in Switzerland, Asia and the Americas, ostensibly in response to currency strength in these places, with cuts ranging from a handful of percentage points to a fifth. The stated aim was to achieve price parity across the world, in order to reduce transhipment and grey market supply.
But the more significant consequence of this is to make Patek Philippe watches more affordable than they have been in years, especially in key markets in Asia. This means that the already pre-eminent brand gains market share at the expense of the competition.
Patek Philippe isn’t the first to cut prices; Audemars Piguet took the plunge two years ago. Though the initial reaction was negative, the longer-term results have been encouraging. Anecdotal evidence from the trade indicates Audemars Piguet is now selling relatively more watches than its rivals.
Another strategy adopted by the industry has been to create more affordable products. Montblanc is notable for heading down that path, guns blazing. The new collection it presented at the Salon Internationale de la Haute Horlogerie trade fair in January offered timepieces at price points previously unheard of, including a tourbillon-chronograph in rose gold for 38,000 euros (S$58,000).
After a decade of lavish growth, the industry is adapting to the new reality. And boys who love their horological toys can indulge their passion on a much smaller budget.