Luxury watches have long been a symbol of reputation and prestige, often sought after as investments. However, the CEO of Rolex, Jean-Frédéric Dufour, challenges this belief, stressing that watches must be seen as a commodity rather than a monetary asset.
In an interview with Swiss outlet NZZ, Dufour took issue with the contrast between watches and stocks, calling it a risky belief. He believes it is volatile to look at watches entirely as an investment situation with frequent price fluctuations.
Dufour’s comments come amid a broader dialogue in the luxury watch industry about the nature of these watches as investments. Traditionally, watches have been considered things that could appreciate over the years, supported by factors consisting of logo status and market demand. However, Dufour suggests that this attitude undermines the watch’s intrinsic value as a precisely crafted commodity.
Callum Patrick, co-founder of Chronofinder, echoes Dufour’s sentiments, describing luxury watches as “trophies” whose costs exceed their investment potential. While some watches may additionally admire their value, Patrick emphasizes that their primary value lies in craftsmanship and suitability.
The latest trajectory of luxury watch costs reflects a shift in customer sentiment. After a surge in demand at some point during the COVID-19 pandemic, the cost of second-hand watches, including those from Rolex, Patek Philippe and Audemars Piguet, has seen a big drop. London-based Total Subdial rates spending on second-hand watches down nearly 40% in recent years, a testament to the changing dynamics of the market.
In response to evolving client options, Rolex has taken strategic initiatives to evolve its business model. The organization began issuing a certificate of authenticity for its watches in 2022 to improve the confidence of buyers in the secondary market. In addition, Rolex’s acquisition of the Bucherer watch business indicates a shift toward greater direct patron engagement strategies and line extensions including the introduction of elegant accessories for fitness tech.
Despite challenging market conditions, Rolex remains a dominant player in the luxury watch sector. The aforementioned company reported revenue of $11.5 billion in 2023, reflecting an 11% boom from the previous year. However, acknowledging the current financial uncertainty and better entry costs, Dufour foresees a “challenging” year ahead.
In managing the volatility of the market, Dufour emphasizes the resilience of mounted luxury manufacturers. He argues that manufacturers with strong recognition and a steady consumer base tend to maintain their price even during a downturn. Dufour’s comments underscore Rolex’s commitment to maintaining the integrity and exclusivity of its logo amid fluctuating market conditions.
To be precise, Rolex CEO Jean-Frédéric Dufour’s perspective signals a broader shift in the perception of watches as investments in the luxury watchmaking business. As the market evolves, manufacturers like Rolex are redefining their techniques to prioritize product integrity and acceptance by clients as true, emphasizing the long-term cost of luxury watches beyond their financial value.
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