Watch Economic Observatory: The secondary market is growing in mature countries. The "certified pre-owned" market is also growing.

One of the effects of the COVID-19 pandemic, which has engulfed the world and shows no signs of ending, is that major central banks have implemented large-scale monetary easing as an economic stimulus measure, resulting in a state of "money surplus." We often hear that this cash, which has nowhere to go, is being channeled into luxury watches and jewelry. Looking at the watch market from a different perspective, rather than just focusing on the negative aspects of the COVID-19 pandemic, reveals a different picture. Leading economic journalist Tomoyuki Isoyama examines the watch market from this perspective.

The secondary distribution market is growing in mature countries. The "certified pre-owned" market for watches is also growing.

　When walking around European cities, such as Germany, you will see many antique shops selling second-hand goods and antiques. Second-hand goods and antiques are also popular items at the flea markets held in squares on Sundays. Sometimes you can find the second-hand item you want at a bargain price, but vintage masterpieces such as watches and jewelry will fetch higher prices than new items.

European countries that value old things

"Treasing good things, even if they are old" is common sense in developed European countries. Rather than categorizing them as developed countries, it might be better to say that they are countries with mature consumption. Even when it comes to houses, people take good care of buildings that are over 100 years old, and many people find more "value" in them than in newly built homes. Jewelry such as rings and necklaces are passed down from mother to daughter for generations, and there are many popular second-hand items such as jewelry and furnishings from the "Art Nouveau" era.

　Curiously enough, in countries with continuing economic growth, such as China and other Asian countries, there is a greater demand for new luxury goods than antiques. This is likely due to a strong desire for the latest technology and new designs. Although Japan's period of rapid economic growth has long since ended, the public still does not feel like a "mature country," and the country is still harboring the afterglow of past rapid growth. This is especially true among the relatively wealthy elderly. There may still be many people who "like new things." However, Japanese consumers are probably also changing into "mature" consumers, like those in Europe.

The value of second-hand goods is rising in Japan

　It seems that even in Japan, more and more people are beginning to find value in antiques and second-hand goods. While new car sales have been sluggish due to the COVID-19 pandemic, used car sales are booming. This also shows that, rather than people becoming poorer due to reduced income, the number of people who find value in good second-hand goods is steadily increasing.

　Furthermore, events are occurring that are likely to accelerate this change. As the global economy is hit hard by the COVID-19 pandemic, central banks around the world are rapidly increasing the amount of currency issued and expanding government fiscal spending in order to avoid an economic crisis. If this continues, people who believe that the value of paper money will fall are moving to exchange their "cash" for "things" with higher asset value. Such "real assets" include second-hand goods and antiques.

　That's right. In the world of watches, too, there is no doubt that an era will come in which second-hand goods will become more popular than ever before. However, in the world of secondary distribution, the ability to judge quality will be essential. This is because second-hand watches are precision machines, and the quality varies widely. In the case of mechanical watches, it can be a problem if the parts are breaking down and the watch stops working quickly. However, it is not easy for an amateur to determine the quality of a watch.

"Certified Pre-Owned" Watches Gaining Attention in the Watch Industry

　This is where "official certified pre-owned" watches are gaining attention. World Tsusho, the exclusive import agent for the Swiss luxury watch brand Franck Muller, has launched a service for "official certified pre-owned watches." In addition to selling used watches purchased as trade-ins, the company also sells them on consignment on behalf of their owners. Naturally, the watches are fully maintained and sold with a warranty. Richard Mille has also started a "official certified pre-owned" service. It is certain that the number of such "official certified pre-owned" luxury brand watches will increase in the future.

　Swissinfo, a news website run by the Swiss Public Broadcasting Corporation, also published an article in 2019 highlighting the rapidly growing boom in pre-owned watches. The article predicted that "the pre-owned watch market could be worth $5000 billion, equivalent to 25 times the annual value of Swiss watch exports." However, it also cited the Richemont Group, which owns brands such as Cartier, acquiring Watchfinder, a British pre-owned luxury watch buying and selling company, and the Swiss watch and jewelry store Bucherer acquiring Tourneau, a US luxury watch specialty store that also handles pre-owned watches, and analyzed these as countermeasures.

　He added, "The trump card of traditional watch brands is their watch inspection know-how and pre-owned certification. Pre-owned certification guarantees safety, distribution channel traceability, and authenticity to consumers in a field where counterfeiting and fraud are rampant." There is no doubt that "officially certified pre-owned" will become a major trend in Japan in the future.

Tomoyuki Isoyama
Economic journalist and professor at Chiba University of Commerce. Born in Tokyo in 1962. Graduated from the School of Political Science and Economics at Waseda University. Served at the Nikkei Inc. as a securities reporter, deputy chief of the same department, Zurich bureau chief, Frankfurt bureau chief, and deputy editor-in-chief and editorial committee member for Nikkei Business. Left the company in 2011 to go independent. Covers a wide range of political, government, and business figures. His books include "The International Accounting Standards War: Final Chapter" and "The Secrets of Switzerland, the Brand Kingdom" (both published by Nikkei BP).
http://www.isoyamatomoyuki.com/