The Hangover After the Watch Boom Nobody Was Supposed to Have
Between 2020 and 2022, the luxury watch market experienced something that veteran industry observers struggled to describe without reaching for hyperbole. Rolex waitlists stretched to years. Grey market premiums on Submariner and Daytona references exceeded 100% of retail price, meaning buyers routinely paid twice the boutique price just to acquire a watch immediately rather than waiting. Secondary market platforms including Chrono24 and WatchBox reported transaction volumes that made their platforms, briefly, the most efficient price discovery mechanisms in the entire watch industry. Then, with the same speed and unpredictability that characterised the boom, the correction arrived. Grey market premiums collapsed across virtually every reference. Swiss watch export statistics, tracked monthly by the Federation of the Swiss Watch Industry, recorded eighteen consecutive months of year-on-year declines through the first half of 2026. The watch category, in short, is not in crisis. It is in correction — and those are genuinely different things.
Richemont: The Company That Proves Hard Luxury Can Hold
If you want to understand what the luxury watch market looks like when the underlying business model is genuinely sound, Richemont is the case study. The Swiss conglomerate — whose portfolio spans Cartier, IWC, Panerai, Jaeger-LeCoultre, and Vacheron Constantin, among others — reported what its Chairman Johann Rupert described as “early signs” of renewed Chinese demand in Q3 2025, while cautioning that it was premature to declare a full recovery. The accompanying numbers were persuasive regardless of the rhetorical hedging: Asia-Pacific sales rose 10% in Q3 2025, and China specifically returned to growth for the first time in nearly two years. For a company whose jewellery and watch divisions are among the most culturally significant in their respective categories globally, that trajectory matters not just for Richemont’s own financials but as a leading indicator for the broader hard luxury category. Watches and jewellery tend to recover before soft luxury in China precisely because their investment and gift-giving rationale is culturally deep-rooted in ways that logo-driven fashion apparel is not.
The Grey Market Collapse: A Feature, Not a Bug
The normalisation of grey market premiums is, counterintuitively, one of the healthiest developments the luxury watch industry has experienced in several years. When a Rolex Submariner trades at 80 or 100% above its retail price on the grey market, it creates a set of perverse incentives: authorised dealers face pressure from customers trying to resell allocations at a profit, boutiques struggle to serve genuine enthusiasts who are crowded out by speculators, and the price volatility undermines the “store of value” narrative that is central to why serious collectors buy mechanical watches in the first place. The correction — painful for those who acquired at peak secondary prices expecting continued appreciation — has restored something like rational price relationships between the primary and secondary markets. A Rolex that retails for CHF 9,000 and sells for CHF 12,000 to CHF 15,000 in the grey market reflects genuine collector demand and brand scarcity. The same watch at CHF 20,000 reflected speculative excess. The industry is healthier for having moved back toward the former.
The Pre-Owned Watch Market: Where Investment Logic and Passion Converge
One of the most durable structural stories within luxury watches is the formalisation of the pre-owned market as a legitimate, regulated, and increasingly brand-endorsed channel. Luxury watches and jewellery are gaining momentum in the pre-owned market specifically because of their strong value retention, rising firsthand prices, and growing demand for durable, collectible assets. Richemont itself operates Watchfinder, one of the most credible certified pre-owned watch retail platforms in the world, with a curated inventory and warranty infrastructure that places pre-owned watches on an explicit quality and service parity with new ones. Rolex’s Certified Pre-Owned programme, launched progressively across its authorised dealer network, represents the company’s most direct engagement with a secondary market it previously kept at arm’s length. The commercial logic is sound: a Rolex that Richemont authenticates and warrants through an official certified pre-owned channel is a Rolex that remains within the brand’s commercial ecosystem rather than being transacted entirely outside it.
The American Market: Price Hikes, Dollar Dynamics, and a Complicated Arbitrage
The United States presents a nuanced picture for luxury watch brands navigating 2026. On one hand, LVMH specifically flagged a good start to the year in the U.S., and domestic American demand for luxury goods remained relatively robust even as macroeconomic uncertainty spread elsewhere. On the other hand, the arbitrage dynamics that made European boutiques so attractive for American buyers are shifting. J.P. Morgan’s analysts tracked the price differential between U.S. and European boutiques narrowing from approximately 26% in summer 2024 to around 20% by early 2026, as the U.S. dollar weakened against the euro. Prada and Dior have both implemented U.S. price increases of 3% to 5% to partially rebalance geographic pricing. For watch brands with globally visible retail prices, the pricing geography challenge is particularly acute: a consumer willing to travel to Geneva or Paris to acquire a watch at a 20% discount will do so. A consumer facing only a 10 to 15% saving is less likely to make the trip. The narrowing of the arbitrage gap is, paradoxically, good for U.S. retail but reduces one of the structural incentives that drove European luxury tourism spending over the past decade.
What Watches Get Right That Fashion Often Gets Wrong
There is something worth examining in the structural resilience of the watch category relative to fashion-led luxury in the current environment. Mechanical watches occupy a peculiar commercial position: they are luxury objects whose core value proposition — the handcrafted, heritage-certified mechanism that tells time less accurately than any smartphone — is entirely irrational by utilitarian standards, and precisely because of that irrationality, almost entirely recession-resistant at the ultra-premium tier. A collector acquiring a Vacheron Constantin Traditionnelle or a Patek Philippe Calatrava is not buying a timepiece. They are acquiring a physical representation of human craft, horological tradition, and cultural legitimacy that has survived two centuries of technological disruption. The category’s durability rests on what China Briefing’s luxury outlook described as “emotional utility” — the ability to generate meaning, pride, and identity connection that is independent of the object’s functional performance. As long as that emotional utility is credibly delivered and carefully protected, the luxury watch category has a resilience that no fashion cycle, exchange rate fluctuation, or macroeconomic shock can permanently undermine.
Where the Luxury Watch Market Goes From Here
Constancy Researchers’ view: the luxury watch market is not a category in structural decline. It is a category undergoing the correction that any mature market experiences after a period of speculative excess, and it is doing so from a position of genuine underlying strength. The brands with the deepest heritage, the most defensible scarcity management, and the clearest positioning in what Richemont Chairman Rupert called the “ultimate luxury” tier are performing better than those whose growth depended more heavily on aspirational volume and grey market price dynamics. The pre-owned channel’s formalisation through certified programmes from Rolex and Richemont is not a concession to market weakness — it is a sophisticated commercial strategy that brings the secondary market inside the brand’s value proposition rather than allowing it to operate as an uncontrolled external ecosystem. And as China’s consumer base evolves toward more investment-oriented, craft-aware luxury consumption, the category’s cultural authenticity and value retention credentials place it better than almost any other luxury segment for the next phase of that market’s development.
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