Five Years Ago, Covid Changed the Watch Game

As always, when I write about watches, it’s meant as a break. For myself and hopefully for you. I was reflecting this morning, after hearing horrible news about Gaza, about how my mind seems to go back to watches as a refuge, a safe space. Without going into further depth on that – for now, at least – the point is I’m fully aware that at the scale of the impact Covid had on the word, the watch aspect is trivial. That being acknowledged, the way it shaped the watch microcosm is, for anyone interested in the topic, quite remarkable.

This blog usually aims for a balance so that true watch nerds can relate but moguls can also understand. Whether this ends up as the best or the worst of both worlds, I’ll let you decide. On today’s topic in particular, I think those of you following the watch scene closely won’t learn anything new. Hopefully, you’ll still enjoy joining me in the hindsight that five years now allows us to take on how the global pandemic radically changed our hobby, including but also beyond financial considerations.

The Causes

In March 2020, most of the world as we know it – well, the industrial world; nature had the opposite trajectory – went into pause. Many people tragically left us, many others gave everything they had on the frontline or keeping things going in the background for our collective survival. And then, many of us basically stayed at home, trying to make sense of it all while trying to work, educate kids, secure groceries and generally remain somewhat sane. 

What this meant for watches unfolded in a perfect storm. Most brands had to stop production overnight. Rolex for instance is thought to have lost three months as a result. Beyond the brands, the pandemic created shortage in supply of critical components. In parallel, consumers started to basically live online. Combined with, perhaps, the need to grab onto something tangible giving a meaning to the partially lost notion of time, watches became a hot topic of online research and discussion. Finally, with the inability to spend on travel, restaurants and other experiences, many folks had a newly found purchasing power to make their watch dreams come true.

The Effect 

Let’s get this one out of the way because it’s the most obvious and, admittedly, top of mind: prices went nuts. The chart below shows the WatchCharts Overall Market Index over the past 5 years. It’s based on 300 watches taken from the top 10 luxury watch brands, sorted and weighted by transaction value. Combining scarcity of resources with higher than ever demand and buying power, well, the result is no surprise. One anecdotal pricepoint that sticks to my mind is the 50th Anniversary Silver Snoopy Speedmaster that was going for close to 40k at one point, at four times retails. Making things worse, opportunistic “investors” wanted in, with watches becoming – at best – an asset class and – at worst – a product to be flipped overnight. In addition, more than ever before, watches turned into a status symbol across mass market scenes, from social media to entertainment.

Some other – perhaps less visible – phenomena took place during that time. On the positive side, more people with a genuine interest in watches discovered the hobby, did their research and met – online, to start – fellow enthusiasts. Interesting independent and micro-brands with unique propositions and true passion for horology were born. Unfortunately, many brands and suppliers – big and small – took the new paradigm for granted and over-invested in production that ended up hitting the market too late.

What’s Happened Since 

The post-pandemic status is generally – and adequately – described as a correction. It happened both through organic and geo-political causes. As people started getting back to their usual lives, watches were less scarce, people had less money to throw at them versus other hobbies, and they spent less time online drooling over them. At the macro level, the war on Ukraine and the global energy and commodity crisis that ensued led to inflation and general economic slowdown.

No question, on the business side, many were hit hard. Brands that had spiked during Covid are now reducing output, with direct impact on staff. Jaeger-LeCoultre putting part of its production on hold, as quoted in the media, is just the tip of the iceberg. As someone who lives at the heart of the industry, I can tell you the impact is felt across the supply chain. Other businesses were hit too. Secondary market resellers who had built inventory when the market peaked had to let many people go, or even – such as Hodinkee’s Crown & Caliber – close shop. On a more positive note, the speculators who were ruining the hobby for many lost interest, and, sometimes, lost money.

For us regular watch fans, I must say things have generally gotten better. The correction also hit watch circles, cleansing it from people who were there for the hype or financial gain. It’s definitely a buyer’s market, both pre-owned and – to a certain extent – at authorized dealers. Sure, there have been some losses as pieces exit the collection, but for anyone who treats watches as a passion and not an investment, it’s generally okay. More importantly, watch people are able to get together again, meet up, and enjoy the hobby as a hobby. 

That said, it’s not in the interest of enthusiasts for the industry to suffer, post the necessary correction. Another nuisance is that official retail prices keep going up, with brands blaming inflation. Also, the raise in watch thefts – sometimes with tragic violence – has also made it difficult to enjoy certain acquisitions in certain places; don’t get me wrong, way more unfair things happen in the world, but it’s unfortunate nonetheless.

What’s Next 

I unfortunately have no crystal, hesalite or sapphire ball. I assume we’ll see consolidation within the industry, as bigger players buy out crumbling suppliers and brands. Living in Bienne and seeing so closely how watches contribute to the local economy – including folks whose lives are very remote from the luxury scenes where their work is sold – I can only hope for the best. The secondary market will see more brand-controlled CPO offerings, meaning perhaps more trouble ahead for the large platforms. What about us regular watch folks? The global economy, starting with trade wars, may have a serious impact on what we can afford. Until then, it’s nice to enjoy the hobby among people who truly care about watches.

What about you? Are there any Covid or post-Covid thoughts or experiences you’d like to share? I’d love to read about them in the comments.