There is a saying in the high-end watch trade that there are only two kinds of watchmakers: Rolex and everyone else.
The privately owned, Geneva-based brand dominates the industry by virtually every measure, although many of these comparisons are based on estimates, as a result of Rolex’s well-known reluctance to share information. In 2021, the company’s sales were estimated to total 8 billion Swiss francs ($8.56 billion), accounting for 28.8 percent of the global watch market’s retail value — up from 26.8 percent in 2020 and 24.6 percent in 2019 — according to a Morgan Stanley report released in March, the most recent information available.
To put that 28.8 percent in perspective, the report estimated Rolex’s market share as equal to that of the next five brands combined.
Rolex is an even bigger juggernaut in secondary channels, where its pre-owned watches often fetch twice their retail value, and sometimes far more. (Many watch insiders cite the 2017 auction of Paul Newman’s Rolex Daytona for $17.8 million as the start of the current mania for collectible timepieces.)
All this goes a long way toward explaining the seismic shift in the global watch trade that occurred on Dec. 1, when Rolex announced it was introducing a certified pre-owned (C.P.O.) program for secondhand Rolex watches that have been inspected, refurbished and met the company’s minimum standards. The brand did not respond to a request for comment.
Many industry experts said the program, which began through the Swiss retailer Bucherer and is to roll out to Rolex’s authorized dealers later this year, would bring order, transparency and greater liquidity to a global resale marketplace that is projected to achieve around 79 billion euros (which would now be the equivalent of $84.5 billion) in overall sales in 2033.
“It’s a revolutionary move,” said Danny Govberg, who is chairman of the pre-owned dealer WatchBox, as well as Govberg Jewelers, an authorized Rolex retailer based in Philadelphia. “This is going to create for the official Rolex jeweler a uniform standard. Right now, there is no standard.”
Unlike in the used car industry, where brand-sanctioned pre-owned programs are common, in the world of watches, secondhand sales have traditionally been the purview of unauthorized third-party dealers big and small, many of whom consider Rolex their bread and butter.
A handful of small, independent watchmakers, including MB&F and F.P. Journe, manage their own certified pre-owned programs, but the industry’s biggest brands have continued to keep the secondary business at arm’s length, citing the strategic and logistical challenges of buying, repairing and selling used watches.
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Rolex’s announcement is expected to change that, with more brands predicted to follow suit. In 2023, “C.P.O. will be the big word from everybody, but especially at the big brands: Cartier, Omega, Patek Philippe,” William Rohr, founder of the independent brand Massena LAB, said on a recent call.
“People look at watches as an investment,” he added. “You know exactly what Rolex will be worth in three years because you have the pricing, but at Cartier, you’re clueless. Which watch are you going to buy?”
The program is fairly simple: Participating retailers are authorized to buy Rolexes that are at least three years old and then send them to Rolex for certification, which verifies, for example, that all parts are authentic.
Rolex certified pre-owned watches are now available at Bucherer boutiques in Switzerland, Austria, Germany, France, Denmark and Britain. A spokeswoman for Bucherer confirmed in an email that the retailer will set prices for pre-owned models, based on current market conditions, but the certification and a two-year international warranty involve an additional, unspecified cost.
Watch industry insiders have been speculating about what Rolex’s official blessing will be worth to consumers.
Tim Stracke, the founder and co-chief executive of Chrono24, an online marketplace for pre-owned watches, said the question is whether buyers are willing to pay Bucherer a premium to get a watch certified by Rolex, as opposed to buying one through a noncertified source. (In a follow-up email, he noted that, in December, Bucherer’s pricing for Rolex watches in the pre-owned program was about 15 percent to 25 percent more than in other sales channels, but by January the spread had increased to 20 percent to 30 percent.)
The answer may depend on which buyers you are talking about.
“The program is good for people who have never bought a pre-owned piece and want a sense of trust,” Jaclyn Li, a collector based in Boston, said on a recent call. “But seasoned watch collectors who can buy at a better price through dealers they’ve known for a long time, there’s no point.”
The truth is, after five years of unparalleled growth in both the primary and secondary watch markets, both types of buyers are plentiful.
In November, Swiss watch exports recorded their best-ever month, totaling more than 2.4 billion Swiss francs, an increase of 10.9 percent compared with the same period in 2021, according to the Federation of the Swiss Watch Industry.
And the federation’s 2022 total export figures, scheduled to be released later this month, are widely expected to set a new global record, led by the booming U.S. market.
The explosion in sales of new watches in recent years, driven by social media, crypto wealth and pandemic-era spending, has benefited most brands, but the gains have been especially pronounced at the “big four” (Rolex, Audemars Piguet, Patek Philippe and Richard Mille), whose supplies lagged way behind soaring demand. (Think back to early last year, when retail showcases were stripped of merchandise and buyers flocked to secondary channels, where they paid three, four, and even five times retail value for in-demand models.)
Despite a correction triggered by the start of the war in Ukraine in February and the crypto collapse in May, the most sought-after timepieces — including the Audemars Piguet Royal Oak, the Patek Philippe Nautilus and the Rolex Daytona — continued to trade well above retail prices through the year.
Mr. Rohr of Massena LAB said that he interpreted Rolex’s embrace of pre-owned as a way to placate retailers tired of dealing with frustrated clients. “The message is, ‘We don’t have enough watches for you guys, therefore, we’re creating this program so you have stuff to sell,’” Mr. Rohr said. “Otherwise, why bother with the C.P.O. stuff? If you think things will slow down and demand will finally meet supply, why create more supply?”
Nevertheless, he said, the trust instilled by Rolex’s presence in the pre-owned category would be good for the entire industry, encouraging people to place more watches into circulation. “The mother ship is leading the way,” he said.
“It’s basically what happened in the car market,” Mr. Rohr added. “You buy a used Mercedes from the Mercedes dealer, or you can buy a cheaper model from another dealer who doesn’t have the warranty.”
There is also another, topical reason that luxury watch brands that, 20 years ago, would have scoffed at selling used goods are now embracing them, said Felicitas Morhart, a professor of marketing at the University of Lausanne in Switzerland: “Consumers and companies can always package their purchase as smart, trendy, authentic and conscious consumption,” she wrote in an email.
Many questions about the Rolex program remain — chiefly, how will authorized retailers handle the widespread preference among collectors to keep cases unpolished and all parts original when Rolex’s standard practice is to polish cases and replace worn parts? But there is agreement that, over the next five years, Rolex’s move will force many smaller players out of the market, as pre-owned dealers will face a lot more competition to buy popular models.
“In order to survive this C.P.O.-gate, every dealer is going to have to diversify the collection they bring in and not just rely on Rolex,” said Matthew Goodman, owner of the pre-owned dealership Philly Time Co. in Philadelphia.
Even well-established pre-owned specialists may need to shift their focus, Mr. Govberg of WatchBox and Govberg Jewelers said.
For example, he referred to Watchfinder & Co., an online pre-owned dealership founded in 2002 and acquired in 2018 by Compagnie Financière Richemont (owner of 11 luxury watchmakers, including Cartier, IWC and Panerai).
“The Rolex piece of their business will be de-emphasized,” Mr. Govberg said. “There is no reason why Richemont wants to be a second-tier Rolex dealer.”
The Rolex-dominant narrative might also play out another way: The brand and its retail partners struggle in the secondhand business, unprepared for its intense price competition.
“On the secondary market, margins are a lot smaller,” said Oliver R. Müller, founder of LuxeConsult, a watch consultancy based near Lausanne. “So even though prices are increasing, you only get a cut from the seller to the buyer. You are always the in-between man. It’s very costly to manage all the data you need to run an efficient marketplace.”
That’s where platforms such as eBay and Chrono24 come in, he said.
Mr. Stracke of Chrono24 said that “every month, we have 20 to 25 million visits on the platform, which translates to 10 million unique visitors, all looking for watches. Some are looking to sell, and all have a price.
“Who determines prices for an asset?” he added. “It’s not a single player. It’s the market.”