In the face of abject lawlessness, watch dealers across America have secured or removed their inventory. Not just in LA, New York City, Chicago, Settle, Philadelphia, Minneapolis, Atlanta and other major urban areas. Jewelers and watch dealers in small cities like Providence, Rhode Island and Portland, Maine have also taken precautions against watch looting. As for the immediate future . . .
Bricks and mortar watch retail is dead in the water. This after months of quarantine closure. There’s no telling when dealers will consider it safe to re-open. But it won’t be this week.
As we’ve observed, even when watch retailers recover, looting’s psychological effect will keep customers away for weeks, maybe months. Potential buyers will avoid what has been, and still could be, a war zone.
Watch looting and the subsequent retail coma will have several knock-on effects.
For one thing, we can expect desperate dealers to turn the stream of new-in-box watches flowing to gray market online dealers into a flood.
Prices for gray market watches were already softening before this second gut punch to real world watch dealers. They will continue to decline, though not precipitously.
Gray market sellers are already holding a lot of inventory. But until and unless their sales start to dry up, they’ll hold the line on prices. Every dollar off the purchase price comes out of their pocket.
That said, online sales operations have low overheads and high margins. There’s plenty of room for deeper discounts. If gray market dealers flush with increasingly plentiful inventory need to drop prices to stimulate demand, they can. And will.
About that demand . . .
In Rolex: Three Reasons Not to Buy One (Other Than Price), we drew attention to the vicious criminals mugging Rolex owners. [GRAPHIC VIDEO ABOVE] The looting is a wake-up call to Americans who never considered the idea that a luxury watch makes them a target for violence. Many will remain in denial. Many will not.
As for the watch industry in general, the U.S. is a key market for Swiss, German and Japanese watchmakers. Ironically, there’s been talk of “revenge shopping” lifting sales from the basement. Thanks to unopposed criminality, hopes for a quick, V-shaped resurrection of the American market have gone out the [smashed] window.
Tough times for U.S. watch retail doesn’t begin to cover it. Still, we’re a resilient people with a profound love of luxury goods. While watch looting affords order-online smartwatches an even greater opportunity to take market share from traditional watches, this too shall pass. What will remain remains to be seen.