Introduction

 A snapshot of the American watch market

In the United States, as in most parts of the world, we saw something of a catch-up effect in 2018. But behind the scenes, the fundamentals of the American market are in turmoil, as a result of the growth of the smartwatch, the concentration of retail in European hands and the strong growth of the secondary market, thanks to the internet.

SWISS WATCH EXPORTS TO THE USA SINCE 2015 (MILLION CHF)

1st upheaval: the breakthrough of the smartwatch

You can do a test, in a New York restaurant or at a Los Angeles gym, by looking at the wrists of the other people there. There is no doubt that the Apple Watch will be in the majority – and this includes women. Even more so than in Europe, the smartwatch has established itself in the under-$500 watch segment in the United States. It is one of the major upheavals to have occurred in North America since 2015.

However, it doesn’t seem to have impacted the traditional luxury mechanical watch market. On the contrary, “fine mechanics” were on the road to recovery in 2018, a catching-up effect observed in both the US and in Asia. With more than 2.2 billion francs of Swiss watch exports to the United States last year, the market grew by 8% and is approaching the results of 2015. To sum up, one could say that the “volume” market seems to be gradually moving towards Apple, while “value” remains firmly anchored among the traditional Swiss brands.

What is left for the American fashion watch giants such as Fossil Group, Movado Group and Timex?

Is there any room left for the American fashion watch giants such as Fossil Group, Movado Group and Timex in this scenario? Since its acquisition of Misfit in 2015, Fossil Group has resolutely opted for the switch to connection, launching “smart” models of Fossil, Armani, Diesel and Michael Kors watches quarter after quarter. The erosion of its stock market share illustrates the group’s difficulties in the face of Apple’s arrival on its playing field. Nevertheless, the sale in January 2019 of $40 million worth of connection technologies to Google reassured investors and could signal the beginning of a trend reversal.

Kosta Kartsotis, Chairman and CEO of the Fossil Group, stated last November: “While the business continues to face topline headwinds stemming from declines in the traditional watch category, combined with business exits and closings of underperforming stores, we are focused on narrowing the gap with gains in connected and digital sales.”

2nd upheaval: European retailers arrive in force

A second major upheaval in the United States is the evolution of retail structures. As everywhere in the world, a significant proportion of brands intend to combine opening their own stores with controlling online sales to lock their distribution. The most recent cases are those of Richard Mille and Audemars Piguet, which both left the SIHH trade show at the same time. The recent opening of a Richard Mille boutique in New York – the largest in the world – also marks the opening of a new era. Audemars Piguet, meanwhile, intends to abandon distribution in multi-brand outlets within three and a half years, according to its CEO François-Henry Bennahmias.

A growing concentration of distribution in a handful of powerful European chains.

Watches of Switzerland’s new boutique in SoHo

In the United States, there have been many closures of traditional small to medium-sized shops. We also see a growing concentration of distribution in a handful of powerful European chains that remain very close to their bestselling brands, such as Rolex, a dominant brand in the United States. We have observed the takeover of the Tourneau chain by the Swiss retail giant Bucherer, and that of the Mayors chain by British retailer Watches of Switzerland. As for Germany’s leading retailer, Wempe, it is firmly established in New York with a store on Fifth Avenue, as well as a space that the retailer operates for Rolex. All are attracted by the promise of a market that could grow in absolute numbers.

Richard Mille boutique in New York – its largest in the world – marks the opening of a new era for the brand

3rd upheaval: e-commerce favours second-hand watches

Would the emergence of the internet encourage online sales of smartwatches? Or of ultra-contemporary models? Neither, in fact. The first segment to benefit from the arrival of e-commerce has been the so-called “grandfather’s watch”, second- or even third-hand, on a market that is still often greyish, fuelled by genuine vintage timepieces, but also by the effects of an overproduction of watches, via so-called pre-owned models, in reality often “never-worn”, at fire-sale prices.

The online watch sales landscape remains something of a jungle, but clearings are starting to appear. In this respect the United States, the cradle of digital technology, is acting as a pioneer, but it needs to be closely monitored. Beyond Amazon or eBay, major players specialising in the sale of second-hand luxury watches have set up shop. WatchBox has just opened an office in Switzerland (read our article here), and there’s also True Facet (read here).

WatchBox’s trading floor in Philadelphia

The online watch sales landscape remains something of a jungle, but clearings are starting to appear.

The latest step is to bring the online secondary market closer to authorised retailers and brands. WatchBox has set up a partnership with Californian retailer Hing Wa Lee, and its arrival in Switzerland is also related to its desire to offer brands a direct channel to the secondary market. The historic American retailer London Jewelers has established a partnership with the pre-owned platform Crown & Caliber. Having just raised $10 million in venture capital, True Facet is working with Silicon Valley retailer Stephen Silver, and also directly with brands such as Raymond Weil and Fendi.

Analysis

 A retail apocalypse? It’s not that simple…

Looking beyond watchmaking, the American retail sector has been under strong pressure for more than a decade now. Several hundred branches of department stores such as Macy’s, Sears, Kmart and J.C. Penney are in the process of being liquidated. giants Toys “R” Us (toys) and HH Greg (electronics) have declared bankruptcy. Payless (shoes) and Rue 21 (clothing) have managed to restructure, but only after having been forced to close many outlets. RadioShack, a long-established chain of electronics stores, filed for bankruptcy before being bought by an investment fund. A rather gloomy picture, then.

According to The Observer, half of the approximately 1,200 shopping malls spread throughout the United States could close by 2023. In 2017, commercial real estate services company Cushman & Wakefield counted nearly 9,000 closures across the country. This is more than the total number of closures recorded between 2003 and 2006.

MAJOR CHAIN STORE CLOSURES (Cushman & Wakefield)

Although this phenomenon has been widely described as a “retail apocalypse”, the picture needs to be nuanced.

Of course, the essence of the explanation lies in new purchasing behaviours: consumers no longer need to visit “super malls” to access product. But e-commerce’s share of total purchases nevertheless remains very small. According to the US Department of Commerce, it accounted for just $452 billion of the more than $5 trillion ($5,000 billion) spent by Americans on retail in 2017.

Under pressure: Macy’s

But according to Bloomberg, “[It] isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt, often from leveraged buyouts led by private equity firms.”

It’s the huge and impersonal shopping malls, which multiplied in the 1990s in the United States, that are under the greatest threat...

The problem seems to lie essentially in the oversupply of commercial space in the United States. As Richard Hayne, CEO of Urban Outfitters, told The Guardian: “The US market is oversaturated with retail space and far too much of that space is occupied by stores selling apparel.” Hayne traced the problems to over-expansion in the 1990s and early 2000s, noting that the US now has six times the retail space per capita of either Europe or Japan.

A reduction in the commercial space dedicated to a shrinking US middle class is under way. E-commerce is gaining market share, but distance buying currently accounts for only about 10% of total spending.

What is more, e-commerce giant Amazon has started to invest in bricks and mortar, buying the Whole Foods chain and launching its own Amazon Go stores. The equation therefore seems to be more about finding the best balance between physical and virtual purchasing, according to an “omnichannel” model.

In this respect, the local store, which is less artificial and more authentic than the mall, could even find new life. Indeed, it’s the huge and impersonal shopping malls, which multiplied in the 1990s in the United States, that are under the greatest threat...

Retail

 European domination in America

Leading Swiss retailer Bucherer, German leader Wempe and British powerhouse Watches of Switzerland have all invested heavily in acquisitions and store openings in the United States. The American market, already dominated by watch brands from the Old World, is becoming European in terms of retail as well.

Last December in New York, British watch retail giant Watches of Switzerland opened its first American point of sale. We had the opportunity to visit the two-storey space on Greene Street in SoHo, a district not traditionally known as a mecca for watches – most of the luxury stores being concentrated on Fifth or Madison Avenue.

The British group has also opened a store in Las Vegas, as well as brand boutiques for Rolex, Omega and Breitling, all located in the Wynn Hotel. No end to the expansion is in sight, as there are plans to open a store in the giant Hudson Yards real estate project in Manhattan this spring, and later on another boutique in the American Dream Meadowlands shopping mall, in New Jersey.

Inside Watches of Switzerland in Manhattan

“It’s not just about gaining market share,” says David Hurley, Executive Vice President of Watches of Switzerland. “The American market can grow in absolute terms. It is already six times the size of the British market in terms of jewellery. However, it is only one and a half times the size of the United Kingdom in terms of watches. You can see the growth potential.”

David Hurley, Executive Vice President of Watches of Switzerland

“It’s not just about gaining market share. The American market can grow in absolute terms."

The group is owned by Apollo Global Management, which is expected to go public in 2019, according to several sources. A real giant is setting foot in the United States. Earlier in the year, Watches of Switzerland swallowed up the Mayors jewellery and watchmaking chain, which operates in Florida and Georgia through a network of 17 stores (including one operated for Rolex): “Thanks to the acquisition of this more than 100-year-old company, we are learning a lot in preparation for our expansion in the United States,” says David Hurley.

The Tourneau turning point

Another giant in European retail, the Swiss group Bucherer, triggered an earthquake one year ago when it bought Tourneau, a historical American chain founded in 1900 and the largest luxury watch retailer in the United States, with more than twenty sales outlets around the country. Tourneau had also strongly developed sales of pre-owned watches and e-commerce, two fast-growing segments.

Bucherer, being very close to its longstanding partner Rolex, did not miss this opportunity to dip its toe into the American market, which could further strengthen the crown brand’s dominance in the United States. The family business from Lucerne will also have the opportunity to develop its own brand, Carl F. Bucherer, on the US market. Since then, the Bucherer group has also acquired Baron & Leeds, another watch retail chain that operates in California and Hawaii, and is also a partner of Rolex.

Bucherer’s empire now extends from Europe to the United States.

The period of upheaval in the watchmaking sector that began with the 2014 Chinese crisis has therefore fully benefited a giant like Bucherer, whose empire now extends from Europe to the United States. And the American market does indeed seem to be the new playground for major European retailers. For its part, the German retail leader Wempe operates a prestigious boutique in New York, as well as a brand boutique for... Rolex, yet again.

Tourneau’s flagship store in New York

A clash of cultures?

Smaller, traditional American retailers can legitimately fear the arrival of these European “super-retailers”, who are very close geographically, culturally and strategically to their Swiss partners.

In an article published on the Forbes website in March 2018, entitled How The Swiss Luxury Watch Industry Is Dismantling Business Operations In America, American watch journalist Ariel Adams, founder of the specialised online platform A Blog to Watch, expressed concern about the growing control of Swiss and European companies over distribution networks in the United States.

He writes: “Americans and Swiss in this industry will never see eye to eye on most things. A perpetually contentious relationship (…) has advanced to a state where one by one, fewer and fewer Americans are actually working in the American luxury watch sales industry.”

“Americans and Swiss in this industry will never see eye to eye on most things.”

He continues: “Recently, overseas companies have been purchasing historically American-run high-end watch store chains. I interpret these moves to acquire US watch retail chains as an attempt to promote further vertical integration of efforts (thus keeping margins closer to home), as well as having the effect of even more Americans exiting the luxury watch sales and distribution industry in the United States.”

Can we expect to see a major culture clash?

“We bring expertise in retail,” says David Hurley at Watches of Switzerland. “I believe that it is the untapped potential of the American market, with sales still far from the real size of the country, that explains our interest and that of other European retailers. We are investing in luxury, digital and pre-owned to bring growth to the United States.”

Portrait

 Roland G. Murphy: the last American master

In the place where the erstwhile giants of American watchmaking, including Hamilton Watch Company, were established, near Lancaster, Pennsylvania, we met Roland G. Murphy. This master watch restorer founded the RGM Watch Company brand in 1992, the only American watchmaker still producing its own mechanical movements. He represents an isolated, independent mind on the other side of the Atlantic, far away from the Swiss ecosystem.

RGM Watch Company is housed in a former bank in the small town of Mount Joy, Pennsylvania. It’s a solid brick-built structure with a vintage but still very reliable safe. On the ground floor, three watchmakers are busy at their workbenches. After the tour, the discussion begins with Roland G. Murphy, one of America’s only master clock and watchmakers.

Roland G. Murphy, founder of RGM Watch Company

“The United States has always been a country oriented towards mass watch production, before everything moved to Asia,” says Roland Murphy. “The large factories in our region operated very differently from our craft workshops. In a sense, I am an heir to this watchmaking tradition, but an heir with a very different face.” He feels closer in spirit to the likes of Kari Voutilainen, Svend Andersen, Peter Speake-Marin or the Grönefeld brothers.

However, it was at the Hamilton facilities in Lancaster that it all began for the native of Maryland. Before Hamilton he completed an apprenticeship as a carpenter. During that time he took a job with Danecker Clock Co. where he worked on the wooden cabinets for clocks. When the company went bankrupt, Roland Murphy bought the stock of clocks and began to analyse their movements. This was the beginning of a passion that still grips him today.

PS-801-CH “Chess in Enamel”: the first RGM timepiece with a double-sunk real glass fired enamel dial

A pioneer in the “new wave” of independents

He joined a technical school in Pennsylvania (which has since closed its doors) to take a watchmaking course, before flying to Switzerland in 1986, where he perfected his skills at Wostep in Neuchâtel. Back in the United States, he was hired by SMH to work on product development for the Hamilton brand in Lancaster. However, Roland Murphy did not really feel at home in a group, where individual initiative is necessarily limited by the many constraints, work meetings and hierarchical superiors. Besides, he missed working with his hands. He decided to leave the group. Hamilton, meanwhile, would relocate permanently to Biel in 2003.

He is operating under additional constraints, far from Switzerland’s watch supply chains.

At the beginning of the 1990s, there were just a handful of independent master watchmakers, a new generation led by François-Paul Journe, Franck Muller, Antoine Preziuso and Vincent Calabrese – a far cry from the current Carré des Horlogers! When he founded RGM Watch Company in 1992, Roland Murphy was one of the early birds of this “new wave” in watchmaking.

And he was operating under additional constraints, because of his location, far from Switzerland’s watch supply chains. “My colleagues have access to local technologies and skilled labour, support from foundations and much more media attention,” says Roland Murphy. “I’ve been wanting to hire a Finnish watchmaker for several years now, a former intern, but working visas are very difficult to obtain.”

RGM Watch Company is housed in a former bank in the small town of Mount Joy, Pennsylvania

How to source critical components

Fortunately for him, the watchmaker initially acquired a large number of Nivarox assortments via third parties, which he still uses today. The first models were skeletonised column-wheel chronographs equipped with Valjoux movements. With the help of Jean-Daniel Dubois (now director of Vaucher Manufacture), then at Lemania, he was also able to launch several small series of tourbillon, minute repeater and perpetual calendar watches.

At the same time, he continues to work as a restorer of vintage timepieces, providing after-sales service in the United States for brands such as Sinn, Eberhard & Co. and Titoni. This supports RGM’s activity as an independent brand, with a dozen employees today. In 2007 the RGM Watch Company launched its first in-house movement after seven years in development. Today, the company has four Made in America calibres, for an annual production of some 250 watches. The brand has specialised in the segment of custom-made models, a growing niche, as well as in the trade-in of second-hand timepieces against new RGM watches.

Today, the company has four Made in America calibres, for an annual production of some 250 watches.

A certain vision of Americana

Current collections include the Pennsylvania series, which ranges from models under $10,000, equipped with custom cases, with parts made by a local aerospace industry supplier (!), to a tourbillon model in steel priced at $95,000. For the company’s twentieth anniversary in 2012, the Calibre 20 was launched on a model with guilloché dial and precise moon-phase indication.

The most recent movement developed by Roland Murphy and his team is the Calibre 801 with a sweep second, inspired by Patek Philippe’s classic central second system. The watchmaker is currently working on a new higher-end calibre, similar to the Zenith 135 or the Peseux 260. RGM Watch Company also uses ETA movements to offer more accessible watches, such as the 151 model priced at $3,000. The company even offers its vision of Americana through the Baseball Watch model.

RGM 801-COE Corps of Engineers watch

Bad retail experiences

Most customers are American watch connoisseurs. Roland Murphy chose to switch to a 100% direct sales model more than a decade ago, after a series of bad experiences with retailers. "At first, I started by collaborating with retailers, but I realised that it was better to give it up for a small independent brand like mine,” explains the watchmaker. “The major brands give advantages to sellers to ensure their supremacy. One day, a customer went to a point of sale that represented me in California and asked for the price of one of my watches: he was immediately redirected to another brand. This happened three times in three months. Enough to understand that it was no accident.”

"I started by collaborating with retailers, but I realised that it was better to give it up for a small independent brand like mine.”

RGM Watch Company took the drastic step of withdrawing from the dozen or so points of sale that represented it in the United States. “By getting rid of this margin, it also allowed me to offer more affordable models,” continues Roland Murphy. “In the end, we reduced production and increased our margins. With the advent of the internet, we have really grown, especially thanks to the impact of social networks and the support of specialised blogs.” The watchmaker manages the Instagram account of his brand himself.

RGM’s in-house Caliber 801, inspired by America’s watchmaking history

A region forgetting its horological past

With his experience as a restorer, the watchmaker doesn’t want to hear about using silicon in his calibres: “When I think of a watch, I think of its repair in several decades’ time. Too few brands take this into account. This is also why independents are so popular with collectors. We’re dealing with humans, not technocrats.” Roland Murphy’s succession seems to be assured, since his son-in-law works for the company, and his son has just graduated with a specialisation in CNC operations.

The citizens of his region are no longer exposed to the importance of the watchmaking industry, however. “Many people are unaware of the long industrial and watchmaking heritage of our territory, despite the presence of the National Museum of Watchmakers and Clockmakers.” So, with his good humour and sincere speech, Roland Murphy acts as a salutary reminder, which may lead to new vocations among those whose grandparents devoted their lives to watchmaking.

History

 The glory days of American watchmaking

When he visited the World’s Fair in Philadelphia in 1876, Swiss watchmaker Jacques David was alarmed by the rapid growth of American industry. His letter to his colleagues remains famous, as it triggered a strong wave of modernisation in the Swiss industry. We take a look back at the most successful years of the Made in USA watch.

Indirectly, Swiss watchmaking owes a debt of gratitude to American industrial genius. Indeed, it was the threat of obsolescence in the face of US productivism that set in motion a major project to modernise the working structures of the Swiss watch industry at the end of the 19th century. Something similar would happen again a century later, in the face of the performance of the Japanese quartz watch...

America was built on the conquest of new territories and the advance of the railways deeper and deeper into the Wild West. Watchmakers played a major role in this undertaking by providing time measurement tools to coordinate this progress and avoid accidents in a very large country with a multitude of time zones. For the needs of the railway and the conquest of the West, American watchmakers worked hard to accelerate production, quickly moving towards assembly lines and mechanisation.

For the needs of the railway, American watchmakers worked hard to accelerate production.

At the Philadelphia International Exhibition in 1876, Waltham, based in Massachusetts, demonstrated the capabilities of a watch production line, introducing a fully automated machine to manufacture precision screws. This had a great impact on Jacques David, Longines’ technical director. His letter to his compatriots, entitled “MM. Les Horlogers Suisses: Réveillez-vous” (Swiss watchmakers, wake up!), acted as an alarm bell for the Swiss industry, which was still largely based on the age-old system of “établissage”.

Between 1850 and 1957, Waltham produced around 40 million watches, clocks, speed counters, compasses, detonators and other high-precision instruments. Another national company, Elgin, based in Illinois, supplied nearly half of the total number of pocket watches manufactured in the United States during its century of existence from 1864 to 1964. Another brand, launched in New York by Bohemian immigrant Joseph Bulova, established itself as one of the pioneers of standardised mass production of watches. It aired the first radio commercial, providing the time to millions of Americans from 1926 onwards.

Hamilton, still known to the general public but now under a Swiss flag, was founded in 1892 in Lancaster, Pennsylvania. Its history is linked to the advance of the railway in the United States: in the 1920s, more than half of Hamilton’s production was devoted to watches for railway employees. But it also accompanied the rise of the American army: GIs wore Hamilton timepieces during the D-Day landings. The Second World War saw the Lancaster firm produce one million chronographs for the needs of the army. American watch factories were operating at full capacity at the time...

Detroit

 Shinola: timepieces, cola and bedrooms

The Detroit firm is a symbol in the American industrial city. Thanks to its partnership with Ronda and a network of own-brand stores, it has managed to make a name for itself in the cool and young quartz watch segment in the United States. The opening of a hotel in its home town accentuates its lifestyle aspect. Shinola is now introducing new lines equipped with mechanical calibres.

After watches, bikes, notebooks and record-players, it’s the turn of loudspeakers and headphones, as well as a hotel and a brand of cola. After all, why should a watch brand restrict itself to its primary mission, especially if its groove is lifestyle? Shinola, launched in 2011 by Tom Kartsotis (the co-founder of Fossil), has taken things to an extreme, since it is has just opened its first hotel in Detroit.

The leitmotiv of this ongoing diversification, in whatever product category, is design. Watches remain the principal business of this young brand with an old name – Shinola was a famous American shoe polish manufacturer during the first half of the twentieth century. The careful, ultra-classic, elegant design of the watches has won over new generations of buyers in the United States. The best-selling lines are the Bedrock and the Runwell, with prices ranging from USD 550 to 2,200.

The Shinola Hotel in Detroit

The brand has so far produced almost exclusively quartz watches, except for a few mechanical series in limited editions. And quite naturally so, since the Shinola factory in Detroit, where the watches are assembled, was born of a partnership with a Swiss champion of quartz watches, Ronda. However, in 2019 it is launching an offensive on the automatic watch front, this time partnering with Sellita to supply calibres for the new Runwell Automatic timepieces.

Today the company has no fewer than 28 proprietary boutiques in the US, from Boston to Honolulu. It is also distributed in several renowned stores in Europe, such as Le Bon Marché in Paris, and has opened its own store on the Old Continent, in London.

A new calibre in Motor City

A few years ago, the brand was admonished by the strict Federal Trade Commission (FTC) over the Swiss and non-American origins of certain components of its watches, including, precisely, those from its partner Ronda. Since then, it has had to use the label “Built in Detroit using Swiss and imported parts”. But who cares about the label, the locals would say, because in Detroit, the brand has become the living symbol of a city which is seeking to create a post-industrial dream, “Motor City” having been ruined long since by globalised delocalisation.

The Runwell Automatic by Shinola

Shinola now employs more than 650 people across factories, retail, and corporate. The brand shares its Argonaut Building premises with a famous industrial design establishment, the College for Creative Studies, and does not hesitate to make use of its young talent. Not content with just reburnishing Detroit’s image, Shinola is now placing itself in the role of moral support-giver to immigrants, with its Statue of Liberty line, an extension of its Great Americans series and, first and foremost, a reference to a tense political context on this issue in the United States.

The challenge facing Shinola will be to withstand the test of time, when the current predilection for ultra-classic, vintage lines starts to wane. What will happen the day when the hipsters shave off their beards and start looking ahead, towards more futuristic products once again? On that day, Shinola will have to be able to fall back on its natural elegance.

Strategy

 Grand Seiko: the American bet

The new deployment of the Japanese brand overseas starts with America. Seiko has opened the world’s first boutique dedicated exclusively to Grand Seiko in Beverly Hills. It has also launched a series of limited editions for the US market. Interview with the American management.

Grand Seiko, previously Seiko‘s upscale collection, has broken away from the parent company to become a fully-fledged brand in its own right. This is part of an ambition to conquer a bigger share of the global Haute Horlogerie market.

In Japan itself, Grand Seiko was already renowned for the finesse of its design and the precision of its calibres. But elsewhere in the world, and especially in the United States, the name “Seiko” was mostly associated with entry-level watches, since the quartz revolution that saw the Japanese brand conquer the planet.

It was to correct this narrow vision of the breadth of the company’s offering that Grand Seiko freed itself. And it is naturally in the United States that the first effects have been felt the quickest. No coincidence, then, if the world’s first Grand Seiko Boutique was inaugurated in Los Angeles, on Rodeo Drive in Beverly Hills.

A series of limited-edition Grand Seiko Spring Drive models have been launched for the American market

Europa Star had the opportunity to speak with two key figures about the development of the new entity in the United States: Akio Naito, Chairman and CEO of Grand Seiko Corporation of America, and Brice Le Troadec, Brand President of Grand Seiko America.

The first brand store has opened in Beverly Hills, there are limited editions for the US market and you’ve enjoyed a favourable reception by retailers and collectors. The new global ambition of Grand Seiko seems to have found fertile ground in the United States…

Akio Naito: Indeed, the new strategy makes sense here. We have to catch up with all the potential that has not yet been deployed by Grand Seiko in the luxury market in the past, especially in the United States. Grand Seiko, born in 1960, had until now been almost exclusively promoted in the Japanese domestic market. When the company decided to expand internationally, it did so first through its production of affordable watches and not its more luxurious ranges. That’s why, even today and excluding Japan, a majority of people associate the name Seiko with an affordable brand. In the United States, the average price of a Seiko remains less than half of that in Japan!

Brice Le Troadec: We are very pleased with the first results of this strategic decision to make Grand Seiko a brand apart. Collectors who already know the brand are our first customers, but we intend to gradually expand this base to a wider audience. US retailers are very excited! We are delighted to see so many new customers interested in Grand Seiko. The United States is already the biggest market for Grand Seiko outside of Japan.

Brice Le Troadec, Brand President of Grand Seiko America

“The United States is already the biggest market for Grand Seiko outside of Japan.”

You have opened a Grand Seiko store in Los Angeles and have Seiko stores in New York and Miami. What is your strategy for the distribution of Grand Seiko in the United States, especially in terms of the difference between retail and wholesale networks?

Akio Naito: The flagship store inaugurated in Beverly Hills is part of our new strategy, because it allows us to control our image in order to deepen this market. However, the idea is not to multiply brand stores. The wholesale network is our priority. Our goal is to have approximately sixty Grand Seiko partners of high quality in the United States.

What about online distribution?

Brice Le Troadec: We currently do not have a Grand Seiko e-commerce platform; however, it is possible to find Grand Seiko models online through our authorised retail partners, but not the extended collection. We are also proud of our partnership with Hodinkee, who have a successful e-shop.

Akio Naito, Chairman and CEO of Grand Seiko Corporation of America

“Our goal is to have approximately sixty Grand Seiko partners of high quality in the United States.”

The United States remains a stronghold of brands like Rolex and Breitling. How do you intend to convince American buyers?

Akio Naito: We offer very high-quality watches, with a focus on precision and finishing. The most sought-after Grand Seiko models are powered by our innovative Spring Drive in-house movement. Watches equipped with high-frequency Hi-Beat calibres are also particularly popular. As for our prices, they start at $2,200 for quartz watches. In general, I was surprised by the young age of Grand Seiko collectors in America. Our models are particularly appreciated by the new entrepreneurs of Silicon Valley, and have a very strong appreciation from watch connoisseurs who understand the intense craftsmanship with which the brand has become synonymous.

Brice Le Troadec: We have launched three Grand Seiko Spring Drive models reserved for the American market, with very original finishes and motifs on the dial, introduced as “Kabuki Kimono” dials. The dial texture is inspired by the Karazuri “empty printing” technique used in the texture of the kimonos worn by actors in Kabuki theatre. We are counting on these limited series of the 44G line, which have been very well received, to increase our brand recognition in the United States.

Manhattan

 Cellini: everything for independence

From his new Manhattan boutique, Leon Adams, a leading figure on the American watchmaking stage, details his strategy for resisting the growing influence of large watch chains and mono-brand boutiques. It is all about working with independent brands that share similar values.

In the watch industry, Cellini is not just the name of a famous Rolex collection. It is also that of a historic and uncompromising New York watch and jewellery boutique. In 1977, Leon Adams opened his first store in Manhattan’s legendary Waldorf Astoria. More than 40 years later, while the hotel (now owned by the Chinese Anbang Insurance Group) is being renovated, the retailer, who works with his two daughters, has just moved to a new space on Park Avenue.

Leon Adams, founder of Cellini in Manhattan

“With the development of e-commerce and the distribution network, many brands have pushed the retailer completely to the sidelines.”

Once spread over two shops between the Waldorf Astoria and Madison Avenue, the collections are now under one roof. “Park Avenue is not the typical shopping destination, it is not where the majority of watch stores are located,” explains Leon Adams. “And in the end, it’s good, because we have an offer that sets us apart just as much.” The nearest watch destinations are the headquarters of the Phillips auction house, as well as Richard Mille and Audemars Piguet boutiques.

Indeed, Audemars Piguet illustrates the problem facing a large number of American retailers: with its strategy of direct control of its distribution, the Le Brassus brand recently ended a 40-year partnership with Cellini. The opening of brand boutiques and the development of e-commerce by major actors are pushing Leon Adams and others like him to get closer to smaller, more exclusive brands with whom dialogue is easier.

Cellini’s new store on Park Avenue in New York

Fewer options for retailers

“With the development of e-commerce and the distribution network, many brands have pushed the retailer completely to the sidelines,” explains this astute connoisseur of watchmaking history. “Nothing is attributed to us, in terms of online promotion, for example. Their key interest is to make their own stores profitable.”

The retailer continues his analysis: “I am not against the idea of a mono-brand store, which can make sense in large cities. But I don’t understand the need to open brand boutiques everywhere, including in more remote areas.”

If Leon Adams thinks that brands are barking up the wrong tree, it is also because these strategies, “by pulling production upwards, are strengthening the grey market.” The only way to resolve this, says the retailer, “is not to open new stores or online platforms, but to reduce production and improve product traceability.”

In the face of these adverse conditions, Cellini’s strategy has been to grow with independent high-end brands that have neither the size nor the pressure power of the giants. The retailer’s portfolio highlights companies such as Ressence, Urban Jürgensen, Voutilainen, De Bethune, Romain Gauthier, MB&F, Greubel Forsey, H. Moser & Cie, Laurent Ferrier and, very recently, Grönefeld.

Inside Cellini’s watch store

All for the local collector

“And it’s a phenomenal success,” says Leon Adams. “This brings a new customer base. While the mainstream market has been relatively stagnant in terms of technological innovation in recent years, these highly creative independent brands are attracting a lot of interest.” In recent years, the number of tourists has also declined due to the appreciation of the dollar, making it even more essential to find strategies for reviving the local customer base.

“The watch business in America is becoming a little healthier, because a certain number of brands have finally decided to reduce their production and release fewer new products, thus stopping flooding the market,” admits Leon Adams. “Other companies, such as our partners Vacheron Constantin or Jaeger-LeCoultre, have decided to launch new, more affordable collections, which should therefore be easier to sell. But what still hurts our business is that brands continue to try to sell directly and forcefully. The grey market remains far too important. The industry created this monster.”

South California

 Hing Wa Lee: everything for the Asian-American community

He is an embodiment of the American dream. His father, a gemstone carver, made it to Hong Kong under incredibly difficult circumstances before emigrating to California. David Lee is now a watch retailer with unusual business acumen, as well as being one of the world’s greatest collectors of Ferraris.

David Lee’s Instagram account, aka “ferraricollector_davidlee”, has all the elements you might expect from the lifestyle of the super-rich in Southern California, like sports cars, private jets and extravagant watches. The owner of Hing Wa Lee Jewelers, in San Gabriel and Walnut, has one million subscribers on his private account.

David Lee, owner of Hing Wa Lee Jewelers in South California

“Some of our competitors can now speak Chinese, but the big difference is that we think in Chinese.”

As a representative of Rolex, Cartier, Richard Mille, Hublot and Omega, he addresses a very specific clientele: the wealthy Asian community in Southern California, whether they are residents or visitors. It’s a successful niche for one of the last multi-brand retailers in this region. David Lee has dramatically increased the turnover of the family business founded 50 years ago by his father, a gemstone carver, since he took over. After swimming across the inlet between Hong Kong and Macau, an extremely dangerous journey, his father settled in the United States in 1980 as a jewellery distributor.

A growing target group

Now 52 years old and preparing the third generation to take over, David Lee took the initiative to start opening stores and diversifying into watchmaking when he joined the family business in 1992. “Today, we are satisfied because we have 99% of the watches we like to sell,” says the entrepreneur.

With Chinese customers largely dominating global watch sales, some other stores in the region now hire employees with a good command of the language. David Lee, however, intends to keep his grip on his clientele, with a simple formula: “Some of our competitors can speak Chinese, but the big difference is that we think in Chinese! The entire team is able to manage the Chinese market in its diversity: a Shanghai customer is not a Beijing customer. It’s easier to do business with our cultural knowledge.”

The pre-owned equation

Aside from his high-traffic Instagram account, David Lee uses the internet mainly for information purposes: “We are not authorised by brands to sell online. In any case, we would not be able to compete with the grey market. And anyone looking to buy a watch online is looking for the best price, not an experience. Brands don’t have the solution yet.”

The retailer has also diversified into real estate: “Given the changes in the distribution structure, I am interested in any investment opportunity in store takeovers. We have a solid financial base and the ability to grow. For example, we can consider taking over retailers who want to retire or fail to keep up the investments requested by the brands.”

In the latest adaptation to date, in response to the growth of the secondary market, Hing Wa Lee has entered into a partnership with the WatchBox platform, which specialises in the sale of second-hand luxury watches. “This is the first partnership of its kind,” says the retailer. “It started in October. The results are good, because there is a real need for recycling pre-owned watches in the industry, and we do a lot of trade-in, even if the brands themselves don’t really know how to deal with this segment yet.”

Chinese clients, who are the main focus at Hing Wa Lee, want above all to buy new watches: “But there is a real interest when it comes to selling a pre-owned watch and exchanging it for a new one. We thus answer this equation.”

Long Island

 London Jewelers: everything for the family

The fourth generation of the Udell family has arrived at the Long Island retailer, which has also expanded into Manhattan. Deeply rooted in its community, it has created its own “artery of luxury” on Long Island, an alignment of boutiques combining watchmaking and jewellery, as well as multi- and mono-brand stores.

If we could only mention one historical family watch retailer in the United States, it would probably be London Jewelers on Long Island. It’s simple: we met the whole family, the third and fourth generation, and each member took turns telling their story, with strictly rationed speaking time.

After more than 90 years in business, London Jewelers has boutiques in Manhasset, Greenvale, Glen Cove, East Hampton and Southampton on Long Island, as well as in the Oculus at Westfield World Trade Center, in Manhattan. The retailer has created a unique boutique alignment in Manhasset, where it operates a true “artery of luxury”: a multi-brand store, a Van Cleef & Arpels boutique, a Chanel boutique, a David Yurman boutique, a Cartier boutique, and an innovative bridal concept boutique exist side by side.

Zachary, Jessica, Scott, Candy and Mark Udell, Randi Udell-Alper, Scott Alper

Territorial control

Candy Udell is in charge of the jewellery department within the family company, which also produces its own collections. Daughter Randi assists in design and is also responsible for social media. Mark and Candy’s son Scott is responsible for growing the digital business and oversees the Two by London bridal boutique. As for watches, the retailer has long represented the essentials: Rolex, Cartier, Audemars Piguet and Patek Philippe. Today, it has a portfolio of around 40 brands. Not surprisingly, London Jewelers focuses primarily on strong personal relationships with its sophisticated clientele: “Our advantage is hands-on local service rather than digital distance. Touch and feel has never been more important than it is today,” says Mark Udell.

One of the biggest challenges today is access to the product, notably the most sought-after models by Rolex and Patek Philippe.

Above all, the brand can count on a territory with a well-off and loyal clientele, where it is very dominant. “The market is very healthy,” notes watch specialist Zachary Udell. “We are addressing a clientele that is looking for a relationship of trust.” About 65% of turnover is based on jewellery. One of the biggest challenges in selling watches, as is the case for many luxury retailers today, is access to the product, notably the most sought-after models by Rolex and Patek Philippe.

A first boutique in Manhattan

“We are a family-owned business of 93 years where integrity, service and attention to detail come first,” says Candy Udell. “We are deeply rooted in our region, with warm and almost family ties with our customers.” The retailer also invests in e-commerce, for a selection of brands that allow it. It has also just entered into a partnership with the online platform Crown & Caliber, which specialises in pre-owned, in line with a strong trend in the sector in the United States.

Owners of luxury watches are now able to resell or exchange their models in London Jewelers’ boutiques. Watches are evaluated by Crown & Caliber. In exchange, they can choose to receive the watch’s value in cash, or purchase credits from London Jewelers – in the latter case for an amount 20% higher than the first option.

“We are deeply rooted in our region, with warm and almost family ties with our customers.”

In addition, the retailer, which has already branched out from Long Island for the first time to open a boutique in the Oculus in Manhattan, is not ruling out further expansion, if the right opportunity presents itself. “Retail is not dead,” says Mark Udell. “But we only plan to go where there is insufficient supply and where development would be viable.”

Silicon Valley

 Stephen Silver: everything for digital entrepreneurs

Located in the richest valley of the world, the independent retailer has access to a constantly growing pool of customers. Since its extension to watchmaking in 2014, the jeweller has been working with Bitcoin and independent brands.

Stephen Silver delivers some of the world’s most exclusive watches to some of the most powerful men on the planet. In the heart of Silicon Valley, its stores in Redwood City and Menlo Park offer a selection of really rare watches – no mainstream brands here, only models by Greubel Forsey, F.P. Journe, Richard Mille, HYT, Bovet, De Bethune, Hermès, Bell & Ross, MB&F, Ressence, Laurent Ferrier and Urwerk. The best in the independent and ultra-contemporary watchmaking scene.

“My father is a gemmologist by training. He started out as a jewellery distributor and a consultant to wealthy entrepreneurs in Silicon Valley, where he has built a very good network and privileged relationships with venture capital funds,” says Jared Silver, who joined the family company founded in 1980.

Jared Silver, Silicon Valley retailer

“Would you dare to buy De Bethune online without seeing it with your own eyes?”

In 2008 they opened their first small store dedicated to jewellery. Stephen Silver’s son continues: “I saw all the development potential that exists in the region with watchmaking, in order to reach a male clientele. Finally, in 2014, we opened a watch store, which from the beginning accepted crypto-currencies as a means of payment.”

Most of the customers are young, with strong purchasing power, already collectors, with a pronounced taste for the exclusive and disruptive luxury segment. “Of course, they are very active people who travel a lot and could buy watches anywhere in the world, but we offer two advantages: a solid inventory and a responsive local service,” explains Jared Silver.

The True Facet corner inside Stephen Silver’s boutique

A relaxed mode of selling luxury timepieces

The young entrepreneur defends the idea of an “authentic” vision of watchmaking in a standardised world, where products and stores are increasingly homogeneous: “New generations cannot necessarily find their way there, because they place a premium on authenticity and originality. They are looking for a local and real experience, in a relaxed way. Everyone knows the products of the major brands. But who has ever had the chance or opportunity to try a De Bethune? And would you dare to buy it online without seeing it with your own eyes?”

As for watches that are better known to the public, Stephen Silver has decided to team up with True Facet, an online platform for the sale of second-hand luxury watches, to offer Rolex, Patek Philippe and Audemars Piguet timepieces to its customers in Silicon Valley.

It’s a way of uniting the old and the new, the physical and the virtual, but also the exclusivity of niche brands with the desirability of the industry’s icons. And all that is aimed at a very specific audience, made up of Silicon Valley entrepreneurs who appreciate the value of tangible products all the more because they are shaping an ever more virtual world...

Washington DC

 Tiny Jewel Box: everything for the political elite

Since Roosevelt in the 1930s, the American political establishment has been buying jewellery from a specific retailer: Tiny Jewel Box. This historic address in Washington DC successfully added watches to its portfolio in 2001.

“We’re always very happy when we get a call from 1600 Pennsylvania Avenue.” Matthew Rosenheim has a rare privilege in the watch industry: the president and owner of the Tiny Jewel Box boutique, which has sold timepieces for 17 years, is Rolex’s exclusive representative in central Washington DC – the most internationally sought-after brand, in the political heart of the most powerful country on the planet. While many fear for the survival of the “bricks-and-mortar” model, such a competitive advantage is difficult to beat.

“In many ways, and despite all the technological developments, my job remains very similar to that of my grandparents,” Matthew Rosenheim emphasises. “We do business based on human relations. Of course, we develop new strategies, but sometimes the simplest things work best.” Here, each new product entry is meticulously thought out by the Rosenheim family.

Matthew Rosenheim, CEO of Tiny Jewel Box in Washington DC

“Despite all the technological developments, my job remains very similar to that of my grandparents.”

Tiny is beautiful

Unlike many of their competitors, the Rosenheim family systematically refused to open other stores, turning their only boutique, which now occupies a historic building in the city centre, into an impregnable bastion of jewellery and watchmaking. Its history began – unusually in the industry – with a woman, Roz Rosenheim, who opened her jewellery store in Washington in 1930 and counted Franklin Delano Roosevelt as a regular customer.

The exhibition space is no longer confined to the 100 square feet of the original shop (hence the name of the boutique); its area has multiplied by 80 in 80 years, as the Washington Post underlined in a portrait of this iconic DC store. “We like the idea of a single destination, embodied by familiar faces, with the owner on site to welcome you,” Matthew Rosenheim explains. “When you operate a family business, it is difficult to separate the business from your personal interests.”

Tiny Jewel Box was founded in 1930 in Washington DC

Watchmaking and “understatement”

The basic conditions are rather favourable to Tiny Jewel Box. This unique location, a stone’s throw from the White House, has always determined its destiny. Moreover, few brands have opened their own boutiques in the American capital. The proximity of New York probably plays a role, but also the profile of their (rather conservative) clientele. “I believe that there is a whole fringe of watchmaking clientele that is not necessarily ready to adhere to the concept of a single-brand boutique. The concept of ‘brand loyalty’ is now more in question than ever,” says Matthew Rosenheim.

Over and above the advantages of its location, it was Tiny Jewel Box’s cautious and highly selective strategy that paid off. Initially a jeweller, the company expanded into watchmaking quite late, at the turn of the year 2000. It has since caught up quickly, forging successive partnerships with Rolex in 2001, Cartier in 2015 (which coincided with the expansion of the boutique, taking over premises previously occupied by Burberry, and freeing up a lot of space for the new watchmaking section) and Patek Philippe in 2016.

Tiny Jewel Box’s cautious and highly selective strategy paid off.

Sporting timepieces with a disruptive design or covered with precious materials do not necessarily fit in with the electoral base and the public service mission of its representatives. The word “understatement” takes on its full meaning here – and has nothing to do with purchasing power... “Here, the local currency is not money, but your network, who will take your call or not!” Matthew Rosenheim points out.

When Obama and Bush meet

Political elites, including a series of American presidents, are the primary clientele of this prestigious address. During the 2008 presidential transition, Michelle Obama presented Laura Bush with a gift from Tiny Jewel Box. A vintage brooch that the Obamas presented to the Queen of England in 2011 also came from there.

In addition to customers and institutions from the political world, the shop also attracts businessmen visiting the American capital. The demographic structure of the city itself is changing. While the middle to wealthy classes settled in the suburbs from the 1960s onwards, as they did in many other American cities, we are now witnessing the opposite phenomenon, with the corollary of a real estate boom. Washington is gentrifying.

Los Angeles

 Wolf doesn’t want an accessory role

The multi-generational company based in California has conquered a place of choice in the highly specialised market of watch winders and watch cases. Its empire is now worldwide, positioned in the affordable luxury segment.

The workshops are well stocked with cardboard boxes, in this hangar in an industrial part of Los Angeles. And inside these boxes are other boxes... watch boxes. Watch cases and watch winders are the speciality of the Wolf company, run by the British family of the same name for five generations. The current heir, Simon Wolf, has decided to settle on the other side of the Atlantic, in California. It’s a practical choice, given that it’s half way between the assembly lines in China and the heart of luxury watchmaking in Switzerland. His playing field is now global.

Wolf’s Axis Collection

“Producing a watch winder is more complicated than we usually think,” says Simon Wolf, showing us around the company’s headquarters in Los Angeles, which also serves as a logistics and after-sales centre for North America. “It is a matter of assembling hundreds of components to produce a product that is both beautiful and effective. We combine the work of leather with the mastery of electronics.”

Simon Wolf represents the fifth generation of the family at the head of the company

The “fitness” of the watch

But what exactly is the purpose of a watch winder? The device serves as a kind of “sports coach” for the watch, to keep it in shape when its owner isn’t wearing it. “If you leave your automatic watch on your bedside table, it will stop; it will no longer keep time, all the complications will be out of phase and it will not be good for its long-term functioning,” says Simon Wolf. “With our watch winders, you will find it in perfect working order. Otherwise, you should do like Nicolas Hayek Sr. and wear all your watches at all times, so they stay on time!”

The watch winder market has a small number of global players alongside Wolf.

It is possible to set the rotation time, and the number and speed of the revolutions, on the electronic module(s) fitted to each rotating watch case. Like the human body, a watch should not be permanently “activated” – the result would be exhaustion! The module is therefore set to pause regularly. While it usually turns clockwise, some models with particular complications, notably by Patek Philippe, require counter-clockwise rotations for their continuing good health.

Wolf’s watch winders are designed in California, made in China, like Apple

It’s an interesting sign of the times that the cuffs produced by Wolf to accommodate watches in their rotating cases have doubled in size in two decades, to adapt to ever more muscular watch formats. (Although a counter-revolution now seems to be under way!)

Raising awareness in emerging markets

The watch winder market has a small number of global players alongside Wolf: Scatola del Tempo in Italy, Buben & Zörweg in Germany and Swiss Kubik in Switzerland. It has also spawned an unknown number of cheap products with dubious pedigrees on platforms like Alibaba and Amazon. While it may facilitate counterfeiting, the web is also an opportunity for Wolf, which has launched its own e-commerce operation and has forged partnerships with specialised sales sites. The company says it already sells nearly a quarter of its production online.

Wolf’s watch winders – designed in California, made in China, like Apple – start at 250 dollars and position the company in a mid- to high-end niche. Indeed, the brand also offers safes with multiple rotating modules, costing up to $250,000. The watch winder is undoubtedly the most “intriguing” part of Wolf’s activity. The company produces more than 200,000 modules per year (one module corresponds to one watch; a watch winder can accommodate up to 32 modules).

The 1834 collection by Wolf

But the company founded in 1834 actually achieves nearly two-thirds of its turnover on another, more traditional activity, the production of boxes and kits for watches and jewellery, as well as other leather accessories. These are sold at specialised retailers, but also in large shopping centres. Wolf now has some 2,500 points of sale around the world, targeting both collectors who are looking for good performance in their watch winders, and people who appreciate the design of their leather goods.

The United States, “probably the most mature market for the use of watch winders,” is Wolf’s main market, ahead of Europe. As for Asia, a new giant in watch consumption, it is still an “underdeveloped” and “high-potential” market for watch winders. Before Wolf can sell its products, it must first convince the target audience of their usefulness, and popularise their features. In a way, it’s a process of “evangelisation”.

Miami Design District

 "Brands create different stores here”

Craig Robins, CEO of Dacra Development and the man behind the Miami Design District, talks about the creation of this experimental shopping experience, unusual for the United States, mixing architecture and business. It’s where the Watches & Wonders fair takes place.

“I was born in Miami Beach, with a father working in real estate. My focus has always been to merge my interest in art with my interest in real estate. The first artist I convinced to come to South Beach was Keith Haring. Every time, the idea was to discover the next neighbourhood: after South Beach, my focus went to developing the Design District project.

Craig Robins, “father” of the Miami Design District

“We want more critical mass in the district, building on events like Watches & Wonders.”

What I find interesting in this project is that it is a contained area, with development we can control. We want to make it an iconic cultural destination. You don’t need to come to shop, you can simply walk around and see architectural and design masterpieces such as the façade imagined by Japanese architect Sou Fujimoto. Global brands like Louis Vuitton or Hermès create stores here that are different from the rest of the world. It is this combination of business and architectural discovery that makes the Design District an international experience.

Palm Court, in the heart of Miami Design District

During this year’s Watches & Wonders, we welcomed more people than ever before, from watch connoisseurs and car fanatics to locals and first-time visitors. Foot traffic almost doubled from last year, reaching nearly 28,000 attendees over three days. What will happen now is that we want more critical mass in the district, building on events like Watches & Wonders. We can still add space to this neighbourhood, with good perspectives for residential and offices.

As for my personal taste in watches, I like wearing the Lamborghini edition created by Roger Dubuis. Timepieces fall naturally for me in the collectible category: the more you know, the more interesting they become. The amount of talent and engineering is fascinating. But I am still a complete amateur!”

(transcript of a talk given at Watches & Wonders 2019 and on Hodinkee Radio Live)

Auctions

 “A watch culture in the making”

Can a country be at the forefront of the watch culture when its own once- flourishing industry has been erased from the map? Reflections with Paul Boutros, head of the American watch division for the Phillips auction house.

We met Paul Boutros, a collector and former engineer converted to watchmaking, now in charge of the North American watch market for Phillips, at the “Styled” auction last December in New York City. “My best memories with my father are related to vintage watches,” he says. “I started by writing about timepieces, as well as taking watch photography.”

In 2013, with the help of Swiss designer Eric Giroud, he began designing watches through his own consulting company. Phillips then wanted to use his services: “The CEO told me that they were going to open a watch division with Aurel Bacs. I met Aurel and it accelerated things.” He started at Phillips in 2014, with the ambition of finding the highest quality collectible watches. We talked about the outlook for the vintage market in the United States.

Paul Boutros, head of the American watch division at Phillips

“I may surprise you, but for me, the United States is not a country with a great watch culture, compared to Germany, France, Italy, Hong Kong or Japan.”

Europa Star: Can you estimate the size of the vintage watch market?

Paul Boutros: Today, the watch auction market, essentially vintage – which means models dating from before 1985, according to our definition – accounts for around 250 million dollars per year worldwide. Despite the many record prices that have been established recently, the market is not growing in absolute size and has remained stable over the past five years. But Phillips’ relative share of this market has changed significantly. We represent nearly half of the market, with an annual turnover of approximately $110 million in 2018. But it should be stressed that the so-called pre-owned watch market is much larger than the watch auction market.

Where does the United States figure in this market?

The United States is becoming a destination for watch auctions, but remains behind Geneva and Hong Kong, where we organise two sales per year, compared to only one for the moment in New York. I don’t think it’s time yet to consider launching a second annual sale, because it is not easy to find enough watches that meet our quality requirements to make a satisfactory auction.

A Rolex ref. 8171 auctioned at Phillips last December in New York

How important is America to your supply of vintage watches?

Today, a large portion of the watches we sell worldwide come from the United States. And a majority of the bidders are Americans. But many of the bidders who eventually win the bids are Asian. This is particularly true with the advent of online sales. There may be a different mindset between American collectors, who are often looking for the best deal, and Asian collectors, who will put a lot of financial resources into obtaining the best quality.

“Today, a large portion of the watches we sell worldwide come from the United States. And a majority of the bidders are Americans. But many of the bidders who eventually win the bids are Asian.”

It sounds like watch culture must be strong in North America, if you find so many vintage watches there....

I may surprise you, but for me, the United States is not a country with a great watch culture, compared to Germany, France, Italy, Hong Kong or Japan. This may be linked to the disappearance of the once flourishing American watch industry. It’s a big market for Rolex, Patek Philippe, Audemars Piguet and Omega, but beyond that, I don’t see very strong interest for other brands in the modern watch market. We hope that interest in watchmaking will grow. In this respect, we are ready to join our efforts with the brands themselves, which are increasingly highlighting their heritage. Our interests converge on this point.

A rare Patek Philippe from 1928 sold by Phillips

Brands are increasingly selling certified pre-owned timepieces themselves, alongside their contemporary creations. Could you see Phillips offering new watches alongside vintage models?

Our own future could indeed combine vintage and contemporary watches, to become a “complete watchmaking destination”. But our short-term focus is to maintain solid financial performance, and to gradually build the best team of experts in the world.