Consumers seeking out an investment opt for precious metals.
As gold jewellery sales have suffered in the recession, it would seem that rising prices are having an opposite effect on the watch market.
The latest Swiss watch export figures show that the country’s watch houses have experienced a 30% uplift in the number of gold watches being sent out. The increase in gold watch exports supported a total export growth of 19.2% in October, with the number of gold watches sold accounting for half the total increase.
While these figures represent global outputs, watch retailers in the UK have reported an increase in demand for gold watches in the past few weeks.
In the Northwest, Cottrills and Prestons of Bolton stock luxury brands including Rolex, Patek Philippe and Audemars Piguet and the retail group’s business watch manager Stephen Drake claims that demand for gold watches is exceeding supply at its stores.
Drake said: “We have noticed an increase in demand for gold watches. Patek Philippe watches have a majority output of gold watches anyway and with Rolex releasing some very desirable pieces, particularly in rose gold, demand is very high. In most instances, particularly Rolex, demand is exceeding supply and therefore most product will go straight to the customer and not even get a viewing in the window.”
Dino D’Auria, manager and co-founder of luxury watch and jewellery boutique Frost of London, said he believes that the rising price of gold does not work as a deterrent to luxury shoppers, but rather adds prestige to the product category.
“For the clients that can afford gold watches in this market it is a sign of wealth and a status and they are pushing to buy for these reasons,” he said. “Also they see it as an investment as it holds its value so well.”
Frost of London only sells 18ct timepieces, so it is unlikely that sales in this particular store would be nonexistent, but D’Auria has noted a trend towards large pieces, suggesting that it is not a price sensitive market at the top end. “Larger size gold watches are some of our bestsellers,” he said.
This is something Arnd Einhorn of A. Lange & Söhne completely agrees with. Rather than dampen sales of its watches, which are exclusively gold or platinum, the economic crisis has made shoppers appreciate the value of gold watches even more. “In times of volatile economic conditions, value retention becomes an important aspect in buying decisions,” said Einhorn. “Timepieces made of gold comply with this requirement.”
But metal prices aren’t the only factor affecting prices, as Drake of Cottrills explained. “Currency is as much to blame with the price hikes as well as the continuing global gold phenomenon,” he said. “With most of our brand portfolio being of Swiss manufacture, the price of the Swiss Franc is key. The recent de-valuation of the Franc might not necessarily lead to a reduction in prices but rather stave off any future price increases for a longer more stable period. Some watch brands have had up to three price increases within a 12 month period. Traditionally, prices were re-evaluated on an annual basis.”
Mark Hearn, UK managing director at Patek Philippe distributor Rhone Products, admits that price hikes have made gold watch sales “more challenging”, but added that Patek Philippe is one brand sticking to annual rises, usually in the spring, rather than multiple times a year.
Drake admits that if the price of gold watches dropped dramatically through a currency or metal price change, he envisions that more shoppers would turn to gold watches, but in the mean time sales are still not slowing down, but they are considered.
The shoppers on the hunt for a gold watch will want it to last, pointed out Einhorn, and added that because of this classic styles are selling well at A. Lange & Söhne. “Buying a gold watch is a long-term investment,” he said. “Moreover, you may expect an A. Lange & Söhne watch to live longer than its owner. Therefore, best-sellers are classic styles that stand the test of time.”
It is a similar story at Jaeger-LeCoultre, where sales of gold watches – rose gold in particular – are “very strong”.
Jaeger-LeCoultre UK brand director and head of global strategy Zahra Kassim-Lakha said: “Jaeger-LeCoultre has a very discreet pink gold, which bodes well for long-term value and personal discretion. In these times of austerity, wearing a timepiece that exudes real value, heritage and timelessness is essential.”
This article was taken from the January issue of WatchPro, out now. To read digital versions of previous issues in full online, click here.