25 Oct Pre-owned, unworn, big business: used watch dealers go big time
PRE-OWNED, UNWORN, BIG BUSINESS: Grey watch dealers go upmarket as demand booms. PRE-OWNED, UNWORN, BIG BUSINESS: Grey watch dealers go upmarket as demand booms. PHOTOS: ROLEX, RICHARD MILLE, PATEK PHILIPPE, TJIN LEEPHOTOS: ROLEX, RICHARD MILLE, PATEK PHILIPPE, TJIN LEE
YOU might have come across them in the mall. Luxury boutique lookalikes where, behind sleek glass fronts sit models of Rolex, Patek Philippe, Richard Mille and other coveted watch brands. Except that the glistening watches nestled in the display cases are used or pre-owned timepieces. Yet the shops selling these pre-owned watches look so posh they may be mistaken for the brand-name boutiques that they are modelled after: those selling luxe timepieces rolled out fresh from the factory.
For the curious passerby, or the shopper after a new, coveted timepiece, it doesn’t help that many of the used-watch shops are found right next door to these high-end boutiques.
These “grey” dealers are in the heart of Singapore’s main shopping district on Orchard Road, in Far East Plaza, Far East Shopping Centre, Mandarin Gallery – only a stroll away from Paragon, Ngee Ann City and ION where the big watch brands are concentrated. Other pre-owned watch shops are to be found in clusters in Landmark Shopping Centre on Victoria Street, The Bencoolen on Bencoolen Street and People’s Park in Chinatown.
There are around 50 pre-owned watch shops – including pawn shops – in Singapore, more than double the number a decade or two ago, according to estimates.
“It’s a sizeable market that’s helped tremendously by the Internet and social media,” observes Su Jia Xian, founder of the highly regarded watch website SJX. “And the rise of shopping online means that more young people will enter the business, having grown up digital.”
Demand from overseas – especially from Chinese and other Asian visitors – has also boosted the number.
But the growth as well as visibility of resale watch outlets is not confined to Singapore; it’s a global phenomenon.
European financial consultancy Kepler Cheuvreux puts the yearly value of the global market for used watches, including watches sold at auctions, at US$5 billion (S$6.95 billion) – and it’s growing at 5 per cent a year, more than twice the rate of the market for new luxury timepieces – fuelled by factors such as the rise of e-commerce, changing consumer tastes and growing communities of watch fans.
This burgeoning trade is getting harder for even the major Swiss watch brands to ignore. Many big names that have been battling grey dealers for years for stealing their market are now starting to embrace this secondary market.
Last year Richemont, the Swiss luxury group which owns watch brands such as Cartier and IWC Schaffhausen, bought UK resale watch retailer Watch-finder for, industry sources say, £250 million pounds (S$440 million). Observers like Mr Su see more acquisitions ahead, as watch brands seek more control of the timepieces they sell.
Which makes good business sense, according to Tom Chng, founder of the Singapore Watch Club. “(The pre-owned watch business) is a recurring business without the need for marketing dollars,” he says. “By buying back watches, or adopting some form of trade-in system, brands can have better control over the distribution of their used market.”
In Singapore, at least one major watch retailer is also looking into entering the business. Asked why, he says: “We will have more credibility than the grey dealers and better control of the watches.”
Until recently, that thought would never have crossed his mind. The local grey market for pre-owned timepieces had been pretty low-key. Most of the second-hand watch outlets were in quiet neighbourhoods such as Serangoon Gardens and Katong. The shops were unremarkable and manned by middle-aged “uncles”. Customers were mainly locals and business was done in cash. The watches sold were mostly vintage or out-of-production timepieces with brands unrecognisable today – Camy, Enicar, Universal and Bulova – all displayed haphazardly in old glass cabinets.
The market for used watches has since gone upmarket. Resale watch shops, as Mr Chng says, have become “sexier” and are run by people in their 20s, 30s or 40s. The stores, especially those on Orchard Road, are no longer patronised only by locals.
Younger operators, digitally savvy, have reached out to overseas watch collectors on the Internet and, cashing in on Singapore’s reputation as a watch hub, built a strong following among them.
Step into a pre-owned watch shop today and you are likely to be greeted by a young man or woman, often in casual designer garb. Drinks may be served while you browse around the fashionably furnished shop, well-stocked with the recent – and even the latest – sought-after watches, tagged with prices and model numbers.
Expert advice may also be offered – and payments for the watches may be made with credit cards – or even bitcoin.
At Chrono95 – an 800 square foot used-watch shop in Far East Shopping Centre – diamond-studded watches with names such as Richard Mille, Jacob & Co and Graff, are artfully displayed in well-polished showcases. The Richard Mille watches alone are valued at S$12 million, according to Angela Foo, the shop manager.
The bulk of the collection is in the S$40,000-and-above price range. Watches priced at S$30,000 and below account for under 15 per cent of its stock.
The pricier timepieces carried “differentiate” Chrono95 from other used-watch outlets, Ms Foo says.
Explaining why the shop is so stylish and is in a prime location, the 38-year-old says: “If you pay S$40,000 for a watch, you would want to buy it at a place that looks like it’s selling S$40,000 watches. You’re more ready to pay more here than in a neighbourhood shop, or online.”
The watches, including those consigned, are of course largely used pieces. Yet they are a far cry from the vintage timepieces sold in the second-hand watch shops of yesteryear. Most dealers today in fact shun vintages because they break down easily and when it comes to repair, it’s very difficult to find the parts for them, says Goh Wee Lee, also 38, the managing director of Goldman Luxury, a used-watch shop in Far East Plaza.
Many of the resale watch outlets also sell new or, in the trade’s parlance, “unworn” watches. Chrono95’s collection is half unworn. But they are all usually hot models not readily available in the boutique, or an authorised shop. Authorised sellers would tell buyers they have to wait for more than eight years for the watches, which include Rolex’s Daytona and Patek Philippe’s Nautilus.
“That’s where we come in,” says Ms Foo. Grey watch dealers have generally made it their business to supply the hot models. They can’t afford the high carrying cost of the “slow moving” timepieces.
One in three watches which Goldman Luxury sells are Rolex models. It’s the same for Chuan Watch, a pre-owned watch shop in Landmark Shopping Centre.
“It’s very competitive,” says Goldman Luxury’s Mr Goh. “Everyone’s selling the same thing. You must ensure your prices are reasonable.”
Reasonable? When you pay three or four times the authorised retail price for a Daytona or Nautilus at a used-watch shop?
Grey watch dealers say that’s the premium paid for accessibility. Everyone – including women – wants these hot timepieces, but there isn’t enough supply to meet the demand. Grey dealers say they pocket only a small premium; the bigger cut goes to the suppliers who include foreign contacts, customers who trade in their watches and, increasingly, individuals who flip watches to make a quick buck.
Flipping for a quick buck
“They’re the flippers,” Ms Foo says of the latter. “They buy and sell and they go to every shop to sell or to buy and move to another to offer the watch for a higher price.”
There are also reports of authorised dealers selling excess stocks to grey dealers; or selling to them rather than customers because they can charge the former premium prices. But the grey dealers we spoke to did not mention them.
Sixty per cent of Goldman Luxury’s watches – it carries 400-500 watches – come from overseas, many from Hong Kong China and Japan. Overseas collectors also often drop by at his shop to trade in their timepieces.
Chuan Watch, which relies mostly on the local market for supply, has a buy-back scheme that encourages customers to upgrade their collections and help renew its stocks.
“You buy (a reasonably big item) from us, we guarantee to buy it back within two years at 80 per cent of what you paid, 85 per cent if you buy another watch from us,” says Nick Lim, a director of Chuan Watch, who turns 28 this year.
“We believe selling a watch to the customer is not the end of it, but the beginning of a long-term relationship,” he says, adding that his shop also provides after-sales services such as polishing and repair.
Chrono95 doesn’t buy from anyone who walks into the shop to sell watches – and every day it has such offers. “We don’t buy from people whom we are not comfortable with,” Ms Foo says. “These are strangers. We don’t know them.”
Chrono95 and most other grey dealers are more concerned about stolen than phony goods. Used-watch retailers today know enough about watches – or they have watch technicians on hand – to tell the fakes from the real stuff. Even with sources they have known for years, there’s the risk that the watches are ill-gotten. Which was the case with one watch consigned to Chrono95 to sell. It was only discovered to be a stolen piece years after the customer who bought the watch returned it to the factory for repairs. Fortunately the matter was settled after the person who consigned it, a regular customer, returned the money and a full refund was made to the buyer.
“Our regular customer, who bought it pre-owned, didn’t know it was a stolen watch,” Ms Foo says.
Bogus and stolen watches have always plagued the used watch market but dealers today, unlike in the past, seem to be more serious in dealing with the problem. They are more cautious in picking suppliers and take extra care to weed out the fakes and rejects that fail their “quality” test.
Most offer a warranty against inauthentic or stolen goods, with a full refund. “We give a one-year warranty, which also covers the watch’s performance and internal damages,” says Chuan Watch’s Mr Lim.
Of course, it’s only the right thing to do. But a sound reputation based on integrity and trust is also good for business in a trade that depends a lot on returning customers – and where the image of second-hand watch dealers being notorious for counterfeits still sticks in the mind.
“We’ve got to win the confidence and trust of customers,” says Goldman Luxury’s Mr Goh. “When they spend so much, they must feel safe (that what they buy are genuine). Trust and honesty are very crucial for our business and also part of the reason for our success and survival.”
Chuan Watch’s Mr Lim adds: “It’s very hard to build but it can be lost very quickly.”
Looking at the grey market today, it’s easy to conclude that the pre-owned watch shops are doing a roaring business. Chrono95 has doubled the size of its shop in five years, while Chuan Watch’s sales have “easily” jumped “two to three” times since it started business in1995 – thanks largely to the Internet, according to Mr Lim. All, including Goldman Luxury, are also believed to be profitable.
But many used-watch dealers say they are not in it only for the money. Ms Foo and Mr Goh, relatively newcomers to the trade, are watch collectors who grew into the business.
“As I collected more and more watches, I came to a point where I started to trade – buy and sell – the watches in my collection in order to upgrade to the next watch,” Mr Goh recalls. “That’s how I got into the business.”
Soon after he opened the shop in 2014, Mr Goh had to enlist his father, who once sold computer accessories, to help cope with its growth.
Mr Lim was keen on music, but was roped in to help manage Chuan Watch in 2009 by his father, who swapped his watch technician job in 1995 for the used-watch business.
“I thought, ‘Why not give it a try?’,” Mr Lim recalls. “I also thought that my dad worked so hard to build the business and it would be a waste if nobody helps him.”
He now manages the day-to-day running of the enterprise with help from his younger brother, Shaun, while his father travels around the world.
“For me, it’s not about money, it’s more to prove that I can do my dad proud,” Mr Lim says.
Yes, but that hasn’t stopped him from enjoying the trappings of success. A recent issue of Affluent Media shows him with his father in a photograph with their Ferraris.
This article extracted from THE BUSINESS TIMES