Gen Z fuels fast-growing second-hand watch market

Generation Z’s growing interest in luxury mechanical watches is keeping the pre-owned sector going at a time of falling second-hand prices, and a drop in Swiss timepiece export volumes, according to industry analysts.

Research shows that “Zoomers” — those born between the late 1990s and early 2010s — are hoovering up luxury watches and building fast-growing offline communities around them.

A YouGov survey commissioned by online marketplace Chrono24 found that 20 per cent of those aged between 18 and 24 were “likely or very likely” to purchase a luxury watch in the next 12 months, compared with an average of 11 per cent for all age groups.

They are spending more, too. A survey for the Richemont-owned second-hand retailer Watchfinder — conducted by pollsters Opinium — recorded that more than 10 per cent of Gen Zers own a luxury watch valued at between £1,000 and £7,500, higher than the demographic market average of 8 per cent.

But is this explosion of interest in expensive watches translating to sales of new watches? Not according to the UK’s largest luxury watch retailer.

“Gen Z have the interest, but they don’t have the financing yet for what is still a luxury item,” says Brian Duffy, chief executive of Watches of Switzerland Group, which recently reported annual revenues across its UK and US retail businesses of £1.54bn, up 2 per cent year on year. “But interest is definitely skewed younger. During that period of excess demand [post-Covid], a lot of that was fuelled by a younger audience, which we think is permanent.”

Instead, younger buyers are taking advantage of the lower prices and instant access available on the pre-owned market. Ben Staniforth, Watchfinder’s UK country manager, estimates that 80 per cent of Gen-Zers buy their first luxury watch from second-hand sellers. “They’re driven by a blend of financial savvy, a desire for unique and discontinued styles, and their commitment to sustainability,” he says.

Trust helps, too. In late 2022, Rolex formally entered the secondary market with its Certified Pre-Owned scheme, available at approved retailers. Other high-end brands have done the same.

Christy Davis, co-founder of UK-based watch-trading platform Subdial and the price-tracking Bloomberg X Subdial watch index, says collecting and trading luxury watches also taps into Gen Z’s appetite for alternative investments, as well as being a more realistic asset for those priced out of the housing market. “People would once have been putting money into [house] deposits, but a watch is a cheaper investment,” he says. “You need 10 grand, rather than 110 grand.”

As a result, experts say the pre-owned sector is growing, fuelled by a younger generation of buyers. Charles Tian, the 28-year-old Texas-based founder of the price tracker WatchCharts, says his company valued the secondary luxury watch market at $27bn last year, roughly half the size of the primary market, and forecast it would grow at between 10 and 12 per cent a year for the next decade. “It’s a combination of increased desire for instant gratification, as well as a sense of hopelessness for the future,” Tian says of the appeal of high-end watches to Gen Z. “Housing prices are outpacing income growth. They feel like, the more time goes on, the further they fall behind.”

This new generation of buyers could not come at a better time for the luxury watch industry. After record years in 2022 and 2023, Swiss watch exports have gone into reverse. The Federation of the Swiss Watch Industry reported last month that export values fell 12.4 per cent in September, compared with the same month last year. This indicates an acceleration in a decline that was first observed in late summer 2023, as buyers tightened their belts or switched their spending to experiences.

Claudia D’Arpizio, a partner at consultancy Bain & Company and an author of Bain’s annual luxury goods market study, says those record years owed a lot to younger watch buyers. “Growth has been driven by the younger generation discovering watches and the proactive approach of watchmakers to target them,” she says, adding that female buyers also contributed significantly.

Working with Gen Z has become an industry imperative. “Even if they’re not the core target from a purchase or volume perspective, they are the core target for communication and storytelling because they have a huge influence on other generations,” D’Arpizio says. “You can become an object of desire for your customers and enter their consideration even if they can’t afford it now.”

Brands that fail to produce something fresh are facing more pronounced declines in demand, especially from Gen Z. “For these brands, secondary market prices are dropping, diminishing their appeal as investment assets,” says D’Arpizio.

What makes Gen Z so powerful? “Gen Z are the smartest consumers by far,” says Austen Chu, 27-year-old founder of Hong Kong-based online watch-trading platform Wristcheck. “It’s the first generation growing up with a [smart]phone. Previous generations only had access to their local market, whereas they’ve had access to the world.”

But large swaths of the watch industry are at risk of being left behind, with many sticking to old-fashioned marketing tropes that focus on craftsmanship and past glories. “If they only talk about heritage, people are going to get bored,” says Scarlett Baker, a freelance writer on watches and fashion. “How many people want to know about the Vallée de Joux [where many Swiss watch companies are based]? They want a unique story.”

One of a handful of watch companies to have seized on this, according to Chu and Baker, is Audemars Piguet, which has collaborated with a long list of high-profile figures from popular culture since it first made a watch for the hip-hop artist Jay-Z in 2005. “As digital natives, [Gen-Zers’] comfort lies within digital platforms like TikTok, Instagram, Snapchat, and YouTube,” says chief executive Ilaria Resta.

Tag Heuer has followed suit. Following the success of its collaboration with actor Ryan Gosling in the film Barbie last year, later this month its watches will appear on the wrist of Gabriel Leone who plays Ayrton Senna in a new Netflix series about the Brazilian racing driver and ambassador for the watch brand.

“The kids are going to grow up knowing that Ryan Gosling had three Tag Heuers,” says Baker, referring to a scene in Barbie where the actor wears three watches by the Swiss company at the same time.

Luxury watches are also proving an unlikely foundation for Gen Z communities and in-person gatherings. “For Gen Z, walking into a watch store is intimidating,” says Chu of Wristcheck. “I’ve been called a delivery boy, and that’s something we want to change. It doesn’t matter whether you’re in shorts and flip-flops or a suit, we’ll treat you the same.” Chu says 70 per cent of customers on his trading platform are under 35 years old.

Gen Z’s interest in luxury mechanical watches might not have been predicted in 2015 when the Apple Watch was launched. But Chu says smartwatches have been a catalyst, even while export volumes of Swiss watches have roughly halved over the past decade. “The Apple Watch gave ‘wrist awareness’ to my generation,” he suggests.

D’Arpizio has observed the same. “Everyone has a wearable, but luxury watches are seen as an investment, something that lasts, something that keeps memories, that has badge value that is different to what the previous generation had. Previously, it was a status symbol.”