The US luxury watch market is experiencing robust growth. Watches of Switzerland Group (WOSG.L) CEO Brian Duffy joins Asking for a Trend in conversation with Yahoo Finance’s Pras Subramanian to discuss the prevailing trends in this market.
Duffy notes that the luxury watch market is “in very good shape.” “You can never produce enough watches,” he says, as demand continuously outpaces supply. Specifically in the US, Duffy observes that the market is underdeveloped, with sales per capita lagging behind other countries. However, he highlights that the US market has “far exceeded” his expectations since the company tapped into it.
Duffy acknowledges that the average customer has been evolving, though it remains “male-oriented.” He attributes this dynamic to the fact that watches are “the only item of jewelry” men typically gravitate toward. Still, he notes an uptick in women and younger people embracing watches.
For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.
This post was written by Angel Smith
Video Transcript
In the luxury watch market times are good, at least for retailer watches of Switzerland.
The company’s fiscal fourth quarter, aided by what’s been called the underdeveloped US market and joining us now for more is watches of Switzerland CEO, Brian Duffy and Yahoo Finance’s very own prices More.
And gentlemen, welcome both to the show.
Brian.
It is great to have you I. I thought, I want to start kind of high level and just get your sense when we look at the luxury watch market because you have such a unique insight here.
How healthy?
How strong is it right now, Brian?
It is very strong, you know, it’s It’s pretty much a Swiss category, right?
It’s all produced in that small country where you know no more than 78 million people, so it’s very well controlled.
It’s very well, you think, long term and everything.
They do a big focus on the on quality.
They never produce enough watches.
There’s more demand than there is supply of watches.
So we have a lot of, uh, customers that are on lists waiting for the the watch of their dreams.
So it’s in.
It’s in very good shape you’re allowed to discuss here.
Obviously, a lot of people come and talk to me about Rolex and things like that like that.
But before we get into that, I wanna talk to you about the US market.
Uh, I believe you guys say that it is an underdeveloped market, which I think many people find surprising.
But then you think about it.
It really is, isn’t it?
No, it really is the, um So we came here for the first time in 2016.
Uh, we were invited, actually by landlords here.
The landlords of the Hudson Yards.
So what we were doing in the UK, um, the folks that were running retail in the wind resort in Vegas, they invited us to, so I could claim to be a great visionary about the market, but we’re actually invited to come here.
But when we came, I was surprised to find that when we analysed things, the the key thing that drove us was sales per capita in sales per capita in the UK is double what it is in the US.
It’s doubled and there’s a lesser level of affluence and so on, but it literally is double and we look back in the market Looked at the history The US market really suffered from 2010, uh, and never quite recovered.
And and, uh, there there was an under investment in retail ever since then and I think we’ve proven it to be true.
We we’ve, um we now $900 million in business that we’re doing in the in the US.
We’ve only been here five or six years, and it’s far exceeded our expectations.
So I think we’ve proven the underdeveloped observation.
Yeah, you know, I notice you’re wearing a Rolex right now, and it’s handsome looking.
Watch one look this good on.
You know, we if you get close up on that, but, uh but you know that that’s sort of the the big 800 gorilla in the room in the US or the international luxury watch market is Rolex.
How was that business been for you guys?
Because I know what’s happening in the CPO market.
That new market is a big grow driver for you.
How is that CPO market going for you guys?
And also the new market too?
Yeah, Well, Rolex is half of our business, uh, is the best brand in the world.
It’s an amazing brand.
You might know it’s a charitable foundation so that there’s no financial interest in the ownership.
And all of the money that’s made is reinvested and obsession with, uh, with quality and innovation, so, so indestructible products.
It’s a wonderful brand, very cautious, very long term, very conservative.
Consequently, there always demand is, uh, is never going to be satisfying for what comes from Rolex.
So it’s great.
We’d love to have a lot more product than we get.
It’s the it’s the biggest thing that we do is to try and negotiate, as you know, much as we can through our investments in Rolex.
But wonderful brand and clearly the cornerstone of our of our of our business and our group, uh, CPO has been fantastic.
Somebody else that exceeded our expectation.
So CPO is Rolex now, Um uh, certifying and authenticating second hand products and only doing that for authorised retail.
Um, the secondary market before was and still is an unauthorised market that the consumer needs to be very careful and be and beware.
So now you can buy, um, a Rolex uh, that’s that otherwise would be in, you know, a long waiting time for it.
You can buy it immediately.
You’re buying at market price, but you’re buying it guaranteed and authenticated by Rolex.
So we’ve been we and others have been rolling out the programme UK and US, and it’s just way ahead of what we expected.
Again, consumers love the product and getting access to a product.
This is discontinued.
The fact you can’t get it.
But I could maybe help you out after the show.
The breaking news right now, Let me get you this, Brian.
Just curious.
Who is your average customer like?
Who’s the demo?
Is it men?
Women young, old Has that been, you know, evolving in any way?
It has been changing.
It’s still male oriented, so you’d say it’s probably around 60 65% male often said it’s really the only item of jewellery that that all men you know would be wearing and and it is an item of jewellery.
It’s something that you you show off with pride about your accomplishments in life or whatever it might be.
So it’s still around 65% men, but increasing women also a convergence of gender when it comes to product selection.
So women buying bigger case sizes and very often products now are more commonly becoming unisex.
The other big change in it, contrary to what people might expect is young people.
There was a view of young people are all using their phones, are all using a smart watches and so on.
But the young people really love a younger audience, particularly here in America.
They really love, and they love the got a lot of emotion associated with them when you bought it, what you bought it for, if you inherited it, whatever it might be.
Products that last forever very good for the environment.
They get recycled and again certified pre owned is very good.
In that sense, these are products that will be in circulation forever.
Um, so our young audiences are really coming into the category.
Quite quite.
Obviously, Brian, it was great to have you on the show today.
Let’s talk afterward.
OK, thank you so much.
Appreciate