Attempts by watch brands including Nomos and Audemars Piguet to control prices for their watches on the secondary market are doomed to fail, according to Danny Govberg, CEO of Govberg Jewelers and pre-owned specialist Watchbox.
Nomos did deals this year with German secondary market players Chronext and Chrono24. Chronext promised it would not sell below retail list prices for new watches in return for being appointed as a primary authorized dealer. Chrono24 was made an authorized partner for certified pre-owned Nomos watches selling for 15% below list prices for new watches.
Aside from the fact that the deals with Chronext and Chrono24 enraged Wempe so much that it kicked Nomos out of its stores, the strategy will do little or nothing to reduce grey market sales or set a floor price for pre-owned models, Mr Govberg predicts.
Audemars Piguet’s CEO has said he is working on a certified pre-owned watch solution in conjunction with its retail partners and its own stores, but nothing concrete has yet been announced.
Govberg Jewelers in Philadelphia is an authorized dealer for dozens of luxury watch brands, but Mr Govberg thinks his pre-owned business, Watchbox, is the far bigger businesses opportunity.
“Because I come from where I’ve been in the primary market, I understand the brand mentality. I understand the multi-brand and monobrand boutique mentality. And I also understand the pre-owned dealer mentality. Very few people have that experience of all three,” he explains in an interview that will be published in the launch edition of WatchPro magazine for the United States.
The problem, Mr Govberg believes, is that consumers buy pre-owned watches at far lower prices today than a brand like Audemars Piguet will ever accept. The same goes for Nomos. A 15% discount off the price of a new watch listed on Chrono24 simply will not cut it for Nomos.
The issue for Nomos is easily illustrated with a quick search on Chrono24. A 2015 Nomos Metro 38 Date can be bought from the platform’s Brand Boutique, where pre-owned watches are “certified pre-owned directly from the manufacturer”. The price for the watch is £1850. However, search for the same watch on the whole of Chrono24 and you quickly find a 2018 version of the same watch from a 5-star rated German dealer for £1489 with original box and papers. Both refurbished watches are described identically as in very good condition (Worn with little to no signs of wear).
“Chrono24 and Nomos do not set what the pre-owned price is, the market sets that pre-owned price,” insists Mr Govberg. “Nomos has put certified pre-owned watches on Chrono24 at 15% less than retail price, but 50% of the watches on Chrono24 are more than 15% off, so what is the point?” he questions.
“The deal with Chronext is that it will only sell at full retail price, but if every consumer on the planet can buy a [new] Nomos at 5-10% off, there will be no sales on Chronext,” he predicts.
Audemars Piguet may be running into these issues as it explores its options for creating a certified pre-owned seal of approval for its watches, but Mr Govberg thinks the challenge is even greater for a brand that wants to sell watches for tens of thousands of dollars.
“One of the problems the brands are going to get into with certified pre-owned is that they are going to try to sell their watches at a lot higher price than the real market. Not a little; a lot. It is going to be hard for Audemars Piguet to offer pre-owned watches that are 45% below retail prices,” Mr Govberg suggests.
“Think about this,” he continues. “You can take a regular Audemars Piguet perpetual calendar from 15 years ago in great condition; a really beautiful watch in gold on a strap. You can buy that watch for $12-13,000. A new one is $50-60,000. I do not believe AP is ever going to want to sell a certified pre-owned perpetual calendar for under $15,000. They have to understand that consumers will set the price,” he concludes.