Highly respected Boston Consulting Group says that the global market for hard luxury items — primarily watches and jewelry — is worth €21 billion today and growing at 8% per year, faster than the primary market for the same goods.
Watches as a category are estimated to account for 75% of the total value, making it worth €15.75 billion ($18.6 billion) per year. Other research firms in recent years have reported the value of the pre-owned luxury watch market to be around $15 billion.
BCG used a combination of consumer surveys, deep market research and interviews with senior luxury executives to compile its study, which concluded that pre-owned sales do not reduce the purchase of new products. “In fact, the right approach can complement the sales of new goods, reinforce the brand’s value, and give companies access to a critical group of future consumers that luxury brands and retailers should cultivate,” its report titled The Secondhand Opportunity in Hard Luxury suggests.
Traditional auction houses account for 10% of sales across both jewelry and watches. Other offline businesses generate over half of sales (55%) while, surprisingly, online sales amount to only just over a third (35%).
Europe is by far the largest market for secondhand hard luxury, with 50% of the market. The United States accounts for 10%.
“Secondhand luxury sales are expanding for many reasons, among them an increase in online sales, changing consumer preferences, and rising concern about the sustainability of luxury goods, particularly among younger consumers. These trends were already well underway before the covid-19 outbreak hit, but the pandemic — and the economic slowdown it created — has accelerated them,” BCG reports.
“Notably, our interviews show that the financial uncertainty prompted by the crisis is spurring more buyers across all age groups to consider secondhand hard luxury as a promising investment vehicle. Prices are more attractive for secondhand products (with no immediate drop in value as occurs following the purchase of new items). In addition, a more robust secondhand market boosts liquidity for these types of investments,” it adds.
As part of its research, a BCG survey conducted with Altagamma in 2020 found that 62% of luxury consumers said they would consider buying a secondhand luxury item and 25% indicated that they made such a purchase in the past year; 18% of whom purchased watches and jewelry.
The pre-owned market has myriad players, many of them one-man-bands buying and selling through WhatsApp groups and other personal contacts.
At the more industrialized end, BCG has broken down the sector into generalists and specialists ranging from marketplaces like eBay and Amazon to specialists including WatchBox, Tourneau and Chronext.
If BCG’s estimate of an $18.6 billion market this year for pre-owned luxury watches is correct, and annual growth of 8% per year is sustained, the sector could be worth over $27 billion by 2025.
It is not too late for luxury retailers and brands to expand into the space, BCG advises. “Brands could face some operational challenges in capitalizing on the opportunity, but the market for secondhand hard luxury goods is large, growing, and dynamic — and it is here to stay in the new luxury reality,” the report concludes.