November 27, 2022

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Luxury watch brands have always liked the concept of a waiting list and the exclusivity that it often signals to prospective buyers.

But with lists becoming more common and growing in both length and duration, some in the industry have warned of rising frustration among consumers who have money in their pockets but are being told to wait, wait and wait some more for their hearts’ desires.

A number of lists are said to stretch to years, decades even. The pre-owned website Watchmaster recently reported that the Rolex list for its GMT-Master II with a red and blue bezel, nicknamed the “Pepsi,” runs to 20 years.

Others, however, say the lists are being created by brands and retailers to manufacture hype, increase demand and inflate perceptions of value.

“Producers have realized that limiting supply, creating the impression of shortages and waiting lists, enhances the integrity of brands,” Jon Cox, head of Swiss equities at the financial services company Kepler Cheuvreux, wrote in an email. Brands also have been trying to rein in the gray market, where unauthorized dealers sell surplus watches at discounts, because, he wrote, “With stable prices in the secondary market, this enhances the value of the watch.”

A June thread about lists on rolexforums.com described wildly different sales experiences. One member, posting as storm66, wrote that the wait for a “Pepsi” had been “4 years, 1 month, 2 weeks and 1 day …”

But another, posting as Blanch, described going to an authorized dealer in Las Vegas and picking up another Rolex in high demand — the 36-millimeter Oyster Perpetual with a turquoise dial — with no delay at all. “Same day in and out,” the post said, adding that authorized dealers “say there’s no stock. They indeed have stock in the back. If they didn’t, they wouldn’t have armed guards up front. It’s a matter of building a relationship.”

Does that mean some new customers might never get the watches they want, even if they can afford them and are prepared to wait?

“Our retailers keep wish lists mainly for loyal customers,” Adrian Lurshay, managing director of Patek Philippe’s British subsidiary, wrote in an email, adding that, in Britain, at least, “As the demand for all timepieces in our collection has increased significantly, wish lists now cover most references.”

Mr. Cox said such practices risk alienating customers. “In some cases, limiting supply and creating the impression of shortages and waiting lists has gone too far,” he said. “Waiting for years will encourage speculators rather than watch enthusiasts, who will ultimately go for another watch.”

Brands and retailers, however, denied that the situation is being manipulated. “There is no waiting list strategy at Omega,” Raynald Aeschlimann, its president and chief executive, said, adding that the brand had lists for about 10 references. “These lists are due to the incredible success of our iconic watches. My goal is to shorten the wait list. We want everyone to be able to get a watch in a short time.”

Waiting lists are nothing new. Demand for Rolex, Audemars Piguet and Patek Philippe has outstripped supply for years, producing the kind of clamor that turned the Patek Nautilus Ref. 5711 into a cult object, even after it was discontinued last year. But something has changed.

In addition to Omega, brands as diverse as Zenith, IWC, Cartier, Girard-Perregaux and H. Moser & Cie now have waiting lists. And executives say that, despite global concerns about inflation and the rising cost of living, the lists are not getting any shorter.

“There are now many more products on waiting lists, and waiting times for customers are longer,” said Brian Duffy, chief executive of the Watches of Switzerland Group of watch and jewelry retailers, which has resorted to displaying what are labeled “exhibition-only” Rolex collections in its windows. Visitors may try on the watches, but they are limited to “registering interest” when it comes to purchases.

“It can be a frustration to consumers,” Mr. Duffy acknowledged.

Some have argued that the pandemic caused the imbalance in the supply and demand of luxury Swiss watches. According to the Federation of the Swiss Watch Industry, exports plummeted to 13.8 million in 2020 (from 20.6 million units in 2019) after many brands closed their factories for a couple of months early that year. Last year, that figure rose, but only to 15.7 million.

Mr. Duffy said he believes something else contributed to the waiting list phenomenon: “I genuinely think it’s an accident of conservatism. The Swiss mentality has created this category. There’s zero compromise on quality, which results in an unwillingness to react in a short period. It’s not at all deliberate or manipulative.”

Analysts said luxury brands are smart to maintain lists. “Being overwhelmed with demand is an indication that your brand is very desirable, which is a very nice problem to have,” Luca Solca, a luxury analyst at the research firm Sanford C. Bernstein, wrote in an email. “All good companies are careful not to make their most iconic products ubiquitous, because this would trivialize them and sink their desirability.”

And Wilhelm Schmid, chief executive of the high-end German watch brand A. Lange & Söhne, said waiting lists actually help to regulate the market. (His company makes just 5,500 watches a year, and it has back orders on its Lange 1 and Odysseus models.)

“There is really nothing bad in waiting lists, apart from for people who want to flip watches quickly,” he said. “Imagine if there were no wait lists. If the watch goes to the first who knocks on the door, would that make people a lot happier? For sure, not. Resale would dictate the market.”

The secondary watch market has been booming. Prices are unregulated, creating a sort of Wild West universe in which impatient consumers can pick up rare or in-demand watches, even those still in production, by paying many times more than retail.

For example, on Chrono24, a specialist site for pre-owned watch sales, examples of the green-dial Patek Philippe Nautilus 5711 introduced last year with a retail price of slightly less than $35,000, are listed for more than half a million dollars. (There are signs that the secondary market has been cooling in the last couple of months, however, a change that some analysts linked to the slump in cryptocurrency values.)

The stratospheric prices are part of the “flipping” culture — buy at retail and sell at whatever the market will bear — a practice that brands discourage. Julien Tornare, chief executive of Zenith, said it had become increasingly necessary to blacklist customers who flip watches for quick profits. “If it happens once, this is usually someone who will be blacklisted,” he said. “That’s the informal rule.”

Brands also cut off retailers who sell to flippers, a threat that can make businesses built on relationships with big-name brands wary of new, unknown customers. “We need to support our longtime customers, but it’s also extremely important to be able to create new ones,” said Mark Udell, owner of London Jewelers, an independent chain of luxury watch retailers in the United States. “So it’s critical we get good data on the person looking for the watch.”

With many customers still unaware that they may not be able to buy the watch in the retailer’s window, several sales representatives — although none who would agree to be identified — said tense encounters with impatient clients have been increasing.

And Oliver Müller, founder of the Swiss luxury consultancy LuxeConsult, wrote in an email: “Clients are getting frustrated and angry with brands they suspect of holding back supplies.”

Mr. Duffy said he has had to retrain staff members to work with promises rather than product. “One of our biggest objectives is giving clients trust they’ll get the product,” he said. “Exhibition collections help build that trust and keep customers away from inflating the secondary market.”

Brands say they are aware of the retailers’ problem. “Managing expectations is very difficult,” Mr. Aeschlimann of Omega said. “We are living in an instant world, and when people see a new product, they want it.”

One question routinely asked of the watch industry: Why not just increase production?

Brands said that is simpler said than done. “It’s not that we don’t want to do business,” Mr. Schmid of A. Lange & Söhne said. “It’s hands that built these watches, and our capacity is restricted by the man hours we have to work with. If we want to increase by 10 percent, it means we need to recruit 50 great people. And that will take five years.”

For brands new to managing waiting lists, the phenomenon has come as a mixed blessing.

“It shows we’re doing a good job,” said Mr. Tornare of Zenith, which — for the first time — has waiting lists for some of the products it introduced during the past 18 months.

“But there are limits,” he added. “After a certain amount of time waiting, end clients can feel a sort of arrogance. We need to be careful as an industry.”

Mr. Tornare said he was having some success with keeping the waiting time for new pieces such as the Chronomaster Sport and Defy Skyline to around six months, noting, “I would never tell a client you cannot buy our brand.”

And he said he was doing what he could to capitalize on the sudden popularity. “Global demand is more than three times what we can supply,” he said. “We are developing production and we should be able to grow by 15 to 20 percent in each of the coming years.” He said that this year, production would climb to around 25,000 watches, an increase of almost 20 percent from the 2021 total.

If there is anything that most in the watch world agree upon, it’s that waiting lists aren’t going to disappear.

“A tempering of demand would be a good thing,” said Mr. Duffy of the Watches of Switzerland Group. “But I don’t think the dynamics of the disparity in supply and demand will change, even in the event of an economic downturn. The industry is very well positioned and its product lasts forever.”

Mr. Udell of London Jewelers agreed. “The demand for some product is so much greater than supply that even if it drops a touch, it will still be way over what we can deliver,” he said. “The harder it is to get something, the more people want it.”

But not everyone felt that spiraling demand and sky-high prices would endure. “At some point, there will be a severe market correction,” Mr. Müller of LuxeConsult wrote. “But brands — big or small — managing to balance keeping the market hungry while not frustrating clients too much, have a bright future in front of them.”

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