When looking for jewelry and watches, customers have to be prepared for rising prices. “Overall, we expect cost pressure in 2023,” said Guido Grohmann, general manager of the Federal Association of Jewellery, Watches, Silverware and Related Industries in Pforzheim of the German Press Agency. It is unclear how the energy crisis will develop. In addition, personnel costs increased. “There will certainly have to be price reactions.” On the other hand, Grohmann does not expect delivery bottlenecks of any relevant magnitude.
Inflation is helping the industry, he said. Consumers looked for long-lasting values. The area of real jewelry, which, in contrast to fashion jewelry, is made of high-quality precious metals and gemstones, benefits most from this. “It runs like clockwork there,” said Grohmann. Everything that is genuine and has value is in demand – “regardless of whether it has a brand on it or not”.
Watches in particular are in demand as an investment for some. “In the first half of the year we had growth rates of almost 50 percent,” said Tim Stracke, co-founder and managing director of the Internet marketplace Chrono24 based in Karlsruhe. Many coveted specimens were offered and sold well above their retail value. If manufacturers such as Rolex or Patek Philippe used to raise prices once a year, they now do so more often. According to the information, the development can be seen a little later in the case of used watches.
Is the time of luxury watches over?
Luxury watches have been very present in pop culture and social media this year, he said. “A lot of iconic luxury watches could be seen, especially in the rapper scene.” That boosted demand. At the end of March, the brands “Omega” and “Swatch” of the Swatch Group also launched a plastic version of the coveted “Omega Speedmaster Moonwatch” – the “MoonSwatch”. Offered for 250 euros, it was traded tenfold in the first few weeks, Stracke reported. “Many see that as a stroke of genius.” In the meantime, the sales prices have fallen significantly and the supply has increased sharply.
The entire jewelry and watch industry is feeling the effects of the Russian war of aggression in Ukraine very directly: In the fashion jewelry sector, many parts come from Asia, which, according to association official Grohmann, were formerly brought to Europe by train through Ukraine, for example. Again, Russia has quite a high market share in platinum metals like rhodium, the chief executive said. In Germany, however, demand can largely be met by recycling.
Design follows prices
According to Grohmann, rising metal prices are also affecting design. “For a long time we had a trend towards more lavish pieces.” Now it is becoming more and more filigree in order to use less metal. Watches, even in the luxury segment, are getting smaller. “Now it’s more about understatement.” When it comes to wedding rings, couples often choose platinum because white gold has become similarly expensive. The background here is the rising price of palladium, which is used to bleach gold.
Conversely, customers in the luxury segment in particular do not look at every cent despite rising prices, as Stracke knows from Chrono24: “Anyone who spends 5,000 euros on a mechanical watch usually has fewer problems when energy and food become more expensive.”
He described it as exciting that the Swiss manufacturer Rolex entered the market for used watches a few weeks ago and wants to certify second-hand models from its official dealers and provide them with a new guarantee. Stracke assumes that this will further fuel demand and prices will rise by up to 25 percent. Almost half of Chrono24 users aged between 18 and 34 are interested in Rolex watches. “And we are very excited to see how the other Geneva luxury brands will react to this.”
