Why Luxury Watchmakers Thrive Even During Recessions
For many industries, it is a general rule of thumb that during a recession sales will decrease. And business owners typically respond to these falling sales by lowering their prices to make their goods more attractive. However, there are industries that do not follow this pattern, one of which is luxury watches, and below are some reasons why this is the case.
Most Luxury Watch Purchases Involve Celebration
A substantial number of high net worth clients purchase these watches for celebratory purposes. It could be the celebration of a new job or promotion, or perhaps the startup they put years of labor into finally went public. Although the decision to spend five or even six figures on a watch might seem irrational to most people, there are two benefits that can be gained from doing so. The first is that you will stand out from ordinary people, and society will treat you special because of it.
In the world of business and high finance, appearance is everything. A man that walks into a bank to get a six or seven figure loan to expand his business will make a much better impression if he is wearing an expensive suit with a Patek Philippe watch than a man that is wearing blue jeans, a t-shirt, and sneakers with a Seiko watch. In the minds of the banker, any man that can afford a Patek is someone that must be taken seriously. Finally, there is a law of nature; life and economics that seems to suggest that the more a person has, the more that will be given to them.
Watches Are Also Functional Investments
Successful people, especially those that come from disadvantaged backgrounds, want to celebrate their success in a big way. In their minds, they’ve earned it. Success in any field of endeavor requires hard work, sacrifice, the ability to take risks and a touch of luck. Few people succeed, especially those that weren’t born into wealth, and when they do they want to display it to the world.
But watches also serve a functional role. They can tell time, and depending on the brand are capable of doing far more. For instance, Breitling watches are designed for aviators, divers and those that engage in extreme occupations. As such, these watches are both status symbols and functional pieces of equipment.
While watch marketers have been unable to predict specific celebratory moments, they know that most consumers will have moments in their lives when they want to celebrate, and such moments don’t stop during a recession. Although people have less money during such periods, those that do want to let the world know they are unaffected by the economic downturn.
This is why it would actually be foolish for a company like Audemars Piguet or Patek Philippe to “lower” their prices during a recession, since their entire product line is geared towards people who have unlimited wealth, and are purchasing their watches to let the world know it. Finally, unlike clothes and electronics, which tend to fall in value as time passes, a watch that is sold for five or six figures has a higher resale value, is likely to become a future collectible, and is therefore a wiser investment.