The recent rise of brand certified pre-owned (CPO) programmes is one that we have been watching carefully. Earlier this year, the announcement that Rolex would be launching its own CPO, although long anticipated, was still news that gave the industry collective pause for breath. Soon after, Audemars Piguet followed suit with a similar announcement.

The community reacted reflexively, with vocal scepticism as well as excitement. Seeing this move by two of the most profitable watch brands, while already impressively significant, presents only a one-dimensional view. Considering the sustained growth seen in the secondary market – as well as some projections that it might outgrow the primary market by the next decade – further enriches the picture.

Now that some time has passed to allow for reflection, we spoke with a wide range of industry insiders – including Pierre Hardouin of Bucherer, Maximilian Büsser of MB&F, Pierre Halimi of F.P. Journe, Theodore Diehl of Richard Mille, Keith Metcalfe of eBay and Sacha Davidoff of Roy & Sacha Davidoff – to understand the significance of this news. Speaking with Oliver R. Müller of LuxeConsult, who authored an industry report focussed on the prospects of the secondary market, we hoped to take a longer view on the state of watchmaking and how changing preferences, along with factors such as brand CPOs, will shape the industry through the coming decade.

This, however, is not an examination of the intricacies of any one brand’s CPO programme. While we touch upon certain aspects of different programmes, this is done only to highlight or understand a trend, not to hold it up as an example of industry best practice. We would also be remiss if we also did not acknowledge our proximity to the subject. It is a segment of the market we have an inherent interest in, and it is for this reason we thought it prudent to seek the insights of industry experts instead of presenting our personal views on the topic. The aim was to make this as close to an academic examination as possible so that it would be useful to a market far wider and more diverse than our own.

There is a significant delta in the projections of the two major studies that prophesied the sustained rise of the secondary market. The Deloitte Swiss Watch Industry Study 2022 predicted that the segment, currently worth about CHF 20bn (£18bn), will balloon to about CHF 35bn in value, or more than half of the collective watch market. This, the report predicts, will happen as soon as 2030.

And the study by LuxeConsult, based on data from the trade body Federation of the Swiss Watch Industry (FH), is even more bullish about the secondary market’s prospects. Its 2022 study projects the segment, which came out of the gloom of the pandemic growing more than 20% in 2022, will consistently register a compounded annual growth rate (CAGR) of around 12% from 2025. The maths points to a situation in which the secondary market will be worth around CHF 79bn by 2033, says Müller.

Crucially, the same study projects that during the same timeframe, the primary market will have registered a CAGR of 4% year-on-year (much like it has done between 2000 and 2019) to be worth just over CHF 76bn. Müller estimates that the segment will continue growing at a similar rate for the foreseeable future for one simple reason. “We don’t see any of the major brands – Rolex, Patek Philippe or Audemars Piguet – substantially increasing their production to meet the demand. By collateral, I see the secondary market continuing to grow,” he says.

So, despite their differences, both studies seem of the mind that the secondary market’s rise is a very likely scenario. Aside from factors such as limited supply in the face of overwhelming demand, both also conclude that this growth will be on the back of existing pre-owned platforms expanding their operations; a healthy and growing number of sales taking place online; and watch brands launching, and in some cases scaling up, their CPO offering.

Keith Metcalfe, director of luxury at eBay United Kingdom, says just like in other high-end sectors such as fashion, macroeconomic realities have spurred many to embrace pre-owned. “In the luxury space, the appetite for pre-owned is only increasing. The luxury resale market continues to expand and is estimated to hit $100bn [£80bn] by 2030,” he says. “We have a new generation of consumers who have entered the luxury market, driving this change within the secondary market in force. This customer no longer carries the stigma associated with second-hand as the generations before did. Instead, they embrace it. The second-hand market is more desirable to them than the primary, and this is for a multitude of reasons – sustainability, scarcity, and value, to name a few.”

Müller thinks the demographics driving this – Millennials and Gen-Z – also have a markedly different approach to collecting, meaning their particular interests are better served by the secondary market. “Many of them are more driven by rational elements [of collecting]. Decision factors to buy or not for a certain brand, a certain watch and the annual return on this investment, play big roles in their buying habits,” he says.

This kind of rational thinking, with watches often traded like stocks, was made possible for the digital native generations, while their predecessors had their resale options limited to discreet private sales or the auction house. “They are much more inclined to resell what they have bought,” Müller says. “This brings with it a higher number of transactions; a more dynamic market. This also often brings its own set of issues because when everything starts accelerating at such a rate, then the prices go crazy.”

Aided not just by platforms offering a safe place to sell, but freely available data on pricing patterns, has been key to this shift. Metcalfe says, “Transactions between buyers and sellers have never been more seamless, and a growing cohort of watch enthusiasts and investors have caught the online trading bug as a hobby and alternative investment class.”

Trust – a recurring theme in this context – is a selling point, and to meet this need eBay UK expanded its Authenticity Guarantee programme in 2021 to include watches above a certain price point. “After [the launch] we saw searches for watches increasing on the platform by 31%, with a timepiece selling every 28 seconds in that period,” says Metcalfe, adding that timepieces sold on the platform for more than £1,500 are inspected and verified by independent watch industry experts Stoll & Co.

Popular platform Chronext offers its own certified pre-owned programme aimed at quality control, while Chrono24’s model is predicated on crowdsourcing the authentication process and holding the sellers to account by only allowing payment to be received 14 days after a watch has arrived and has been inspected by the buyer.

While it is widely known how a handful of brands perennially struggle to meet demand, it is worthwhile understanding the extent of their extraordinary position. “The demand for Rolex, Audemars Piguet, and Patek Philippe is not going to diminish, whatever people say,” Müller says, referencing more recent market corrections in pricing.

Each of these three brands has steadily been ramping up production by tens of thousands of watches a year. The demand, it seems, is still greater, and likely to outpace supply for the foreseeable future. Müller says, “In 2022, Audemars Piguet went from producing 45,000 to 50,000 watches. That’s already a lot. Their plan is that within the next five years they will more or less grow to [produce] between 60,000-70,000 watches.

“Patek Philippe is also expected to keep increasing production. For Rolex, the issue is to keep demand and supply in balance, but they also have the issue of growing their production capacities. Whatever people say, it’s not that easy to produce 100,000 or 200,000 watches or more a year, even if you’re Rolex. However, it is something they’re now investing massively in. My latest estimate, which will be published in the [upcoming] Morgan Stanley report [2023], is that they increased output by more than 10% last year.”

This has in turn fed the trend of “premiumisation” – the practice of increasing the profit margin per unit. “In recent years we have seen brands steadily increasing prices, thereby increasing profit margins,” Müller says. “These profits are being reinvested.” Even within the group of profitable brands, Rolex stands apart. “Of course, any other brand would dream of being in the virtuous circle or positive dynamic that Rolex is in,” he adds.

In the primary market this has translated to five brands – Rolex, Omega, Cartier, Patek Philippe and Audemars Piguet, in order of their position – representing more than 53% of all industry revenue in 2022, according to the latest findings of the LuxeConsult study. In fact, the top 15 Swiss brands account for just over 84%, while the top 25 represent about 90% of all revenue. This is in a field of 350 Swiss brands.

This polarisation of the market – where the big brands, owing to their financial health, continue to pull ahead of the rest of the pack – has been ongoing for several years, says Müller. “When you are growing the size of the brand, you become more powerful, you’re more visible and then you have pricing power,” he adds. According to his report, this is visible in the fact that luxury watches – defined by sale prices north of CHF 3,000 – accounted for just 12.7% of production volume coming out of the industry in Switzerland in 2022, but 76% of the share of retail value.

Recently, economic trends have also contributed to this. Maximilian Büsser of MB&F says, “[Premiumisation] grew exponentially when those [desirable] pieces transformed into a speculative asset class. Many speculators are luckily now leaving the market as the liquidity has seriously tightened and the potential gains are waning. The interesting part will be how this market will look in the next 6 to 18 months.”

The brands that have been enriched by these trends have reinvested in themselves. This is feeding the verticalisation of the industry, with brands trying to own not just the manufacturing and marketing aspects of their business but much of the retail experience as well. This is a model that Audemars Piguet has been championing. The LuxeConsult study suggests that the brand, with its growing number of directly owned boutiques and points of sales, is now in charge of up to 75% of its revenue. This also ostensibly helps the brand better manage issues around availability and waiting lists.

Richard Mille, in its earliest stages as a young brand, worked with retail partners, later settling on their own brand-owned boutiques instead, says Theodore Diehl, spokesperson and horologist at the brand. “The brand CPO is another tool we deploy in our efforts to offer a consistent and high level of service to our clients,” Diehl adds.

In fact, while volume brands, owing to the scale of the undertaking, have been slow to the secondary space, independent brands have led the charge. “Brands such as Richard Mille, Greubel Forsey, F.P. Journe, and MB&F pioneered this,” says Müller. Aside from considerations around delivering a consistent level of service, they often recognised other benefits the space offered.

For Richard Mille, the experiment with CPOs started when the company’s Japanese distribution network, owing to the particular demands of that market, started selling a small number of its pre-owned watches with the brand’s consent back in 2015.

Its Japanese experiment allowed it to test the waters. There are now almost 45,000 Richard Mille watches in global circulation and its pre-owned offering extends to all geographies where it has a retail presence, even though only a number of these have dedicated CPO sections. Diehl says, “Richard Mille’s programme is differentiated from most by the fact that anyone can bring in their watch and paperwork to any of the brand’s boutiques and offer it for sale. The boutiques then communicate amongst themselves to work out the best place to work out the best position for the timepiece to enter the CPO pathway, after it has been fully serviced and brought back to as new condition following the brand’s guidelines”.

In spite of the difference in the scale of operations, Diehl thinks most CPOs have similar goals. “Nearly all high luxury brands struggle to deliver on the huge demand for their products, and CPO’s go some way to relieve this tension, wherein clients coming to a boutique find that there are barely enough watches to see, let alone buy, and discover they have to wait quite a while to get their favourite watch,” he says.
“In the first place, a CPO assists us in supporting those clients who can't get a new watch but would like to, because their tastes, goals or expectations have changed direction. It’s a wonderful way to respect and value your clients,” Diehl says.

“Secondly, on a brand level, I think an important aspect is that you can protect your product. Every watch we produce, whether it was delivered yesterday or 21 years ago, is precious to us, and the watches sold through our CPO programme are brought to perfectly original condition, thus ensuring their long term existence and functioning. Certainly this is very attractive for us, as well as for our clients,” Diehl adds.

Speaking to us from upstate New York, Pierre Halimi, the general manager of F.P. Journe America, says, “The idea behind the Patrimoine service [F.P. Journe’s CPO programme] was born out of the watchmaker’s desire to help serious collectors find past watches that would fill a gap in a particular collection. The brand was incidentally one of the first to offer such a CPO programme back when it launched in 2016. Owing to this demand-based model, the programme deals with only a very small number of watches.”

MB&F’s CPO is similar in its offering. Büsser says, “We restricted our CPO to pieces which were no longer in production and where none were left at our retail partners so as not to create competition with them. It became a specific curation of [impossible-to-find] pieces … that you could buy ‘eyes closed’ as they had been serviced, refurbished, and came with factory warranty.”

There is another compelling reason, of course. Müller says, “When you’re managing your brand, one thing you don’t want to see is that your launch from two years ago comes back to an auction and sells at a very low price. You don’t want someone who buys a watch at auction to get one that hasn’t been serviced properly, isn’t sure if it has the original crown on it and doesn’t know if the other parts have been changed on it.

“These small brands understood that playing an active role in making sure that their watches [on the secondary market] are authentic, that they are being serviced, that they have been controlled by the brand and may be issued with a new guarantee that would bring a lot of trust into the market. Similarly, the Rolex CPO is sending out a very strong signal to all the other brands and the market that it cares about the second life of its watches, which is totally new for the [volume] industry, as incredible as that might sound.”

While pointing out F.P. Journe’s relatively small size, Halimi notes that for a volume brand a CPO could have real economic incentive. “For big brands such as Rolex, that often have popular models that are sold out, this represents another stream of revenue,” he says. “It is also another stream of traffic to the boutiques, where they hope to sell these used watches.”

As much as 55% of watch purchases are conducted entirely online, and while this channel has driven growth in the secondary market, it might have limited application when it comes to brand CPOs, Diehl adds. “The online model is not really viable for a CPO programme since on reception the watches have to first be physically inspected and their history examined,” he says. “Afterwards, in terms of sales, the timepiece also needs to be supported by sales personnel who have lots of experience with what each model offers. This bring customers into the boutique. Human contact and seeing a Richard Mille on your wrist is the essence of what makes the magic happen, and this is what online approaches cannot offer clients,” Diehl added.

While it makes sense that the process of a brand buying back a watch will have to be done in person for the foreseeable future, the other end of the CPO transaction could ostensibly happen online. Speaking to us on the subject, Pierre Hardouin, the head of the certified pre-owned category at Bucherer UK, says, “We developed it in partnership with Rolex because we have had a CPO programme for a number of years. We took a few years to get a grip on the landscape as the primary market demand was far superior to supply. There were other factors such as demand from Gen-Z as well as what happened with cryptocurrencies.”

Whereas certain elements of the Rolex CPO programme will be universal – such as the fact only watches three years and older will be considered – other aspects will remain at the discretion of individual retail partners. “At Bucherer, we are not so interested in watches that are in the current catalogue, preferring to go with discontinued and vintage models,” Hardouin says. This provides customers with options without cannibalising the primary offering and avoids the potentially uncomfortable situation of offering the same product at two different price points under the same roof. Notably, Bucherer will also be offering its Rolex CPO products for sale on its website.

However, Sacha Davidoff of Roy & Sacha Davidoff says that while dealing with pre-owned modern watches is one thing, scaling up an operation to value, service and resell vintage pieces is quite another. “On the vintage side, it requires so much training and expertise in order to properly buy a vintage watch. In modern watches, the condition fluctuations are much smaller,” he says, adding that it is much easier to “shape up” modern watches ready for sale. “But when buying a vintage watch, you have hundreds of factors to consider which makes scaling up an operation that also deals with them significantly more difficult.”

What’s more, CPO gives a brand advantage over the dreaded grey market. “The grey market is not going to disappear,” Diehl says. “However, a well-functioning CPO programme should take the wind out of the sails of those who want to stand in line for a watch only to turn it around and try to flip for a profit.”

Halimi thinks that many of these developments are crucial to bringing and retaining new collectors and enthusiasts to watchmaking. While the secondary market of the past was often described as the Wild West, he thinks this will bring a modicum of order and “officialisation”, rather than a consolidation headed by a few brands with the economic wherewithal to do so.

“It will create legitimacy for the secondary market,” says Halimi. “However, it will mean that some secondary market sellers and intermediaries offering a poor standard of service will suffer.” Halimi and Davidoff agree that it will also provide a confident, comfortable environment for first-time buyers – commensurate with the luxury of the watch in question – and bring a new generation of enthusiasts into the fold.

While in the past brands viewed the secondary market with caution, and elements within it such as the grey market with open contempt, many have since found success directly engaging with it instead. In fact, more than 70% of brands surveyed for the Deloitte Swiss Watch Industry Study 2022 saw the pre-owned market as playing a positive role in terms of brand perception. Also significant is the fact that 30% of the brands said they were investing in their own pre-owned platforms; 17% had reached agreements to sell through other established pre-owned platforms; and 15% were launching CPO programmes in the near future.

Far from being detrimental to the primary market, brands now are of the position that the secondary market is in fact complementary to their primary offering. They are deploying a range of measures – from teaming up with pre-owned sellers (as is the case now with Vacheron Constantin, whose parent organisation Richemont owns Watchfinder) to delicately balancing production numbers and discontinuing models – to maintain desirability on the secondary market. This, of course, bolsters brand visibility and equity as well.

Davidoff thinks this latest development needs to be seen in the context of growth driven by verticalisation. “Brands, of course, continually seek growth,” he says. “Yet there are very few ways to expand that haven’t already been explored to some degree,” Davidoff added.

“First, it was taking ownership of the distribution of their watches, then it was eliminating the margins that were typically lost at the retail level. A number of big brands, and those part of larger groups, started with this. Then came the trend of rising prices [premiumisation], which was made possible by the huge demand and relatively low supply. Increasing production to capture market share is a time-intensive endeavour,” Davidoff says. At its most basic, CPO offers a fresh source of revenue.

There are other benefits, of course. Diehl says, “The value for us is that the CPO market gives our clients freedom and flexibility and from our viewpoint, the CPO market is important in how it supports the primary market. Sure, that support will inevitably affect turnover to some degree, but our main intent is that the CPO is a client-centric offering that accentuates and supports the brand’s vision for the future”.

Bucherer is positioning itself strategically, keenly aware of its interests in the primary market as well as the competition it faces when it comes to selling pre-owned Rolex. Hardouin says, “For Bucherer, the idea is to curate a selection so that, say someone comes in to try on a Submariner, they also have the option to try on pieces from past generations. You can then decide whether to try on the exhibition piece or buy one which is immediately available for sale. The overall market, in terms of pricing, will stabilise and probably become more affordable on the lower end [under £10,000] and become more targeted [in terms of specific pieces] on the highest end when it comes to big-ticket items.”

The certification and warranty Rolex will offer on its CPO pieces means the watch will be more readily accepted for a trade at any Rolex retail outlet that is part of the programme, something that will also serve as a draw for customers. On the other hand, several brands, including Richard Mille, may impose a fee for watches that have been serviced outside their service network, further incentivising consumers to stay within the CPO ecosystem.

Halimi thinks a brand of Rolex’s size and reach entering the secondary market through a CPO programme will have an accelerating effect when it comes to other brand CPOs. “I don’t think other brands of comparable size will be able to survive without their own CPO programmes after this,” he says. Müller thinks this in turn will result in strong growth of the secondary market for the foreseeable future.

However, Davidoff is of the view that not every brand is in the position to do this. “Rolex has had a very buoyant market, with secondary prices above retail for some time now,” he says. “The same cannot be said for most other brands in the market. How much sense does it make to launch your CPO if your watches are trending at below retail levels on the secondary market?”

In addition, while entering an entirely new segment gives a brand more control over its market, it also exposes it to a greater number of uncertainties. “For instance, if there is a dip in the market and secondary market prices are hit, they won’t benefit from the kind of detachment [from fluctuating secondary prices] they enjoyed before,” says Davidoff. “If the market is at a high, they’re selling high; if it's at a low, they’re selling low.”

While we have talked about the confidence this new wave of CPO programmes can potentially inject in the secondary market, we would be remiss if we did not discuss the concerns about pricing and the data that informs it.

“The secondary market often dictates the true value of a watch,” says Halimi. It is the reason the prices of watches sold as part of the brand’s Patrimoine service closely follow market rates. In Halimi’s view, the results of auctions represent the most transparent way to index prices on the secondary market. “Other models, such as pricing based on list prices on pre-owned websites, may not offer a realistic picture of what the market is actually willing to pay for a certain piece,” he says.

While it may not offer end-consumers a holistic picture, it is without doubt this access to pricing data that has played a significant role in the proliferation of the secondary market. “Even today we have a lot of blank spots,” says Müller. “We have view of about two-thirds of the market – no more than that.”

Davidoff echoes this sentiment. “The secondary market, in my estimate, is already larger than the primary one,” he says. “We were seeing this as far back as 15 years ago in markets like Japan. I see no way that the market, in terms of sheer volume, isn’t already bigger than the primary one, if you count all the small dealers, plus platforms such as eBay and Chrono24, [and] all the auction houses, big and small. I think we don’t have the metrics to measure it yet.”

While it would be premature to predict what brand CPOs will mean for visibility on pricing on the secondary market, there are concerns that if brands – especially the dominant, volume players – capture a large enough share of the secondary market for their products, as they have done in the primary market, the data that comes from these re-sales will also increasingly reside with them. This will mean brands will have more control on secondary pricing, with the end-consumer progressively facing more blind spots on pricing trends and the forces informing them.

Bucherer will deploy the strengths of its databases with a proprietary algorithm feeding in pricing models from its network of operations around Europe as well as a number of other tools that will allow the retailer to be competitive in the rates it offers customers looking to buy and sell, Hardouin says. These are expected to be in excess of market rates, which is attributed to any service cost Rolex will have to undertake to recondition the watch. Prices will be negotiated, he adds, and customers part-exchanging a watch for a CPO piece will be offered a small bonus to offset the effect of the double margin. For special pieces, Hardouin and a watchmaker will personally examine watches before providing the client an offer price. “We are not chasing watches since we are sitting on 5,000-plus pieces across Europe,” he says.

Davidoff thinks, precisely because of the extent of the proliferation of the secondary market, it will be very hard for any one brand to control enough data to be able to determine pricing models. “There’s no way to control the market because it’s the sum of so many little transactions,” he says. “It may be possible to sway it ever so slightly, but never enough to control it.”

Halimi thinks a brand like Rolex will have significant historical data that will inform its pricing, no matter the vintage of the watch in question. “Just as ever, brands will have to straddle the fine line of supply and demand, constantly updating pricing based on data it is gathering from the market,” he says. “Bad actors on the volume end of the market will obviously be hit the hardest. For secondary sellers who offer a reliable service, it will represent an opportunity for significant growth. If these players can match the brand CPOs for quality of service, offering a small advantage – be it in terms of a rare piece or the price – over what the brand is offering, it can be a workable model.”

Müller concurs with this view. “On the niche end of the market, with high-end artisan watchmaking, I see an opportunity for some secondary market sellers that have a more curated offering,” he says. “If you’re reselling a Kari Voutilainen or a Roger W. Smith, you need to offer a level of service and advice to the client, so I see a split in the market going forward.”

So, while brands entering the CPO space might have a stabilising impact on often mercurial pricing, Büsser thinks they can do one better. “One of the primary targets of all brands should be to ensure that their secondary market prices are as close as possible to retail prices,” he says. “As long as that happens, the amount of secondary transactions will grow exponentially. Just imagine being able to wear a very nice watch for a couple of years and virtually not lose any money reselling it. Who would not jump on that bandwagon?”

Talking about the secondary market as a monolith would obviously be a mistake. It is one with many segments, catering to clients with different motivations. It is a constantly changing scene, with new developments pushing and pulling the market in different directions, often all at the same time. While even a few years ago the industry viewed the segment through the lens of the grey market, with its discounted pricing model, today it is known for secondary prices that often tower over retail levels.

The entry of dominant volume brands in the secondary market, after years of trepidation, is being viewed as having the potential to officialise the segment and have a stabilising effect. For consumers, this will represent the ability to buy with a greater degree of confidence. However, there are concerns that the segment whose growth has hinged on the democratisation of pricing trends and fluidity of transactions, will change dramatically. This has the potential to become an inflection point in a segment whose growth has been trending upwards for some time now. Based on projections, that rate of growth is only set to accelerate. This is expected to be especially true if more volume brands follow Rolex and Audemars Piguet’s lead.

The CPO model is hardly a new one. It is one that the automotive industry has employed in the past, with some success. Watches and cars are after all similarly complex mechanical items that need to be serviced periodically and are comparable in terms of their pricing. However, that may be where the similarities end. Whether this is the beginning of something that will prove to be a tipping point for the watch industry, with far-reaching consequences, remains to be seen.