The chief tool most luxury brands have against fighting grey market sales is to not honor the warranties, an approach taken by Omega, which found itself massively oversupplied in Asia, but it is a fairly weak measure at best. “It does allow them to discreetly turn a blind eye to some of their retail partners getting rid of non-moving stock and replenishing with parts that are growing faster,” he says. But the grey market “does provide a useful function,” no matter what some manufacturers say, according to Jon Cox, an analyst at Kepler Cheuvreux in Zurich.
Swiss luxury goods conglomerate Richemont, whose portfolio of brands includes Cartier, IWC, Jaeger Le-Coultre, Panerai, Piaget and Vacheron Constantin has taken the hardest line, buying back unsold stock in Asia and destroying it so that it cannot be sold on in Europe and the U.S., the FT notes. The other things going for grey market watches is that they are available online while most luxury brands still don’t have an e-commerce presence themselves.
(credit: Panerai) The Grey Market has no e-Commerce The grey market is being destroyed by a few brands. Whatever luxury brands you love it will be affected by the grey market. While some brands are obviously working with grey market dealers to rid themselves of unwanted stock, others are violently opposed to it. Oversupply in Asia, where the bottom fell out of a once-booming luxury watch market two years ago, has certainly fueled the grey market’s rise, the paper reports. The market is “growing massively” according to the FT and now accounts for about 20% of the global market for watches that retail for above $5,000, a 100% increase since the last time the numbers were crunched. As opposed to pre-owned Rolex watches, the grey market consists of essentially unauthorized sales of stock that for whatever reason failed to sell on the primary market and is now being offered at a deeply discounted price. The Financial Times, the world’s most respected business periodical, has taken a hard look at the booming grey market for luxury watches and finds that it is “becoming a powerful force in the watch industry,” one that may soon spiral out of control.
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