We Sued to Stop Tariffs – And Rolex Is Reshaping Retail – Episode 90

WEBVTT
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Bucherer, Watches of Switzerland, and the 1916
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Company are playing this brick-and-mortar high-end
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retail arms race. Yes, new locations,
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bigger and better, biggest in the world. Hello,
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it's 2026. Continue to play that game
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at your own peril. This is Open Work, a look inside
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the watch industry, a podcast from Collective Horology. I'm Gabe
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Riley, co-founder of Collective, and I am Asher Rapkin,
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co-founder of Collective. Collective Horology is an independent watch retailer
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based in Ventura, California. We carry a wide range of independent brands including
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David Candot, Niton, Singer Reimagined, and more.
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To learn more about us and check out our available inventory, visit collectivehorology.com.
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You read the wrong script. What the— that was the right script
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the first time. Yeah, yeah,
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well, good thing you read the right one because I think we want to chat
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a little bit about Singer Reimagined. Oh yeah, we mentioned this on
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the last pod, but very happy to report that we've received some new inventory
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from them. But that's not really the news for Singer at the moment. It's the
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new Heritage V72. Killer watch. It is a killer watch.
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And I think what's killer about it is not just the execution, which is great,
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but also what it, what it means for Singer moving forward.
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Because this now, I think, solidifies Heritage as a, as a formal line
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for the brand. Yep. Not just a creative experiment. And in many ways,
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it actually connects, at least in my head, to the Singer brand
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more broadly because it is essentially a restomod. Yeah.
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And if you're into that Singer vehicle design kind of approach,
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the sourcing of these vintage movements— Valjoux
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72s, legendary, the V72, and legendary in this context—
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the refinishing of them and the rebuilding of them and then
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bringing them to life in this new but most certainly vintage and
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automotive-inspired design. It's awesome. So these
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are a bit more limited than the first Heritage, and they
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also come in different metals, which is also new. The watch is available both
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in stainless steel and 18-karat yellow gold, and in a pretty
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high— pretty limited limitation— pretty limited limitation— they're limited
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to 50 pieces in steel and 25 in gold.
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Yeah, these things kill, and it just goes to show the strength of Singer
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as a brand in terms of their approach to design.
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They can do a Heritage piece like this. They can do things that are thoroughly
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modern and things that are sort of in between.
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They can do unusual stuff with, you know, the Agenhor, Agengraphe movements
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with an unusual time display on everything from the Dive Track,
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which is a wild watch, to the Track 1. Yeah. And then they can
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do a more straightforward time-only watch, or in this case a chronograph, a more
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traditional 3-register chronograph. Yet it all somehow hangs together. It's,
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it's pretty, pretty remarkable and speaks to not only their watchmaking
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prowess but the, the prowess of Borracino,
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the guy who runs the brand and designs the watches. We did a podcast
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with him a while ago if you want to hear all about his philosophy and
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approach to watch design. But that was then,
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this is now. That's not the only thing— what have you done for me
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lately, Singer? That's not the only thing that's happened in
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the, in the last few weeks, Asher. We sued
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the US government. What happened there? And we did it the day
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you went on vacation. We should. Oh my God. Yes.
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I got a lot of phone calls on vacation about this. So since
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you are the one here running the show while I was off
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gallivanting on vacation, catch us up. What exactly
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is going on here? We've talked a great deal, of course, about tariffs and their
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impact on the industry and our business, but this is the first
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time where we find ourselves in the news around tariffs.
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Yeah. And we put ourselves there with a lot of intention and
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a lot of gravity in terms of the decision. It's no small thing to
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enter into a lawsuit to begin with. Certainly no small thing to enter
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into a lawsuit against the United States federal government. But,
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you know, we've said this on other media appearances that we've made about this,
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and we'll say this, you know, from the bottom of our hearts. You guys all
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know this is a business that we live and breathe. We care
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about deeply. And independent watches are fundamentally not only what we've dedicated
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our life to, but also what we believe more watch
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enthusiasts should have access to. The simple reality
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of the Section 301 tariffs and the 122s before them and the IEPA
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tariffs before those is that they limit people's access to independent watches, full stop.
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They make them more expensive. They make them harder to import. They also
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make it harder to operate a small business in America. And that's true whether
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you sell watches, whether you import coffee beans, whether,
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as our co-plaintiffs do, you sell Herbes de Provence,
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which by definition cannot be made in the United States. All of these
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are things that small businesses rely on.
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Not only— Herbs de Providence. Those would probably be fine.
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Yeah, they should really look into that. Yeah.
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Have you been to Providence lately? I sure have. Yeah, my mom's family's from there.
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There's some herbs from Providence. I don't know about herbs, but— Fair. Okay. Okay.
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That was a deep cut anyway. But all kidding aside, you know,
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looking into the joke that you're making, you make a valid point, which is,
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well, why wouldn't you just sell American watches, right? And of course we do.
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I mean, listeners here have heard us speaking to Carel Bichon only a couple of
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days ago about Barrelhand. Everyone here knows we're a retailer, massive supporter of
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J.N. Shapiro. We love— first brand we ever retailed. Yeah, we've talked about
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Oak and Oscar in the past. There's friends of ours that we love, and,
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you know, whether you're talking about, you know, Seal Instruments or, you know,
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Dan Spitz or any number— or any number of tens of
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scores of brands, you know, from Laurier on, all around the
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country. You know, American watchmaking is growing as an industry, but it is still a
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young industry. And moreover, As independent watch collectors know, you know, we buy
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watches, we collect watches based on the aesthetic value of that watch, not necessarily
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its country of origin. And having taxes being put
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on every good that is imported into the United States— erratic
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taxes, I might add, especially when related to Switzerland, which has been all over
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the map— makes it difficult for small businesses to plan,
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to build up cash reserves, to hire, to grow,
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to invest, and of course to buy the goods that they sell to
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their customers. So because of all of those issues,
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the starvation of capital
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to us that we have earned, that we have built here in this business,
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and being pulled from us in taxation that we believe to be misapplied,
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to the increase in costs due to the first and second order
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challenges of tariffs, we decided to challenge these tariffs
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in court. And our hope is to see that not only will they be overturned,
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because we also believe that the justification for them is specious at best,
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But we also hope to see universal relief for other American small businesses,
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all American small businesses. Yeah, I think that's a key point here. So just
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2 thoughts on this. One, you mentioned the American watch industry.
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It's very much dependent on a global
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supply chain. So even if you're assembling watches here, certainly if you're assembling watches
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here or making watches here to some extent or another, with one exception, which is
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Josh Shapiro's Resurgence, you are dependent on a global
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supply chain. Yeah. And even in the case of Josh Shapiro's resurgence,
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he's dependent on a global supply chain. Sure, everything in the watch is American-made,
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but where did his CNC machines come from? Some of
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them came from the United States. Not, not all of them. Kern comes from,
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from Germany. Where does his electric lathe come from? You know,
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where do some of the old engine turning, you know,
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rose engines come from? A lot of that stuff is coming from outside
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of this country. And so this affects every business
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in this country because we all have input costs from around the world.
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And, you know, the other thing here is like we're not just seeking relief for
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ourselves and for the watch industry or for our co-plaintiff,
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Burlap Barrel. This case and our suit seeks
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relief for all businesses and ultimately all consumers to whom these
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costs get passed on to. So I think, you know, that's important and
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we felt strongly about that. Look, over the last year we've been on this,
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like roller coaster of tariffs. They were supposed to be something like
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30% initially on Liberation Day. They went to 10%, then up
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to 39%, then to 10% again. Now they're up at
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12.5%. They may go back up again. There may be more Section 301 tariffs
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imposed on Switzerland and a number of other countries. So we
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felt that the environment that that creates for us and other businesses
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is it's just too unpredictable. Forget the costs.
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Businesses like certainty and predictability. So we felt strongly
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that this was something we couldn't stand by any longer
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on and that we needed to take action. But of course, as all of that
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goes on here at Collective and out in the business world in general,
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the watch industry continues to motor on.
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And it's interesting, we are seeing the impacts of
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these tariffs and more importantly, I think that the volatility I just spoke about,
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the uncertainty play out in export recovery
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and in the results that we're seeing from the major holding companies.
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The results and the numbers are just, frankly, they're good now,
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but they're all over the place. And I think anyone who's been tracking this podcast
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where we've talked about export data and we've talked about the results
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from Richemont, from Swatch, and from LVMH will know they're
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up and then they're down and then they're up again. And right now things are
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up. So 2 things going on. Let's start with exports because that's obviously most topical,
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relevant relative to tariffs here. So Exports
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in June of 2026 were up 11.2%
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year over year. So about $2.4
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billion worth of exports, watch exports, left Switzerland
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in June, and that's up 11% year over
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year. Volume is also up, so more watches are shipped. These are global exports.
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These are global exports. But, you know, the US, as we've talked about, is a
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major presence. The US continues to do well.
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China, actually exports to China are down. So Volume was
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up. What's interesting is exports to the US
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in particular out of Switzerland. So if we look at June exports year over year,
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they're up 12.7%, but China is down 16.5%.
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Some other European countries are down to flat. So the US
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continues to drive growth for the industry and be kind of the critical watch market
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at the moment. And despite that position, it's also an extremely
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volatile environment. Exports were down earlier in the
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year. Now they're back up. So what we're seeing is a little bit of what
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we've discussed in the past, where you have this bullwhip effect where
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the tariffs go up, the exports come down, the tariffs come down a
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little bit, the exports go back up, and the US market is having
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a hard time finding an equilibrium for exports or imports into
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the country of watches because the trade policy is just
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all over the place. So you've made this point many times, which is
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right now we're on this roller coaster. Of volatility. We won't
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really know how the industry is doing overall, though it
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seems promising until we zoom out and have a look at this over 12
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months, 18 months, 36 months, and so
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on. It's just an erratic environment. Yeah. And, you know,
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it's interesting when I hear you talk about this because I can imagine the juxtaposition
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of us saying, well, we're suing because tariffs are becoming preventative
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for import. And now let's talk about the news where exports are up. They're up
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now. Yeah. And, you know, in part because they were down before. Yeah. And I
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also think we have to look at these things, like to your point, at a
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macro level, right? Like they are down relative to 39%.
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They are up relative to 16 months ago.
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We don't know where they will be. We don't know where they won't be.
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What we've seen with exports from Switzerland in general are these,
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to your point, waves, right? And some of that is some,
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is some, is some like intentional engineering about saying,
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well, let's sort of ride this out a little bit. Let's see how it goes.
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Well, if a tariff comes down, we're going to export massively. We'll warehouse
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in the United States. If it goes up, then we're going to hold. And I
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think it's important. So we have to look at these against a 16 to 24
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month window as opposed to these quarterly windows, because on the quarterly windows,
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things can look perhaps more healthy than they are. Month to month, it's even more
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erratic. Exactly. So these numbers are interesting and we need to pay attention to
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them, but I would caution about reading too far into them just in general for
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either good news or bad news. Well, if we're gonna read a little bit
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farther into them, let's do it anyway. Hell's bells,
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baby. Okay. Let's look at the results for LVMH,
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for Richemont, and for Swatch, 'cause they also paint a picture
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of recovery. Now again, we've talked about this on the podcast before.
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Each of these companies has a different sort of financial year that's separate
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from the calendar year. So, you know, one company's,
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the first quarter might actually be the second quarter of the calendar year. Sure.
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But we're looking at the most recent quarter of results
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from these companies. LVMH Watches and Jewelry is one division within
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the company. They saw organic growth in
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the first half of the year, 9% in the
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second quarter of the year. So looking even more recently, it was up
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11%. So the business is ramping there.
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And again, they're lumping jewelry and watches together,
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but what they're telling us is there's recovery there. Keep in
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mind, as we've talked about on this podcast before, jewelry in
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general for this, for this industry or
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for the broader luxury industry is doing extremely well right now and is driving not
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just LVMH's results within this jewelry and watches division,
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but the same will be true for Richemont. Yeah. So let's talk about Richemont.
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They actually do give us some specific insight into watches.
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So in the quarter that ended at the end of June for them,
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group sales were up 20%. So Richemont
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is booming, especially that's double, more than double what,
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what LVMH did. Yeah. Within that though,
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when you dig deeper, it's the jewelry maisons that are driving this.
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So the jewelry maisons— Cartier is a jewelry maison, of course,
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they're also the number 2 watchmaker by sales— but jewelry
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maisons are up 24% year
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over year, and specialist watchmakers. So these are the maisons
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that are just focused on watchmaking. Cartier is not in there. This is IWC,
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JLC, Vacheron, Lange, et cetera. Up 8%.
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I don't know how they adjust for, for Baumann-Mercier, but actually Baumann-Mercier
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may not fully be spun out yet. I think there was some time that I
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don't— I think they actually get spun— I could be totally wrong, but if memory
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serves me correctly, they actually get spun out, I think, after this quarter. One would
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have to imagine that there's some sort of like a soft wind-down there so it
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doesn't make— doesn't look bad on the books when something like that rolls off.
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Yeah, unless it was so negligible. But I wonder how they'll account for that.
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I mean, that's a significant maison leaving that division. Will they, will they adjust sales,
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or have they adjusted sales? I don't know. I'm sure there is, there's some form
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of accounting for that. In their commentary on the earnings call, they also said
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jewelry is really the driver, the, the engine of growth
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for them. But, you know, the, the watch brands are up. I think it's important
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just to put in context, watches are doing well for them, but relative
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to their other businesses, still relatively stagnant.
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Yeah. Swatch Group, the group of
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watch brands, no jewelry maisons in, in here.
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So they're telling us that their sales are up 8.5%.
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So this is kind of consistent with what we're seeing from LVMH's watchmaking
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maison. And they're telling us that their operating
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margin, though, is just 1.7%. So this is— that's
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really living on the wire. It continues to be tough for, for Swatch.
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So they're performing, at least in terms of top line numbers,
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in line with their, their peers. So 8% is is where Richemont
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is. And for LVMH, 9% generally
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for watches and jewelry. So look, Swatch is hanging in there on
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the top line numbers, but when it comes to the bottom line and how much
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money they're actually clearing, it still remains essentially breakeven.
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They're saying that their pain points right now are
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really around foreign exchange. So the Swiss franc continues to be
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relatively relatively strong, not only relative to the dollar,
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but in part because it's strong relative to the dollar, it's strong
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relative to everything else because it is acting to some extent as a
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reserve currency more and more. So they
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can blame currency pressures all they want,
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and they are real. Like we've certainly talked about that, but we're not hearing
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that from Richemont or from LVMH. So Swatch,
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they're selling watches, but they have serious work they need to do,
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it seems, around the internals of their business. Yeah.
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So we'll, we'll see. So I, I'd say the watch market
17:20.250 --> 17:22.931
is, is doing well. It's continuing to grow, as we've talked about.
17:23.429 --> 17:26.690
What's really interesting next is what's happening with Rolex and
17:26.722 --> 17:30.466
the broader pre-owned market, because I think this paints an interesting,
17:30.739 --> 17:34.225
an interesting picture of how tastes
17:34.290 --> 17:38.427
are evolving and what we've talked about with the overall sort of analog
17:38.459 --> 17:42.050
boom and how tastes in watches are not being driven by
17:42.550 --> 17:45.913
hype but are more being driven around substance. And we're starting to
17:46.413 --> 17:49.969
see that reflected in the pre-owned market where Rolex's role in
17:49.985 --> 17:53.207
the pre-owned market as in terms of its overall piece
17:53.707 --> 17:57.166
of the pie is actually diminishing. It's still the number one brand in terms
17:57.214 --> 18:00.372
of pre-owned sales by revenue, but its share
18:00.420 --> 18:04.796
of the pie is diminishing while others catch up. But you're, you're, you're sighing.
18:05.390 --> 18:08.179
I'm not sighing. I'm just I'm sort of smiling because, you know, some of the
18:08.679 --> 18:12.218
research that we pulled here demonstrates that the market is normalized and more model-specific.
18:12.908 --> 18:16.130
Well, yeah, makes sense. It's Rolex, right? You know,
18:17.172 --> 18:20.586
checks out. But it's interesting because
18:20.698 --> 18:23.856
there was this fever pitch that we all knew about,
18:23.920 --> 18:27.447
you know, that '21, '22, like peak of the market where it was just like,
18:27.575 --> 18:31.006
give me watch. Yeah, not, not quite as,
18:31.759 --> 18:35.158
as I think focused as we saw with, you know, with the collector mentality before.
18:35.286 --> 18:38.797
And that's coming back where people are saying like, okay, Well, I am
18:39.297 --> 18:42.343
interested in that 1675, but is it a full set?
18:42.583 --> 18:46.225
Does it have original papers? What about the bracelet? Is it fully linked? Like all
18:46.434 --> 18:49.771
of these questions that were collector-oriented,
18:49.883 --> 18:53.798
thoughtful questions, you know, which I'm not saying they didn't
18:54.298 --> 18:57.039
exist, of course, in collecting in that era. Yeah, but there was much more of
18:57.539 --> 19:00.136
a fever pitch of— I mean, certainly with new Rolex, where it's like, if I
19:00.636 --> 19:03.425
just put it in the box, I just know it'll sell regardless of what it
19:03.925 --> 19:07.307
is. Versus now we're hearing one, and on the new side of the market,
19:07.917 --> 19:11.155
that retailers are certainly selling out of their inventory, but it takes a little
19:11.655 --> 19:14.169
bit longer. They got to work their way down the list. Not everything that goes
19:14.669 --> 19:18.097
into the box automatically walks out the door that day. But, you know,
19:18.257 --> 19:21.527
don't get me wrong, still very healthy. On the CPO side,
19:21.559 --> 19:25.856
what I find really interesting is when I go and look at CPO boxes
19:25.968 --> 19:29.623
that are in like local retailers, what's in those boxes generally in
19:29.639 --> 19:33.359
my mind, I fall into 2 buckets. A lot of new watches. Well, not new
19:33.423 --> 19:36.469
watches, but relatively recent watches. We see that wasn't my
19:36.969 --> 19:40.064
takeaway. My takeaway was you know, a portion of it is what you would think,
19:40.144 --> 19:43.982
right? Like Submariners, Explorer IIs, and GMT-Masters,
19:44.078 --> 19:47.306
right? Like the watches that people tend to want, you know,
19:47.371 --> 19:52.220
quote-unquote. And then there's this other side, which is like off-catalog
19:52.349 --> 19:55.464
and interesting gem set and sort of unusual— yes,
19:55.641 --> 19:59.640
modern, but unusual watches, which is fascinating because
19:59.672 --> 20:03.221
the way that I always thought about Rolex CPO, I think a lot of people
20:03.721 --> 20:06.192
think about it like this too, is like, eh, If I want a Sub,
20:06.898 --> 20:09.869
you know, there are a million ways to get a pre-owned Sub from somebody that's
20:10.369 --> 20:13.402
reputable. And yes, I understand we can make the argument about you're not— you don't
20:13.902 --> 20:16.019
know the market, you choose to go CPO, blah, blah, blah. But like, if you
20:16.115 --> 20:19.295
are a guy or a gal who's been in this community long enough,
20:19.809 --> 20:23.855
you know, you can buy a Sub from any
20:24.355 --> 20:27.837
number of reputable online dealers and you'll be fine. Yeah. And the
20:28.337 --> 20:30.824
price will be lower and the watch will be under— it's still probably under its
20:31.324 --> 20:34.963
5-year warranty, may not even be more than a few months old. But an
20:35.139 --> 20:39.034
interesting use case for Rolex CPO, which admittedly had not occurred to me until
20:39.226 --> 20:42.913
I saw some of these boxes, is a way of getting not
20:43.413 --> 20:46.808
only off-catalog pieces but off-catalog pieces that have been verified. Because one
20:46.920 --> 20:50.077
thing that is interesting— yeah, it's like, think about like,
20:50.366 --> 20:53.667
you know, a variance of Rolexes, for example, pavé dials. Yeah, what are they
20:54.167 --> 20:58.235
called? Like, like bust-down watches? Yeah, there's a lot of those on 47th
20:58.735 --> 21:01.762
Street, but how do you know if it's an off-catalog piece or something that a
21:02.147 --> 21:05.277
Or more importantly, how do you know that the card is the real card and
21:05.357 --> 21:08.439
all of those things? But if you buy a piece like that from a
21:08.939 --> 21:12.421
CPO retailer, it is 100% authentic. Yeah. And you know
21:12.437 --> 21:15.888
that. That's interesting. Warrantied and it's guaranteed. And I think
21:16.388 --> 21:19.002
that is an interesting use case. So if you're out there looking for that like
21:19.163 --> 21:23.112
onyx dial gem set, you know, Day-Date from 3 or 4 years ago off catalog,
21:23.128 --> 21:26.804
if you can't get it from a dealer you 100% trust, CPO is totally
21:26.868 --> 21:31.104
a way to do it. Or, or watches that are, you you know, similarly molested,
21:31.136 --> 21:34.759
whether it's like, you know, stone dial watches. You're not sure if the
21:35.259 --> 21:38.255
stone dial is original or whatever, or gem-set in any number of ways. Or not
21:38.271 --> 21:41.958
just off-catalog. Even from the era of Rolex where dial swaps and bracelet and
21:42.458 --> 21:45.614
variations in bracelets were normal. Yeah. But deciding
21:45.710 --> 21:48.981
like, you know, okay, am I— do I want the Latin America bracelet on
21:49.013 --> 21:52.316
this gold watch? Like, that's information only you can decide as a collector,
21:52.701 --> 21:56.036
but at least you'll get that information if you're not getting it from like,
21:56.052 --> 21:58.714
you know, the best of the best on the vintage side. You might just be
21:59.214 --> 22:02.630
getting it pretty well from the, from the CPO program. So on the more modern
22:03.130 --> 22:06.963
side of watches. Hey, it's Gabe. Now, if for some reason you find yourself
22:06.979 --> 22:11.151
wondering what you can do to support Open Work and the good folks at Collective
22:11.651 --> 22:15.484
Horology, you can of course pick up an independent watch or maybe some
22:15.984 --> 22:19.705
merch at collectivehorology.com. But really, the number one thing you can
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do to support us if you're enjoying the podcast is give
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That just goes a long way to helping the right audience find this
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show. And while you're at it, you can check out and please subscribe to
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our YouTube channel where we've got hundreds of videos on independent
22:39.458 --> 22:43.108
watches and of course on the business of watches. Thanks so
22:43.124 --> 22:47.307
much, of course, for listening and for your support. We hugely appreciate
22:47.807 --> 22:52.180
it. We never take it for granted. Let's get back to the show. So I
22:52.680 --> 22:55.800
actually had never— that never occurred to me as like a strong use case for
22:56.300 --> 22:59.520
CPO. Kind of opened my mind to it and does change my perspective on programs
23:00.020 --> 23:02.240
slightly. That's a great point. Let me ask you this question though. Let me riddle
23:02.740 --> 23:06.280
you this. Riddle me that. I was doing a little online research the other
23:06.780 --> 23:09.580
night. Oh geez. Yeah. How much time do you have? I was doing a little
23:10.080 --> 23:15.000
online research. I was looking at the Rolex GMT-Master 1675.
23:15.500 --> 23:17.760
Oh, that's, that's a grail for you. It's a grail for me. I was looking
23:18.260 --> 23:21.905
at this watch and wouldn't you know, At the 1916
23:22.017 --> 23:25.992
company, they've got a 1675 GMT-Master, and it
23:26.025 --> 23:29.567
was listed for something like $12,000 CPO.
23:30.129 --> 23:33.736
That's it. I clicked— what a deal! I clicked the listing. This is
23:33.784 --> 23:37.615
unusual. Actually would be a deal. Yeah, it would be a deal, except because
23:37.631 --> 23:40.741
it was CPO'd, the only thing that looked original on the
23:40.757 --> 23:44.637
watch was the bezel insert. The dial and handset were replaced.
23:44.765 --> 23:48.260
I mean, they were white, white, white, white, white— the lume plots and the lume
23:48.308 --> 23:52.075
on the dial. Bummer, huh? The the bracelet was almost
23:52.575 --> 23:55.890
certainly replacement, you know. So with those
23:55.987 --> 23:59.818
watches, you know, the dial of course is, is the thing, but the condition
23:59.930 --> 24:04.226
of the case, you know, not over-polished. I can't quite remember, but I'm
24:04.322 --> 24:08.618
sitting here scratching my head over that because while yes,
24:08.971 --> 24:12.305
what 1916 and/or Rolex has done with that
24:12.417 --> 24:16.104
watch is they've reconditioned it and restored
24:16.604 --> 24:20.833
it, and you can be assured in so much as a Franken-service
24:21.333 --> 24:24.618
watch is an authentic Rolex watch, there's that peace of mind,
24:24.634 --> 24:27.507
but they've essentially destroyed a vintage watch in the process.
24:28.336 --> 24:32.350
And not only have they destroyed the vintage watch in the process, they've destroyed
24:33.028 --> 24:36.397
the majority of the value of that vintage watch. If that were
24:36.897 --> 24:40.303
an all-original 1675— I think it was like a Mark IV or something like that,
24:40.351 --> 24:43.724
I could be, could be wrong in my recollection— you know,
24:43.805 --> 24:46.903
it would sell for twice. And being a CPO watch and being sold
24:47.403 --> 24:50.901
by 1916, you could maybe even sell for almost 3 times more than what they're
24:51.263 --> 24:55.959
what they're asking for. So I just don't understand. They could have wholesaled
24:56.072 --> 24:59.839
probably the original watch for more than they're now able to sell
25:00.339 --> 25:03.349
it as a CPO watch with all of the parts having been swapped
25:03.849 --> 25:07.084
out. So I'm scratching my head over the economics
25:07.453 --> 25:10.964
of that particular watch. That's an example that makes no sense
25:11.464 --> 25:15.196
to me whatsoever, and honestly is a kind of a shanda. It's a crying shame
25:15.228 --> 25:18.402
that that's been done to that watch. A shanda. Well done.
25:18.979 --> 25:21.832
Yeah, it is. And, and I don't want to dwell too much on this one
25:21.880 --> 25:25.460
because like every everything when you're collecting vintage, like the devil's in the details,
25:25.572 --> 25:29.908
you know. But all of that— and I'm far from
25:30.408 --> 25:34.260
an expert in vintage, Lord knows. But yeah, I do think
25:34.308 --> 25:38.339
that there are folks that, that could end up, you know, buying something
25:38.839 --> 25:41.470
that isn't exactly what they think it is, even though, even though it is incentive
25:41.970 --> 25:45.276
for the market to destroy good vintage watches. And this is the problem, right?
25:45.404 --> 25:49.580
Because that 1675, from Rolex's
25:50.080 --> 25:52.679
perspective, is an authentic watch because it is.
25:53.294 --> 25:57.095
And the 1675, in whatever condition it was presented, either the watchmaker,
25:57.224 --> 26:00.268
Rolex watchmaker at 1916, or at the Rolex Service Center,
26:00.623 --> 26:04.558
was defective. Correct. But in their view, from a collector
26:05.058 --> 26:08.642
perspective, it's now destroyed. Yeah. So there is, there is this
26:08.851 --> 26:12.078
push and this pull here, which I get. So I'm not,
26:12.143 --> 26:15.343
I'm not saying that the program is like the way to buy vintage. Far from
26:15.843 --> 26:19.061
it. No, I think it's just more checkered than— in terms of like,
26:19.191 --> 26:23.337
there's, there's I'd never considered the rare or off-catalog
26:23.883 --> 26:27.225
proposition there. That makes a lot of sense. Here's the other side of that where
26:27.257 --> 26:30.631
they've destroyed something that was original. Yeah. And although we
26:31.131 --> 26:33.861
don't know what shape the watch was in when it arrived there, but for sure.
26:34.022 --> 26:37.299
But to me at least, this was a use case
26:37.799 --> 26:40.433
that I had never considered and I thought was pretty cool. So let me,
26:40.513 --> 26:43.582
let me just give you the numbers on what's going on with the pre-owned Rolex
26:44.144 --> 26:48.173
market. So right now, Rolex constitutes
26:48.221 --> 26:51.573
41% of secondary market transaction
26:51.685 --> 26:55.743
values. So in other words, of all of the transactions, all the money flying
26:55.839 --> 26:59.271
around there in the secondary market, $4 out of every
26:59.287 --> 27:03.601
$10 is towards a Rolex, which is— wow. But that's
27:03.714 --> 27:07.306
impressive, right? However, comma, but that's at a 7-year low.
27:07.803 --> 27:11.251
So you talked about the, you know, there are 2 things going on. Obviously there
27:11.751 --> 27:14.748
was the COVID frenzy, and before there was the COVID frenzy, there was also the
27:14.780 --> 27:17.894
Rolex vintage frenzy from, you know,
27:17.991 --> 27:21.090
kind of that the Paul Newman Daytona sale in
27:21.203 --> 27:24.816
the late 2010s up and, you know, up until the
27:25.316 --> 27:28.719
COVID bubble. So you had this sort of vintage explosion, then you had the watch
27:28.831 --> 27:32.653
bubble, and now Rolex is kind of stabilizing.
27:32.701 --> 27:36.170
At the same time, we're seeing that transaction values for
27:36.620 --> 27:41.181
watches from LVMH and from Richemont
27:41.681 --> 27:45.258
and others are modestly gaining
27:45.354 --> 27:49.237
share. And what this tells us is that the pre-owned
27:49.285 --> 27:53.055
market is in a state of transition where it's still
27:53.555 --> 27:57.291
a growing market. I mean, we've talked many times about the huge opportunity
27:57.804 --> 28:01.575
and the overall size of the pre-owned market. It is massive, but we're
28:02.075 --> 28:05.329
seeing the numbers in the pre-owned market, which are the most transparent
28:05.829 --> 28:08.827
because we have the most sense of what's actually transacting as compared to new watch
28:08.875 --> 28:12.612
sales. We're starting to see this shifting of
28:12.805 --> 28:16.652
tastes where tastes aren't necessarily dominated by Rolex steel sports
28:17.152 --> 28:20.788
watches. There's more of a diversity of taste, and that's showing up in the transaction
28:20.900 --> 28:24.491
data, which I think is really interesting. And honestly, I think it's encouraging. And heck,
28:25.292 --> 28:28.899
4 out of every $10, or, or whatever currency you might,
28:28.915 --> 28:32.858
you might measure it in, going toward a Rolex watch in the pre-owned world
28:33.358 --> 28:36.529
is still hugely dominant. I mean, no other
28:37.029 --> 28:40.505
brand comes, comes close. So it is fascinating
28:40.601 --> 28:43.631
though, and we're starting to see the things we discuss anecdotally totally, as far as
28:43.679 --> 28:47.013
a broadening of taste, show up in the data. Yeah.
28:47.269 --> 28:50.267
And it's something that I think we should continue to monitor because, of course,
28:50.716 --> 28:55.108
the numbers here are so big and the impact of CPO is so profound that
28:55.608 --> 28:57.288
I know we're not just looking at it from a collector standpoint or from a
28:57.788 --> 29:01.616
business standpoint, but I think there's also a
29:01.680 --> 29:05.127
desire to replicate this model across multiple brands. Vacheron is dabbling in
29:05.627 --> 29:09.326
this, for example. MB&F has done that, has done CPO for a while, and obviously
29:09.391 --> 29:13.366
the scale of MB&F CPO is minuscule relative to— relative—
29:13.398 --> 29:16.908
well, anything is relatively minuscule compared to Rolex CPO. In general,
29:17.004 --> 29:20.723
Rolex CPO continues to gather strength. Sure. So what's interesting
29:20.787 --> 29:24.906
is you have Rolex CPO gathering strength and growing. The transaction
29:24.938 --> 29:28.272
value of those is higher than the average non-CPO watch,
29:28.544 --> 29:32.359
non-Rolex CPO watch. So it's growing into this juggernaut at
29:32.375 --> 29:35.933
the same time that Rolex's overall share of the pre-owned market is coming down.
29:35.998 --> 29:39.298
So that gives you a sense that watches outside of pre-owned
29:39.573 --> 29:43.148
are not performing as well, and that— and the Certified Pre-Owned program
29:43.229 --> 29:47.339
is critical therefore to Rolex to maintaining their value
29:47.839 --> 29:51.240
on the pre-owned market. I find this also fascinating,
29:51.675 --> 29:55.479
and I want to just keep keeping— keep— I want to keep watching what happens
29:55.543 --> 29:59.706
here because as always Rolex continues to defy gravity and
29:59.738 --> 30:02.534
figure out its own way forward in its own approach.
30:02.952 --> 30:06.121
Yeah, 2 people I'd love to talk to about this would be one, Tony Traina.
30:06.186 --> 30:09.434
He recently wrote for his his— for his newsletter Unpolished,
30:09.450 --> 30:12.575
a piece on kind of the decline of the boomer watch.
30:12.639 --> 30:16.293
And so a lot of these stainless steel Rolex vintage watches fit in
30:16.325 --> 30:20.170
that boomer watch definition, like the 1675 we
30:20.670 --> 30:24.321
spoke about, the 5513, all these sort of, you know,
30:24.882 --> 30:28.551
canonical Rolex vintage pieces. And what he's basically seeing
30:29.368 --> 30:32.910
and reporting is that interest in those watches is
30:32.974 --> 30:35.886
waning and was maybe generational in a lot of ways.
30:36.384 --> 30:39.597
I think they'll— they're like a pair of Converse, like they'll always be popular,
30:40.079 --> 30:43.228
but things wax and wane, tastes change. I'd love to chat with him,
30:43.469 --> 30:46.501
and then I'd love to bring Hamza back on to get into the numbers of
30:46.517 --> 30:50.052
Rolex CPO and the pre-owned market. Absolutely. There's a ton
30:50.408 --> 30:54.892
going on there that he's got much better visibility into. But let's switch
30:55.005 --> 30:58.388
gears now to Rolex's new market and what's
30:58.888 --> 31:02.913
going on there, in particular the expansion of Rolex-owned,
31:02.946 --> 31:07.219
or I guess they're Bucherer-owned, boutiques in the United States.
31:07.621 --> 31:10.798
We talked— God, it was maybe a couple months ago when
31:10.814 --> 31:14.522
I mentioned like the Rolex boutique in New York being run by Wempe,
31:14.618 --> 31:18.005
and you wisely corrected me. And we're like, no, not anymore.
31:18.422 --> 31:21.295
Yeah, now we know a little bit more about that. So there's some news here,
31:21.889 --> 31:25.773
not just about what's happening with Rolex's planned flagship boutique
31:25.837 --> 31:29.608
in New York, but an expansion of Rolex-owned and operated
31:30.108 --> 31:32.948
boutiques around the country. Yeah. So,
31:33.526 --> 31:36.882
you know, first there's the, the sort of the obvious question, right? Which is,
31:37.155 --> 31:40.398
okay, so does this actually mean that there are Rolex-owned and operated boutiques?
31:40.446 --> 31:43.914
And the, the official answer to that is no. You know,
31:44.059 --> 31:47.720
Bucherer is its own business entity. These boutiques are run
31:47.768 --> 31:51.397
separately. The, the real truth of it's probably a lot more
31:51.445 --> 31:54.737
nuanced than that, right? Because it's very difficult to
31:55.237 --> 31:59.587
imagine that the fact that a Bucherer boutique exists
32:00.020 --> 32:03.232
wouldn't impact the way that they allocate watches to it.
32:04.196 --> 32:08.211
The other thing about it, and this has always been the fascinating thing with
32:08.227 --> 32:11.905
Bucherer, right, is the information and the power dynamic
32:12.405 --> 32:15.647
there. Because Bucherer, of course, retails plenty of watches from
32:16.017 --> 32:19.630
the competitors to Rolex, even if Rolex doesn't think about it
32:20.130 --> 32:23.533
in, you know, that— those terms. Dollars spent in that price category
32:23.565 --> 32:27.162
against sports watches in general general is competitive
32:27.662 --> 32:30.887
to Rolex. And they have that data. They know how they sell.
32:31.514 --> 32:34.821
They know how much they buy. They control how much money they put back
32:35.321 --> 32:39.590
into that industry. It's a lot of sensitivity there around
32:40.329 --> 32:43.620
all of this. And of course, what's Bucherer's biggest competitor
32:43.636 --> 32:46.800
in the United States? Well, it's 1916 and it's Watches of Switzerland,
32:47.394 --> 32:50.653
both of whom have massive Rolex accounts. Now,
32:51.423 --> 32:54.756
And this is to say nothing of the— I
32:54.772 --> 32:58.618
would imagine the third largest competitor
32:59.118 --> 33:02.880
there are the mom-and-pops, the locally owned jewelers, and they're probably
33:03.380 --> 33:05.540
under the most competitive pressure. Yeah. I mean, it's interesting when you look at the
33:06.040 --> 33:08.777
New York market, right? Because the New York market in particular is sort of an
33:08.873 --> 33:12.255
oddball. Well, let's just give the news here for clarity.
33:12.559 --> 33:15.956
So a couple of things are happening. One, Rolex has announced that they're opening a
33:16.456 --> 33:18.809
new 4 43,000,
33:19.066 --> 33:23.169
43,000 square foot flagship
33:23.314 --> 33:27.065
boutique in New York City. It will be, it's a monobrand boutique. It'll be
33:27.225 --> 33:31.457
owned and operated by Bucherer. It's going to open in
33:31.874 --> 33:35.529
the end of this year, early next year. It will be the single
33:36.058 --> 33:39.552
largest Rolex boutique globally.
33:40.370 --> 33:43.736
I mean, physically, physically, probably in
33:43.832 --> 33:47.599
terms of transaction too. Who knows? I mean, that's, they're really
33:48.099 --> 33:51.015
shooting the lights out here. So that, that is huge news.
33:51.689 --> 33:54.801
They also are opening a dedicated Rolex
33:55.301 --> 33:59.292
boutique. Bucherer is opening a dedicated Rolex boutique in Seattle this
33:59.792 --> 34:03.414
fall, and they've planned additional new— they're multi-brand, but additional,
34:03.462 --> 34:07.055
and you better believe Rolex will be a part of it— additional new multi-brand
34:07.248 --> 34:10.392
Bucherer locations in Washington, D.C.,
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and then in Williamsburg, Virginia, not Williamsburg, Brooklyn, Williamsburg,
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Virginia in 2027. So Bucherer is
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now a growing entity in terms of its retail footprint again in the
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United States. They did close a number of locations. Remember the old Honolulu Tourneau?
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Yeah, that, that closed unfortunately. Maui's still there though,
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although I think that's owned— that's not Tourneau. That's not Tourneau. But so they're,
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they're expanding again, and, uh, they're expanding
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with, it seems, just as many mono-brand
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Rolex boutiques as they are, as they are multi-brand.
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Now, if you're a Rolex dealer— and I don't know who is a Rolex
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dealer in Seattle, Washington, for instance— it's not great
34:53.728 --> 34:56.891
news. Maybe your account's getting pulled. Well, this is— maybe it is, maybe it isn't,
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I don't know. But they're sort of coming for everyone.
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They're coming for Watches of Switzerland, and they're coming for
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1916, and they're creating incentives for those 2 companies themselves
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to only get bigger. Yeah. And they're coming for the,
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the family-owned and operated, you know,
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Rolex retailers that have been in a lot of these major or
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secondary markets for a long time. It's a huge shift that's happening right in front
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of our eyes. Yeah, it is. It's also fascinating because we're seeing an expansion
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of big-box retail in the watch world, which hasn't happened in some time. You know,
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if you roll back the clock even just 7 or 8 years, you know,
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Tourneau kind of felt like it was in decline. Yeah. And now we're seeing
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Watches of Switzerland and Bucherer and 1916
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really getting, you know, really putting their tentacles out there and trying to take
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over more of the country into, you know, in mainstream watches.
35:51.456 --> 35:56.442
This is an interesting space because you're right, you are— if I were a family-owned
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Rolex dealer, I can certainly feel the pressure on this
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one. And they are closing them. They— well, they're— they're—
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they are— some of them are getting closed and losing their status, and others
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are being acquired acquired. Well, that's the thing.
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Some are being acquired too. And I think— do you think it's always a friendly
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acquisition or do you think it's like a, you need, you know, it's like the
36:19.105 --> 36:22.694
mob shows up and it's like, you need to sell your business and we're
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going to take care of you. I highly doubt that Rolex approaches their partners that
36:26.556 --> 36:29.953
way, but I think they probably approach them with a logical reality. Like if I,
36:30.097 --> 36:33.654
if I had to guess, it would probably be, hey, your revenue is
36:33.766 --> 36:37.484
this today. Like you're doing, I don't know, $30 million in revenue this year,
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I'll give you $30 million in cash for your boutique today.
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If I have to come back in 2 years, then it's $15 million. And if
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I come back in 5 years, then I'm just going to knock you out with
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a booker next door. I don't know if it's that explicit. In fact,
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I would be shocked if it was. Yeah. But I think that's the implicit reality
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of it. And they also don't make it easy for
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these smaller stores that don't have
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the deep pockets that say, Bucherer does with Rolex's
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backing, or Watches of Switzerland, which is traded in the public markets,
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they don't have the backing to meet a lot of the hurdles
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that Rolex makes them jump through, you know, refreshing their boutique. When you— I'm
37:20.517 --> 37:23.649
sure there's some timeframe that Rolex is like, every certain number
37:24.149 --> 37:26.428
of years you have to refresh your boutique, and when you do, you got to
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buy all the fixtures from us. Oh no, there is absolutely a timeframe,
37:30.058 --> 37:33.174
and that— and they absolutely do have to. And by the way, not for nothing,
37:33.608 --> 37:37.175
but for poor folks that had to redo their boutique in the last 16 months,
37:37.865 --> 37:41.464
guess what they have to pay too? Oh, they gotta pay tariffs
37:41.964 --> 37:44.340
on all the fixtures coming in, right?
37:45.336 --> 37:48.935
God. So yeah. Yikes. Anyway, I think
37:49.435 --> 37:51.618
this is something to also pay attention to. It's tough out there in these streets,
37:51.682 --> 37:55.940
man. It is. But, but the dynamic that you're pointing to of
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like, it's impossible to separate out if you're London
38:00.036 --> 38:03.697
Jewelers in New York, the reality that Bucherer is
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not only the biggest physical store, but is also the biggest
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one in the world and probably will have crazy allocations. That's going to be an
38:11.037 --> 38:14.696
interesting conversation with Rolex, with Rolex corporate.
38:14.872 --> 38:18.549
And, you know, but here, but I will add one
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final point on that before we wrap on it. Rolex is nothing
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if not deliberate and slow. So I
38:25.870 --> 38:29.256
don't think that they're going to come, you know, into a market
38:29.756 --> 38:33.396
with a sledgehammer. No, they acquired Bouguereau in 2023. They're not opening
38:33.429 --> 38:37.280
this New York flagship, which has to probably be their— it is by
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virtue of the fact that it's clearly the largest. They're not
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opening that boutique until what will end up being, they say late 2026.
38:45.063 --> 38:48.674
It'll be next year, 4 years after they made the acquisition. Sure. But they're also
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probably not closing like London, you know, the same Or Watches of
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Switzerland. No, no, no, absolutely not. And look, New York is a huge
38:57.477 --> 39:00.827
watch market. I think the bigger threat are for these dealers in these secondary
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markets. Like, the, the— as big as that Rolex flagship boutique will
39:04.867 --> 39:08.169
be going in, in Midtown— so you think that like that,
39:08.217 --> 39:11.551
like the, the local AD in Princeton is in more danger than the one
39:11.616 --> 39:15.928
in— I don't know about that. Let's take Seattle because they're opening a mono-brand boutique
39:16.428 --> 39:20.240
in Seattle. I think the shockwave of, of that in that market in Seattle
39:20.272 --> 39:23.895
is much bigger than the shockwave of the, of the flagship store
39:23.943 --> 39:27.280
in New York. Yeah, I'm curious. I think it's gonna be tougher in those,
39:27.537 --> 39:30.649
in those secondary markets. So, all right, so let, we talked
39:31.149 --> 39:33.071
about a lot of things on the show. Let's just zoom out because I think
39:33.713 --> 39:37.050
all of these things are interrelated and it's fascinating, right? Talked about our
39:37.082 --> 39:40.852
lawsuit based on the tariffs that have put pressure on this industry. We are
39:41.352 --> 39:44.205
also seeing an erratic amount of imports into this country, or I'm sorry, out of
39:44.221 --> 39:47.798
Switzerland globally. Yep. And we're seeing a massive reshuffling
39:48.167 --> 39:51.969
of the deck in terms of growth around big box retail.
39:52.643 --> 39:56.189
So to me, what all of this says is uncertainty creates
39:56.689 --> 40:00.569
both stress and anxiety and challenges, but it also creates significant opportunity.
40:01.227 --> 40:05.061
And I think what we are seeing right now is when there's the pressures
40:05.093 --> 40:08.912
that we see that are being created economically, the change in consumer
40:08.944 --> 40:11.527
behavior and the way they like to buy and where they like to buy,
40:12.072 --> 40:15.682
the growth and resurgence of big box retail, and as we
40:15.922 --> 40:19.544
assume perhaps the retraction of some
40:20.044 --> 40:23.230
smaller family-owned independent shops. This is a grand reorganization
40:23.730 --> 40:26.980
of an industry. It sure is. It sure is. And it's
40:27.480 --> 40:30.537
an— it's a retail arms race. And I— here's my,
40:30.890 --> 40:34.335
my thought on that. Oh, I think
40:34.835 --> 40:37.925
there, there's some good news and some bad news for these independent retailers.
40:38.534 --> 40:40.810
Number one is Bucherer Watches.
40:41.082 --> 40:44.287
We're an independent watch retailer. Well, yeah, like I said, there's some good news and
40:44.787 --> 40:47.220
bad news, but we don't sell Rolex and we don't sell mainstream brands. Brands.
40:47.974 --> 40:51.633
Bucherer, Watches of Switzerland, and the 1916 Company,
40:52.693 --> 40:57.411
to lesser extent, are playing this brick-and-mortar high-end
40:57.989 --> 41:01.343
retail arms race. Yes. New locations,
41:01.600 --> 41:05.355
bigger and better, biggest in the world, best fixtures,
41:05.403 --> 41:09.046
nicest build-out on the best location, the most brands,
41:09.158 --> 41:11.999
the most stunning, crushing the local competition,
41:12.432 --> 41:15.725
getting bigger and bigger and bigger and really shooting the lights
41:16.225 --> 41:19.935
out with brick-and-mortar retail. Hello, it's 2026.
41:21.429 --> 41:25.537
Continue to play that game at your own peril. Will it be effective at
41:26.037 --> 41:29.312
consolidating the brick-and-mortar retail landscape? 100%.
41:31.103 --> 41:35.244
However, focus on the brick-and-mortar retail landscape
41:35.744 --> 41:38.787
in 2026 at your own peril. What it will also do
41:39.076 --> 41:42.978
is force some of these independent retailers who are willing to change and adapt
41:43.478 --> 41:46.917
to get creative. To find new brands to sell,
41:46.981 --> 41:50.556
to find new ways to sell, to innovate their
41:50.604 --> 41:54.082
market and their approach to the market to survive.
41:54.451 --> 41:57.753
So I think out of this, we will absolutely see
41:58.234 --> 42:01.793
a consolidation of traditional brick-and-mortar retail. There's clearly
42:01.825 --> 42:05.720
an arms race there. I do think we're also going to see some authorized dealers
42:05.993 --> 42:09.968
develop some interesting approaches, some asymmetric approaches
42:10.241 --> 42:13.703
to challenging that and innovating retail while these other
42:13.767 --> 42:17.102
guys focus on, you know, the fancy marble-clad showrooms.
42:17.791 --> 42:20.260
So I think it could cut both ways. I don't think it's just bad if
42:20.760 --> 42:23.963
you're willing to adapt and change as an independent
42:24.332 --> 42:27.314
retailer. I think this could, this could be an opportunity.
42:27.474 --> 42:31.097
Let's leave it there. All right. We will leave it there. Well, thanks so
42:31.597 --> 42:35.233
much for listening. Open Work is of course a production of Collective Horology. You can
42:35.733 --> 42:39.546
find us online at collectivehorology.com. You can find
42:39.882 --> 42:43.528
our marble-clad showroom It's not really marble-clad, but cement-clad.
42:43.592 --> 42:47.195
You can, you can find us in Ventura, California. And of course,
42:47.436 --> 42:50.717
to get in touch with your questions, your feedback and suggestions,
42:51.210 --> 42:52.843
please send them to podcast@collectivehorology.com.