It is the ultimate marketing dilemma, a pandemic. A time when businesses are closed. Restaurants can only do take out service. Shopping online increased three-fold. But there is a glimmer of hope in all of it. Most especially if you manufacture and sell high-end luxury goods markets. Or you are in the secondary part of the market.
While that may make no sense to you, it is perfectly logical. While foot traffic in high end boutiques and luxury goods manufacturers has been non-existent to sparse, online traffic is bigger than ever. What’s more, is that the more certain prices increase the more people want the goods. Seems too good to be true right? It is.
If you have not yet realized it, because you are not in the market for a Hermes or Chanel pocketbook, Gucci loafers, a Rolex, Audemars Piguet or Patek Phillipe time piece and/or a Rolls Royce Wraith; all of these item’s prices have gone up drastically. In the secondary market where all of these products typically traded at somewhat of a discount to their price as a new item from the designer / manufacturer, such pricing is long gone. Now, the prices in the secondary market are so high that some of these items have reached nosebleed levels as some of the ridiculously wealthy are even questioning the pricing.
About three to five short years ago a Patek Phillipe Nautilus stainless steel watch was approximately $24,000.00 new and could be gotten for a little discount if you were a good customer. This is of course, only for the basic version of a watch that has been introduced with multiple different types of complications in recent years. Some time in say late 2016 to 2017 a used one of these time pieces would run you say a slightly discounted amount of about $20,000.00 to $22,500.00. The watch was a Patek after all which like the world of Ferrari has limited production. Much like a Ferrari a Patek will hold its value year after and has been an interesting investment segment much like collectible cars and artwork.
Today this same watch is trading on the secondary market for over $80,000.00. A trend that should scare anyone buying one, as this is not a value bubble everyone, this is what is referred to as an “asset bubble”. In and around late 2019 the same time piece sold for approximately $40,000.00 to $45,000.00 on the secondary market, which was an increase of roughly fifty-seven to sixty percent in just two years. Does this rise remind anyone of anything? (keep thinking)
Now what is pushing these trends? Well first, let us start by saying the catch all “social media” phrase. As you may know the highly secretive and inventory controlling Patek Phillipe, represents the holy grail of swiss master time pieces. To the younger generations who have followed the meteoric rise of the highly acclaimed piece, it is featured by many influencers on social media, celebrities from movie stars to musicians, athletes, entertainers, rap stars and even a gaggle of investors like Kevin O’Leary on Shark Tank.
Additionally, the market conditions of the COVID-19 Pandemic gave what high end luxury manufacturers are calling their “moment”. With boutiques featuring their products closed in most cities they have been forced to focus on online media and advertising. Well, as it turns out online marketing is less expensive than most forms of marketing and it takes less dollars to get the same impressions media wise. Have your product featured in a movie, social media video or post, by a YouTube influencer or other random area on the internet and whalla you have achieved marketing stardom.
A byproduct of the pandemic conditions as most of us were forced to be at home, is what? Time to surf! We worked from home, lived at home and for a period of a months did everything from home. What does one due when they have exhausted the Netflix categories and do not want to FaceTime for another hour? They surf social media, surf the web, shop, look at trends and see what others are wearing and doing. Pandemic shopping phenomena is a real concept. Multiple marketing and market research companies are looking at these trends and how they can focus client companies if the next pandemic should arise. (gotta love those marketing people)
Now add to that your lack of vacation spending, new car purchases and other luxury item purchases, and you can see how the initial entrance level stainless steel time piece segment of the market has done extremely well. Or the basic Chanel black pocketbook or entry-level high-end luxury item being plastered on social media, fifty times a day, by twenty or so different places, people or online retailers creates a must need. Mix in a little cross-marketing with some hashtags and then a watch auction or two where people are selling similar time pieces for millions just because they were once worn by so in so, and now you have a recipe for marketing nirvana.
One thing is for certain, the companies that make these products should enjoy their current market infatuation as it is not going to last for forever. Believe us when we tell you, the ultra-luxury swiss watch market (as an example of other markets) will soon enough come back down out of the stratosphere. Those who paid $90,000.00 for that secondary market stainless Patek Nautilus will be really upset when the average price it trades for is a bit over the $35,000.00 current manufacturer suggested retail price. Buyers be ware……………..