To Enjoy a Luxury Watch, You Dont Really Need to Own It – The New York Times

As the famous slogan has it, you never actually own a Patek Philippe. And if forecasts are right, you never will. Instead, youll be happy to rent one.

Its early days, but there are signs that a new luxury watch rental market led by the brands is coming. According to the market research company Bain & Company, rentals could account for 10 percent of luxury brand revenues by 2030. Now, it says, is the time for brands to engage with subscription culture and generation rent, a growing number of young people less inclined to spend money on high-priced luxury goods.

Something is changing in the way consumers think about and interact with luxury products, said Claudia DArpizio, a partner at Bain and co-author of LuxCo 2030: A Vision of Sustainable Luxury. The willingness of the younger generation to embrace renting and secondhand is very high. The shift from owning to having an experience is super strong.

Rentals, according to Bains research, could also reinvigorate a flagging market. Exports of luxury Swiss watches have been in decline for years, made worse by the coronavirus pandemic. The numbers contracted to 13.8 million last year from 28.6 million in 2014, according to the Federation of the Swiss Watch Industry.

Bains forecast concluded that brands needed to decouple growth from volume and adopt circular business models that cater to certified pre-owned (secondhand) and rental services, as well as sales of new watches. An item rented 20 times could generate a profit margin of 41 percent, according to the research.

So far, uptake is slow. In March, Breitling became the first mainstream luxury watch brand to enter the rental space when it introduced a 12-month subscription service called Breitling Select. Subscribers pay a one-time fee of $450, and then for $129 a month they can rent three watches a year, one at a time. At the moment, the service is available only in the United States, but Breitling has plans to roll it out in Europe this year.

Georges Kern, the companys chief executive, said the initiative was intended to attract consumers away from unauthorized dealers online who obtained and sold slower-moving brands or designs at lower prices.

We dont give discounts, especially not online, he said. So how do you respond to consumer needs and create new offerings in order to make your online business interesting?

Mr. Kern said subscribers could buy their watches during the rental period for less than the retail price, depending on how long they had borrowed it, and that there were around 200 refurbished watches in the rental pool, covering around 35 different models from Breitlings mens and womens collections. He said the average retail price of the rental collection was $4,500 and that the company might one day release a special-edition watch that was available only to rent.

Is it profitable? This is a business that is direct to consumer, he said. We make margins. After three months, Breitling Select accounted for 15 percent of his e-commerce business in the United States, he added.

Adopting rental strategies poses a number of problems for brands, such as the high tariffs associated with shipping; returns; insurance against loss, damage and theft; and maintenance. Mr. Kern said the $450 sign-on fee covered these costs.

Ms. DArpizio said that in the early stages brands going it alone would struggle to make a profit from rental services. In the short term, I dont see brands doing this by themselves, she said. Theyll do it as a partnership, unless theyre part of a group, where you can have a critical mass.

Rental programs also present watch brands with a marketing challenge. For years, the industry has pushed luxury watches as exclusive objects, meant as lifetime investments. Can the same product be an heirloom and also a brief encounter?

Ms. DArpizio said she believed that brands offering rentals would be helped by a shift in consumer attitudes toward luxury.

It used to be that if you couldnt afford a product, you werent part of the circle, she said. Not anymore. Besides, now you dont want to show off your money; you want to show off your personality and that you know how to live. Youre not posting on Instagram the name of the three-Michelin star restaurant; youre posting the food and the experience youre having. It seems a slight difference, but its not.

One brand was using a rental service to demonstrate its own personality. Last month, Fears, a British company, introduced Be Fearless, a free watch-for-rent service offered to anyone with an upcoming job interview.

For us, theres no return on investment, other than that its doing the right thing, said Nicholas Bowman-Scargill, owner of the company. The pandemic hasnt been as harsh on us as on others, so you dont just say, We were lucky. You have to stop and ask what you can give back. You have to think like this in the 21st century, and not purely in terms of product. I cant see why this wouldnt be the start of this business growing.

Mr. Bowman-Scargill, who rolled out his Britain-wide service only a week after he came up with it while sitting in a pub garden, said his business was perfectly suited to the weeklong rental service. For the last five years, weve been an online business, so were geared up for shipping, he said. To keep it simple, were not taking a deposit. It costs us a lot more in insurance, but the logistics are easy.

Will rentals cannibalize sales of new watches? It doesnt mean consumers will never buy a watch, Ms. DArpizio said. This is a huge opportunity to create the new growth engine for the new generation. You can attract them through this market and grow them in your brand and then upgrade them.

Mr. Kern agreed. He said that he expected around 80 percent of subscribers to buy a watch, but that for some, ownership simply wasnt an issue.

You have people who want to experience luxury but dont want to own it, he said. This is a trend. It could be superficial for those who like to own luxury, but not for those who want to experience luxury. Its a very personal question.

Ms. DArpizio said rental services could help make luxury watches relevant to a new audience. Gen Z are very much into achievement and self-empowerment, but they live it in a more social way, she said. Watches can play an important role because they are both a symbol of achievement and self-empowerment, and at the same time of personality and experience.

Should every luxury watch brand adopt a rental strategy? Its mandatory to change the marketing formula to attract and engage younger consumers, Ms. DArpizio said. But rental is not mandatory. It can be an interesting enabler. Its the lifetime value of the customer that is important, not the volumes you do every year.

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To Enjoy a Luxury Watch, You Dont Really Need to Own It - The New York Times