This is How Covid-19 Has Changed Auctions and the Vintage Watch MarketBy Kevin Cureau
In the watch business, Covid-19 has affected all brands to the point where major names have postponed, or outright cancelled, their new releases for 2020. Manufactures have been temporarily closed, international fairs were cancelled, and sales numbers for luxury watches around the world have plummeted. Just like many businesses, auction houses find themselves in unchartered territory. Lockdown measures in major cities and social distancing have become the new normal and all these extreme actions have considerably reduced the number of face-to-face interactions we are allowed to have.
That is obviously not ideal for the auction business, an industry that relies primarily on having large groups of people gathered in one room. The practice goes back as far as the 17th century and most of the auction houses we have come to cover over the years have all been created during the 18th century. Needless to say, with more than 200 years of deeply rooted traditions, where an auctioneer stands at a podium and yells out numbers to a room full of live bidders, making changes is not easy. So, when a worldwide health crisis such as Covid-19 breaks out, how do these established auction houses adapt?
Turning to Digital
The virus originated from China and first started spreading through Asia, so the auction houses in this part of the world had to react at the outset and come up with the right measures. Of course, the most important measure was aimed at safeguarding the health and well-being of their staff and collectors. Temperature checks were implemented, hand sanitizer dispensers were placed everywhere, and all the Spring watch auctions have been postponed to this Summer. This new time frame allows to create a safer sales environment for participants, in the hopes that the virus would have stopped spreading by then.
Once the safety measures were set up, now came the question of how to keep their business running when people cannot gather and meet in person? Travel restrictions also make it difficult for potential buyers and high value timepieces to move freely which in turn means that no auction previews can be held.
No one will be surprised that the one answer all auction houses had was: Digital!
Much like the rest of the world, companies had to embrace conducting their business online, and the auction business is no different. But don’t think for a second that these historical establishments only started taking advantage of digital platforms once the pandemic broke out. For many years now, live auctions have been enhanced by the addition of the online bidding process. As a fast, anonymous and convenient way to bid, collectors were quick to warm up to the idea of buying luxury vintage pieces through their computer or even smartphones. For example, Phillips in 2019 saw its global online registrants number up 80 per cent from the previous year, and the total number of lots sold to online bidders was up 50 per cent from 2018. Last year at Christie’s, 64 per cent of their global clients opted to buy or bid online and 41 per cent of new buyers came in through online sales. With their new weekly online sales, launched on April 1st, Sotheby’s observed that 54 per cent of participants were either new to Sotheby’s or to their watch department.
This rise of interest in online bidding has enticed auction houses to launch dedicated online sales, and the Covid-19 has surely pushed them to offer more timepieces for sale online for collectors stuck at home, and who are eager to kill the boredom with the purchase of a few timepieces. Sotheby’s are the ones who have recently gathered the most attention in proving how successful having regular online auctions can be.
“We have launched the ‘Watches Weekly’ online sales to complement our existing sales calendar. The rolling sale format, with a new selection of watches being unveiled every seven days, will offer a fast and dynamic format for collectors to sell and buy watches. With a swifter turnaround between appraisal and sale, this allows us to continue bringing exceptional pieces to collectors worldwide and keep the market going,” explains Sam Hines, Sotheby’s Worldwide Head of Watches.
Phillips is also adding online sales to their portfolio of auctions according to Thomas Perazzi, Head of Watches for Phillips Asia: “While Phillips started online sales years ago with other departments, this year we have decided to have the first watch online sale here in Hong Kong but it won’t be only the first watch online sale, it will also be the first cross-department Phillips Hong Kong sale which means we will offer a selection of contemporary art, jewellery and watches all in one online sale.”
Just a few weeks ago, Bonhams in Hong Kong held ‘The Centennial Collection: Part II’ watch online-only sale; “We will also introduce ‘Luxury Online’ – a cross-category one-stop shopping experience covering watches, jewellery, wine and whisky. Each sale will be open for bidding from a week to 10 days, before a fresh selection of luxury lots is unveiled next,” says Tim Bourne, International Director of Watches, Bonhams Asia.
Christie’s is also seeing digital engagement as a top strategic priority for the 254-year-old auction house; “Christie’s is prioritizing online-only sales within our existing calendar to ensure continuous engagement with prospective global buyers and clients. We have since trebled our aggregate online-only sales to 27 sales (from 9) over April and May,” explains Alexandre Bigler, Vice President & Head of Watches, Christie’s Asia Pacific.
Vintage Watches Still Thrive
What the first two Sotheby’s ‘Watches Weekly’ online sales helped demonstrate is that even in a difficult world situation like the one we find ourselves currently in, collectors are not afraid or discouraged to spend high amounts of money through a digital platform, and quality high-end timepieces are still in high demand. A Rolex Paul Newman Daytona ref. 6241 in steel sold for HK$ 2,375,000 (US$ 306,518) in the first Sotheby’s sale, while a brand new Patek Philippe Nautilus ref. 5711 in platinum fetched HK$ 3,750,000 (US$ 484,000) in the second one, a record for a watch sold in an online sale.
One might ask if the terrible economic situation and the instability of the stock market has had an impact on the prices achieved by these timepieces. Most auction houses tend to agree that the volatility of the stock market has created increased interest from collectors or investors to have more tangible assets such as high-end wristwatches. This has been true for the 2008 financial crisis for example, but regardless of the macro-environment changes, quality vintage timepieces have always been important pillars in any watch auction with Patek Philippe and Rolex remaining the top performers at each sale.
Last November in Hong Kong, Christie’s sold a unique Patek Philippe ref. 2523 with a blue enamel dial double-signed by Gobbi, Milan for HK$70,175,000 (US$9,013,623) — the most expensive wristwatch ever auctioned in Asia. Phillips achieved world auction records for any Patek Philippe ref. 5002 and Rolex “Pre-Daytona” ref. 6238 last November as well during their Hong Kong sale.
Bourne explains: “A healthy collection doesn’t focus purely on investment but in terms of the market demand, rarity and quality of watches will continue to drive market strength. We could see the growth of those already highly respected blue-chip brands, specifically their limited editions and small production runs. Patek Philippe and Rolex will be the main stayers, but super rare models from the independents could also benefit as much as the early production pieces.”
Online Auctions as the Future?
“The pandemic certainly provides a chance for both auction houses and clients to rethink their use and relationship with digital technology, and what it really means to their collecting journey,” says Bourne.
Can we then imagine a future where online auctions become the norm for auction houses? It would be heartbreaking to lose the theatrical performance of Aurel Bacs for instance; the room auctioneer is after all the one who has the power to convince someone to add that extra bid which could push a rare timepiece into world record contention. But having online auctions only would also cater to a small portion of collectors’ needs.
Speaking of Aurel Bacs, Senior Consultant and Auctioneer for Phillips Watches; in his recent Zoom interview with Revolution Founder, Wei Koh, he touched on several points regarding the digitalization and future of watch auctions: “A successful auction isn’t about bringing 500 people under one tent. Here at Phillips, we have more than double the number of bidders participating who are not in Geneva in the tent. Whether they are online, on the telephone, they have left maybe advance bids, absentee bids, there are so many platforms today. So I would be absolutely okay to imagine one day an auction where there’s nobody in the room.”
The problem that arises then for collectors is how confident a bidder would be getting the watch he imagines buying if he has never seen the watch in person. Bacs muses: “In my view, the more important aspect is, how do I get all the thousands of bidders to a degree of knowledge and understanding that they are, in total confidence, able to raise their paddle?” That’s when auction houses rely on their team of experts to reassure their clients and answer all the questions they might have.
There is a consensus that the coronavirus situation has given online auctions a greater importance to the business model and that digital platforms will be more widely used to connect with collectors and consignors, but auctions are still very much rooted in the traditional gavel coming down to signal the sale of an item.
“The live auction platform continues to have a strong foothold in our area of business. However, we are indeed beginning to see some structural changes in the industry, where digital influence on buying and consumption preference is undeniable,” Bigler notices at Christie’s. “The new scenario has enabled us to fully embrace the digital realm, making it a “new normal” within our business in current times.” With that said though, Bacs still thinks that we are far from having cyber previews or cyber auctions. Examining vintage watches is also very much a tactile experience; the sharpness of a lug, the sound of a movement being wound up, the smell of old oil when the caseback is removed, these are elements that can push someone to make another bid. These sensual experiences are far from being replaced.
Coronavirus or not, there is still an important demand for the rarest and finest vintage timepieces available and these will surely be kept for live auctions instead of online sales. “Likely there will be many more online sales in the future but still the greatest collectors’ watches will be reserved for live sales. I believe live sales will be further curated and will be transformed into sales for the best of the best. The lot count may get smaller but the quality will go up,” says Hines.
His thoughts are echoed by Perazzi: “As we have noticed in the last year, the focus has been more on quality, how a watch has been preserved over the years or decades. Polished cases or re-lumed dials are no longer accepted by the market so the interest has dramatically dropped.”
Business As Usual
As such, the demand for live auctions is still strong, and as it is terribly difficult to finely assess the quality of a timepiece through a computer screen, feeling and touching watches will remain part of the attraction of taking part in a live auction and a process that most collectors go through before ultimately deciding on which timepiece to drop their money on. Even through difficult times, auction houses are still able to consign new watches and engage with their existing clients. Digital endeavours are taking a larger importance and will be valuable assets which will work in tandem with traditional live auctions. The exceptional Covid-19 situation has demonstrated that auction houses can remain functional, flexible and creative whilst operating remotely, and while quality timepieces will be offered more and more online to cater to the younger demographic, the real cup of the carpenter will still be kept for the biggest live auctions.