The Enrichment Economy
How watch brands transform ordinary products into vehicles of wealth preservation - and what collectors risk losing in the process
Last week, I received a link, out of the blue1, to an interesting research paper2 about what academics call “the enrichment economy.” I don’t recall seeing this term before, but essentially, this paper describes how luxury brands transform ordinary products into vehicles of wealth creation and preservation. The study was published in the Journal of Marketing and offers insight into how luxury brands maintain their market dominance with regards to their control of both primary and secondary markets.
At first glance, it’s a useful piece of research; I think the paper’s findings echo what many collectors have known all along but couldn’t quite prove, regarding the apparent madness of luxury watch allocation and pricing. The researchers conducted what seems like an extensive ethnographic study, interviewing 38 industry executives, collectors, and experts to understand how this system actually works.
To nobody’s surprise, I’d guess, they discovered it was all far more sophisticated than simple supply and demand. They found dynamics between brands, retailers, collectors, and secondary market players - all worked in tandem to create and maintain value through what they term “enrichment privileges.”
Think about that steel Daytona you’ve been trying to get from an authorised dealer. The paper explains why simply possessing enough cash won’t be enough – you’re actually participating in an elaborate system of privilege distribution which dates back to the royal courts of Versailles. Yes, really!
Anyway, as I read the paper, I found myself increasingly troubled. While it helpfully documents the mechanics of luxury watch distribution, it also inadvertently captures something darker - the gradual corruption of pure collecting as a hobby, by pure financial motivation. What you’re about to read is both a breakdown of this sophisticated system and a reflection on what we risk losing when watches become empty vessels for wealth preservation rather than objects of pure passion.
At its heart, this isn’t really about collecting at all. It’s about investment disguised as collecting, and about access masquerading as passion. While there’s nothing inherently wrong with treating watches as investments, we need to be crystal clear about the distinction between collecting and speculation. One enriches our lives; the latter merely enriches our bank balances.
Let’s dig in and see exactly how this system works - and what it might mean for the future of our hobby.
The Four Pillars of Enrichment
The paper identified four market processes which sustain the so-called enrichment economy. Here goes…
Curating
Anyone who’s tried to buy a Daytona or Nautilus at retail knows how this works; simply walking into a boutique with cash ready to burn just isn’t enough. The research formalises something which collectors know in their gut. Luxury brands aren’t really in the business of selling watches as much as they are the business of selecting who gets to buy them. If anything, this process has become more systematic over time, particularly post-pandemic. Most brands which sell products where demand exceeds supply tend to curate a complex system of tiered access behind the scenes. Matthias, a sales manager at a leading luxury watch brand explains:
“Since I’ve been with [Brand A], I no longer have the same job. Because when I was at [Brand B], I tried to sell. Today, I am selecting the client to whom I want to sell to, and I avoid clients who are going to buy a watch just to resell it and fuel speculation. So, it’s really trying to understand the profile and psychology of the person.”
This curation tends to happen through multiple mechanisms. First, brands profile their potential buyers extensively. An ideal candidate would demonstrate genuine passion, deep knowledge of the brand’s heritage, and clear long-term ambitions of buying from the brand. Paul, another brand manager, explains in the paper:
“It’ll be like an interview. They ask you questions about the watch: design, movements, the history. But of course, the most important is the understanding of having to wait.”
Going beyond individual buyer selection, brands force collectors to invest in their entire product portfolio before they can get access to the most desirable or hyped pieces. One collector in the study described a brand where you’d end up spending nearly €200,000 just to put yourself in consideration for a €30,000 watch everyone wants; a reason why anyone with common sense knows to go grey if you only want one piece from the brand.
Securing
You may recall from old history lessons how courtiers would seek royal favour - the parallel the researchers draw to the Palace of Versailles is rather apt. Just as courtiers would compete for the king’s favour through elaborate displays of loyalty and cultural refinement, today’s collectors are now forced to demonstrate their worthiness through their behaviours too.
The power dynamic has completely reversed - it’s no longer brands courting customers, but the other way around! Again, this is not news to you, I suppose. The collector-authorised dealer relationship has become a running joke in the hobby. For people like me who share memes daily, it’s literally the lowest hanging fruit. We’ve all heard the stories of strategic purchases, long lunches, the Christmas gifts and so on. But what the research reveals is something which seems to be even more structured.
Quoting from the paper, Ben (a watch enthusiast) says:
“I think [luxury watch] consumers are completely powerless. Even the VIPs. Because there’s literally millions of people who want the same watch. So, consumers have to work hard to foster that relationship, which is very bizarre. I see people literally begging them to let them buy, let them spend hundreds of thousands of dollars.”
The most successful collectors approach this as a strategic game, which seems to have the best success rate. They build deep relationships with brands, demonstrate genuine knowledge and passion, and most importantly, understand this is a long-term investment in relationship building. This affords said collectors ‘special privileges’ in the game. As sad as this sounds, one collector put it like this:
“It’s not about what you buy today; it’s about what you’ll be offered tomorrow.”
Lord help us.