SDC Weekly 69; More on the Hodinkee Acquisition; Status Games; Pricing and Economic Realities
Rolex Goes DTC, Chrono24 Drama, British Watchmakers Circus, Sherpa Watches vs Christopher Ward, Watch Market Report, AP's New CPO Guy, Middle East Security Report, AI and Energy, and Leisure Time.
🚨 Welcome to edition 69 😉! Estimated reading time: ~36 mins
“69 is the only dinner for 2”
First off - a huge horde of new premium subscribers gives me hope for the future of independent randoms like SDC. Thank you all. I know it is a mere few bucks a month, akin to buying me a coffee and a cupcake - but it helps create accountability and I appreciate it very much. It’s great to have you here, and you can catch up on the older editions of SDC Weekly here when you have time.
This week, we dive deep into various sources of industry drama, and revisit watch pricing. From Rolex’s direct-to-consumer move in China to Chrono24’s fee hike controversy, we’re covering quite a few bases. Plus, we’ll explore the latest in watch market trends, the curious case of negative time, and even touch on some non-horological topics that might just blow your mind.
Buckle up.
🎈 Small stuff
🐉 Rolex Goes Direct-to-Consumer in Shanghai
The watchmaking giant is making moves in the Middle Kingdom. According to Chinese blog xbiao.com, Rolex is set to open its first direct store in China at Shanghai’s HKRI Taikoo Hui mall. This isn’t just another AD - it’s a Bucherer-operated boutique, marking the retailer’s debut in the Chinese market since being acquired by Rolex in 2023.
The timing is interesting, to say the least. Despite Swiss watch exports to China being down 21.6% (y-o-y) in the first half of 2024, Rolex seems to be playing the long game and betting on direct engagement with China’s affluent consumers.
It gets better. On the second floor of this new boutique they will be stocking Certified Pre-Owned (CPO) Rolexes and offering recycling services. This could ruffle some feathers among Rolex’s existing ADs in China. This marks a significant shift from their traditional distribution model, and other dealers will no doubt be watching closely to see if Bucherer gets preferential treatment for future expansions.
Industry insiders are speculating this could be the start of a broader trend. As mid-tier Swiss watch sales decline, luxury brands might pivot towards ultra-high-end segments and direct-to-consumer models. I wouldn’t be surprised to see other brands follow suit, especially if Rolex’s gambit pays off. I also think this would be a poor strategy, but if any brand reads this and wants to know why, contact me and I will happily spill!
Watchpro mentioned a potential $284 billion stimulus package from the Chinese government later this year. Luxury stocks got a little boost from the rumours - maybe Rolex is positioning itself to ride that wave if it comes.
Either way, the watch world ought to be keeping a close eye on how this Shanghai experiment unfolds. Whether this will be the first of many Rolex ‘direct stores’ in China, or a one-off test run, is what remains to be seen.
🥇 Trump Tourbillon Revisited
After a passing mention last week, The FT’s Alphaville sleuths have done some digging on this one. We already knew the movement is a BCP T02, designed by Olivier Mory - apparently known as the “cheat code” for affordable Swiss tourbillons. At around $4,800 a pop, it’s a far cry from the six-figure asking price.
So where is all that extra value coming from? Well, there’s about 200 grams of 18 carat gold in there - that’s about $19,000. Throw in 122 VS1 clarity diamonds and you’ve got yourself a watch that costs around $25,000 to make - at most. Apparently the dial and other bits weren’t worth more than a few hundred bucks!
😮 Chrono24 Drama
We covered the C24 price increase last week, so that’s not news per se; However, I found a recent deep dive by Infinite Breguet, which is worth a read. He covers some interesting details, offering further food for thought.
For instance, Chrono24 is now potentially earning more on some sales than the sellers themselves. Some might be thinking, “If sellers don’t like it, can’t they just sell elsewhere?” Well, as it turns out, Chrono24 has a near-monopoly position in the online luxury watch market. They’re annoyingly, it seems, indispensable"!
According to Infinite Breguet’s analysis of their FY2022 financials, things aren’t looking good. We’re talking about a €22M negative net income, a 33% drop in equity capital, and some questionable investments too. Despite all this, Chrono24 claims a valuation of over $1B after investments from Cristiano Ronaldo and Charles LeClerc!
I’ve recently gotten word that there’s a WhatsApp group of over 800 dealers who’ve banded together to oppose these fee increases. They’ve collectively removed over 50,000 listings from Chrono24 – that’s about 10% of the platform’s “stock.”
The dealers have reached out to Chrono24, demanding a reversal of the fee hikes. While a reply has been received, the status of negotiations remains as unclear.
This is, of course, a developing situation that’s unfolding in real-time, so… more to come!
🎪 British Watchmakers Circus
This was a weird thing to see. So I looked into the brand and saw this:
So I went further, and looked at a few other brands in the British Watchmakers Alliance to find, of course, making their own movements in the UK was never going to be the defining criteria. So I looked further, and to be fair, all the other brands I looked at, seemed to have some sort of British spin in their product offering. From “wire cut discs of steel from the Rolls Royce Merlin engine crankshaft of Mosquito HX909” to a “nautical watch made in collaboration with a London Fire Brigade Fire Boat (The Massey Shaw) that saved over 600 lives off the beaches of Dunkirk in World War II.”
Whether you’re into this stuff or not, these are undoubtedly “British” stories being sold in watches by British folks. Good for them!
As for AVAIL watches? I have no idea. I would argue this is exactly the type of brand they should be discouraging out of existence, particularly if one of the primary goals of the alliance is production repatriation (i.e. a long-term goal of bringing more watch and clock production back to Britain).
If the British Watch and Clock Makers Association is supposed to be a unifying force for the British horological industry, working to promote, develop, and support watch and clock making in the British Isles while fostering collaboration among its members and representing their interests on national and international stages. This brand, which I had not heard of until I saw this post, does none of the above, and I think the alliance needs to be more mindful about quality over quantity when it comes to membership and support.
🕵️♂️ Sherpa Watches vs Christopher Ward
Speaking of British Watchmakers… Let’s talk about Christopher Ward (CW).
Sherpa Watches, a small independent brand founded by Martin Klocke, has raised concerns over some striking similarities between their designs and a new release from British giant CW. See for yourself:
Spot the difference? Yeah, me neither. Sherpa’s case back design, which has been in production since summer 2022, bears an uncanny resemblance to CW’s new release from June 2024. To me anyway, this isn’t just a simple case of design similarity - it’s a story of passion, research, and the revival of a nearly forgotten technology.
Martin Klocke, a mechanical engineer by trade, founded Sherpa Watches out of a deep passion for vintage timepieces, particularly the “Sherpa” series from the now-defunct Enicar SA. His journey into the world of watchmaking began with a simple question: “What exactly is a “compressor” watch?”
This curiosity led Klocke on a deep dive into Swiss archives, uncovering the secrets of compressor technology. These innovative watches use rising water pressure to increase sealing pressure, making them more watertight the deeper one goes. Fascinated by this ingenious design, Klocke set out to revive it.
Sherpa Watches became the first brand since the 1970s to revive compressor crowns and the bayonet compressor case back. Klocke even manufactures these crowns in-house using specially made components from Germany and Switzerland.
In homage to the original innovators, Klocke chose to use the EPSA (Ervin Piquerez SA) logo on his case backs, along with their former stamping logo inside. He registered these trademarks in Germany in 2019 and later in Switzerland.
This revival didn’t go unnoticed. Klocke found himself in interesting conversations with Jaeger-LeCoultre about trademark use and licensing. Simultaneously, Anonimo disputed his German trademarks, leading to an ongoing legal battle.
Despite these challenges, Klocke pressed on. When Christopher Ward released their own super compressor case back during Sherpa Watches development phase, Klocke was initially excited. He appreciated that other companies saw value in bringing back the compressor concept.
That excitement changed to disappointment in June 2024, when CW released a new watch that basically copied Sherpa’s design. The resemblance is undeniable, but it doesn’t stop there. It appears CW’s advertising materials included graphics lifted directly from Sherpa’s website too: