As Rolex rolls out its Certified Pre-Owned program in the U.S., the Swiss watchmaking titan is giving some of the most concrete insight to date into what carefully-calculated brand-owned secondary market endeavors look like in the luxury segment. After officially launching in Dec. at Bucherer locations in Europe & the UK, Rolex confirmed on Wed. that certain Tourneau Bucherer & Watches of Switzerland outposts in the U.S. are now offering up pre-owned Rolex models – that have been approved & authenticated by the brand – in furtherance of its pre-owned program. Additional retailers are expected to follow. Aside from ensuring authenticity of the pre-owned watches, Rolex is offering up a new 2-year international warranty for the watches by way of the program. (Rolex’s traditional warranty lasts for a period of 5 years from the date of purchase.)
Chasing Control – Reflecting on one of the most critical forces behind Rolex Certified Pre-Owned – control, Rolex Watch USA president and CEO Luca Bernasconi said this week that Rolex is “pleased to provide clients with the opportunity to experience the innovation & excellence of the brand through the [new program], allowing Rolex to showcase the uncompromising quality & durability that its watches are known for.”
Some of the obvious elements of control here: Rolex’s ability to have a strong hand in dictating the Rolex buying experience in third-party retailers’ stores, the condition of the watches being traded & some of the conditions of the sales. Specifically, Rolex has mandated that pre-owned watches be displayed/sold in a separate section of participating retailers’ stores – presumably to ensure that consumers are not confused, for one thing. Additionally, pre-owned watches will come with distinct Certified Pre-Owned packaging. (The caveat here, according to a Rolex rep, is that “if a watch is sold to the retailer with its original box, the watch can be resold with it.”)
The Bigger Picture is a rising embrace of the resale market by companies like Rolex & Audemars Piguet, the latter of which is set to launch certified pre-owned program by end of 2023. This seems to indicate that brands are acknowledging that one of the immediate results of their strategy of limiting supply of their goods is robust demand in the secondary market and that if left unaddressed, this activity will fall exclusively in the hands of third-party players, which could be detrimental from a brand positioning/protection POV. Brands’ increasing efforts in this segment are also an apparent nod to the fact that resale and retail can co-exist for luxury goods, which is a distinct approach from those that continue to view resale as a channel that will cannibalize primary sales.
Revenue is, of course, also a factor, with Audemars CEO François-Henry Bennahmias, for one, stating earlier this year that the company anticipates that its pre-owned business will be bigger than retail sales of new models.
Owning the Resale Opportunity – In light of the continued existence of counterfeit or otherwise infringing goods in the resale segment, brands have a distinct upper hand when it comes to trust in the secondary market. “Labels are learning they have an [inherent] advantage over multi-brand platforms because they hold the documents that allow them to easily authenticate [pre-owned] pieces,” according to McKinsey senior partner Achim Berg. He notes that brands are able to “certify the origin and authenticity of products [in order to] fight counterfeiting, which is one of the main risks associated with this business model.” This is where utility-based uses of blockchain technology come into the fold. (More about that here.)
There is an array of other elements at play here, including ESG and pricing power, that are worthy of attention to; in an effort to keep this somewhat succinct, I am building those out in this month’s Enterprise Deep Dive, which you can expect shortly.
The Key Takeaway (for now): In addition to he desire for control & maximized revenue, steps by Rolex and co. seem to be a clear signal that brands broadly view the future as consisting of a mix of retail and resale efforts & are starting to really test the waters accordingly.
A Snippet on “Superfakes”
One of most interesting elements of the New York Times’ recent article on “superfakes” is the recurring theme of younger consumers pushing back against price premiums and the “real” thing, altogether, in favor of fakes: “That the profits of one idea’s relentless duplications funnel only into one (fat, corporate) pocket is precisely why many younger consumers see fake bags as better than the real thing. To them, counterfeit luxury – in a world already awash in lower-prices ‘dupes’ of every kind, from eye shadows to electronics – is not an unethical scandal but a big, joyful open secret. Replica communities laugh at big luxury firms, taking on a subversive, stick-it-to-the-man attitude. A handbag ‘is a mass-produced item — it’s not a piece hanging in a museum.’”
Global TM Squatting …
In the wake of the opening of that fake Gucci café in Moscow, a new Stone Island-themed shawarma outpost has opened in Kyiv. The place is called “Shaurma Island,” its employees wear uniforms that bear a striking resemblance to the Stone Island logo, and it is offering up stickers bearing Stone Island’s logo.
A Couple of Quick Litigation Updates …
– A handful of new paparazzi photo © cases have emerged, such as one filed against Tale of Two Vintage, for posting photos of actress Abigail Spencer in its wares on social media. These cases are far from being dead but certainly aren’t being filed with the same frequency as a few years ago, as seen in our tracker.
– The latest generative AI © clash comes out of the EU. Andres Guadamuz has a write-up about a battle between LAION and a photographer here.
In some deal-making news in the fashion/retail, tech & web3 segments …
– Only The Brave, S.p.A., the Italian fashion group that owns Diesel, Maison Margiela, Marni, Jil Sander & Viktor & Rolf has acquired a majority stake in Frassineti, long-term leather goods supplier of Jil Sander.
– Off-price fashion marketplace Secret Sales has raised $10M in a Series B that includes ePerwyn, Belerion Capital & Big Ideas Group.
– Two years after filing for bankruptcy & being bought by TerraMar Capital LLC, Francesca’s has acquired Richer Poorer, a wardrobe essentials brand.
– Indian retail-focused tech platform Ace Turtle has raised $34M in a Series B round. The new cash will be used, in part, to “help us to expand our brand portfolio,” which currently consists of Lee, Wrangler, Toys”R”Us & Babies”R”Us.
– Tesel – which provides a B2B software marketplace that puts ESG tracking technology, assessments, consultations & info in one place – has raised £320K in a pre-seed round.
– FuturePlus has raised £750K in a round led by Two Magnolias. The co. helps brands manage their sustainability efforts & report on their ESG performance via a range of tools & services.