7 months ago
Luxury Brands Face Shortening Wait Lists
Luxury brands like Hermès and Rolex have long had wait lists for their products because they make fewer items than people want.
This makes their products very valuable and expensive.
Recently, the wait lists are getting shorter, and the prices for used items are not as high as they used to be.
This is happening because more people are selling their luxury items, and the brands are raising their prices too much.
For brands like Hermès, this is a problem because they rely on people buying other expensive items to get a wait-listed product.
However, having wait lists can be good for brands because it smooths out sales during good and bad economic times.
It also acts as free advertising because people see that these brands hold their value.
But it's hard for other brands to copy this strategy because they need to convince customers that their products are truly scarce.
Wait lists for luxury brands like Hermès and Rolex are shortening, indicating a potential decrease in demand.
Resale premiums for luxury watches like Patek Philippe and Rolex have been slipping for three years.
Hermès' Birkin and Kelly bags now have the lowest resale premium since 2017, suggesting reduced competition to buy them.
Falling resale values and weakening sales in non-handbag categories indicate less intense demand for Hermès products.
Scarcity-based business models, like those of Ferrari and Hermès, have been successful long-term investments but are difficult for rivals to replicate.
- Who
- Luxury brands like Hermès, Rolex, Patek Philippe, Ferrari, and Porsche
- What
- Shortening wait lists and falling resale premiums for luxury goods
- Where
- Global luxury market, with specific mentions of the U.S. and Switzerland
- When
- Resale premiums for Patek and Rolex watches have been slipping for three years
- Why
- Market normalization post-pandemic, increased supply in secondhand markets, and large price increases in the primary market
Key facts
- Ferrari Market Cap
- $59.6 billion
- Porsche Market Cap
- $45.4 billion
- Ferrari Annual Production
- Fewer than 15,000 cars
- Porsche Annual Production
- More than 300,000 cars
- Patek Philippe Annual Production
- 72,000 watches
- Cartier Annual Production
- Almost 10 times more than Patek Philippe
- Patek Philippe Resale Premium
- 11% premium to original price
- Cartier Resale Premium
- 31% discount to original price
- Rolex Average Premium (Jan 2024)
- About 7%
- Patek Philippe Premium (Jan 2024)
- 11%
- Hermès Birkin/Kelly Resale Premium
- 50% above retail prices
- Hermès Annual Ad Spend
- 4% of total sales
- Ferrari Shareholder Returns (Past Decade)
- Close to 700%
- Hermès Shareholder Returns (Past Decade)
- Close to 700%
- Gucci Owner Kering Returns (Past Decade)
- 140%
Quotes
Luca Solca
Bernstein luxury analyst
“Current resale premiums seem to suggest that waiting lists have shortened, and that the total supply for Hermès’ bags is now closer to demand than before”
livemint.com
Oliver Müller
Founder of watch-industry adviser LuxeConsult
“New customers don’t get access to these pieces”
livemint.com



