In a vain attempt to fend off a looming mid-life crisis and prove to myself that I’ve achieved something in my time on the planet, I have recently ‘invested’ in a number of luxury items to shore up my flagging self-esteem – big car, expensive watch, posh holiday – all very stereotypical male ego items. It’s the civilised alternative to standing atop a hillock and beating my chest to intimidate the other apes. It’s a way of asserting alpha male status without having to physically beat up and drive off weaker members of the herd.
These recent close encounters have caused me to reflect on the nature of what we perceive as a luxury, on luxury goods and of the industries behind them. When I was in college, study of luxury goods was limited to noting that demand would sometimes increase if the price went up, an exercise in negative price elasticity currently being explored in greater depth by the Irish restaurant trade.
To be more accurate, as price rose, desire increased – this is not quite the same thing as demand, as not everybody has the required funds to complete the transaction. In the whole area of luxury goods, frustrated desire (or envy to give it its proper name) is a major part of the attraction. A luxury good is by definition something you don’t need, which somebody else doesn’t have and for which you paid way more than you would have for a perfectly rational alternative. Part of the attraction is that you can have something that others can’t.
Economic rationality plays a thoroughly circumscribed role. It’s not about fitness for purpose. It screams social positioning – I have this because I am finely discerning and I appreciate the finer qualities of this item in a way the peasantry never could. I have this because I am rich and I can afford items you can never afford. I have this because it will make you think that I am rich even though I can’t quite afford it. I have this because I think it will make me more sexually attractive. I have this because I crave your approval. I have this because I crave your adoration. I have this because when the night draws in cold and dark, I’m alone in this life and I buy possessions in the futile hope my life will seem less empty.
If you’re in the luxury goods trade, all of these are excellent motivations for your customers to have and good reasons not to fear recessions the way other mere mortals would. Let’s examine the particular case of mechanical wristwatches.
When I was a child, I received a mechanical Timex watch one year as a birthday present. It had a simple white face, simple black hands and a simple red fabric strap through which holes had been burnt to allow the buckle to fasten through. It worked well for a couple of years and then it broke. As replacement I got a new digital watch. As a sign that the future had truly arrived, it ran off a battery and didn’t need winding. It had a big button on the side instead of a crown winder. When you pushed the button, tiny numbers lit up to tell you the time – you didn’t need to know how to decipher a dial, you just read it off. Mind you, it was rubbish in direct sunlight.
Unfortunately for the vendors of mechanical wristwatches, my little digital timepiece was indeed the future and it had in fact arrived, eliminating vast swathes of their market as it did so. Faced with unmatchable digital technology from the East (No moving parts to wear out! The accuracy of vibrating quartz!) giving customers superior timekeeping at prices so low as to render the new watches themselves disposable consumer products, western manufacturers of mechanical timepieces must have felt like stick-waving leather-clad Saxon warriors in the face of the invention of chain-mail and longbows by the other side. Like the woad-daubed Saxons before the invading Norman hordes, they were routed and the country was no longer theirs. A small bunch of intrepid survivors spotted a niche in luxury and headed upmarket as fast as their advertising budgets would carry them, where they survive in small numbers today by preying on our greed, pride and insecurity.
In the Soviet bloc, markets weren’t open to such foreign invasion and domestic producers weren’t incentivised to embrace the new paradigm. Paradoxically such markets are the only ones where reasonably priced mechanical wristwatches exist today, exposing the lie that mechanical timepieces are hugely sophisticated and so necessarily expensive machines which we see peddled in so many glossy style magazines.
Pick up a ‘Business Week’, ‘Vanity Fair’, ‘Economist’ or other publication similarly targeted at society’s rich, beautiful and successful. Here you’ll see slick, feel-good advertising reassuring you that owning a Rolex is what all right-thinking rich, beautiful and successful members of society do. Patek Philippe have a lovely twist on this – a rich, beautiful and successful white male plays joyfully with his young son and heir while the tagline informs us that “You never actually own a Patek Philippe, you merely look after it for the next generation”. The concepts of dynasty, durability and achievement all masterfully interwoven. In a society where heroes are a media fabrication and religion no longer provides a direction, here truly do the good people of Patek Philippe provide a reassuring beacon of lasting values.
These talismans may seem expensive to the uninitiated as they are lead into the inner sanctum, to a world of rose gold lunettes and guilloched rotors, to a world where prices aren’t immediately apparent, but let’s not concentrate on the price. It’s not about the price, it’s about the wonder that is the product and the worth you should ascribe to it as a mark of respect to the manufacturer if nothing else.
We are now deep into the realms of emotional manipulation. The vending of luxury goods is social stratification at is most visceral and cutting, making you feel you should crave acceptance, to be permitted the high honour to purchase one of these magical status-conferring goods.
There are a number of ways to recognise such snake-oil salesmanship: one is repeated use of the word ‘craftsmanship’; another is the physical clustering of retail outlets wherever the rich and bored are especially likely to gather. For me however, the key determinant is the absence of price tags. At the lower end of the market, the purchase is almost entirely price-driven. At the upper end, price is but one factor – there’s much more room for a proper appreciation of craftsmanship. As such one shouldn’t focus entirely on price, it is far more apposite to consider other factors in the watch purchasing process (and it is a process not a simple transaction). Accordingly price tags could prove a needless distraction here. If this makes the prospective purchaser slightly uncomfortable and unsure of their own preferences and the limits of their budget, so much the better.
I have a very simple rule – If there’s no visible price tags, I don’t frequent the outlet. There is a jeweller in Dublin who displays price tags on his watches going up to Eur75,000 without driving away potential customers in droves. Obviously he has to source a slightly longer price tag than other outlets, but these are mere details. For anybody other than the most parsimonious this merely informs as to the general nature of the stock and likely response were one to seek a student discount.
Likewise I don’t patronise bars that employ bouncers on the door. If it is expected that violence will erupt so frequently within that the owner feel the need to raise a private militia for the protection of their premises, and if they have to so blatantly question my motivation for seeking ingress, I simply won’t bother.
Anyways, back to shopping for wristwatches. A prime weapon in the arsenal of the normal shopper is comparison shopping – trekking around to take your custom where you get best value. This tactic is useless in the face of the luxury goods vendor. There is simply no point in shopping around. For an industry where prices would appear to be magicked out of thin air, zeroes appearing at the end at the whim of the salesman, they are remarkably consistent between competing outlets. The technical term for this phenomenon was coined by the Americans – “It’s a racket” would be their description.
In the course of my business travels, I once had opportunity to price a particular watch type in three European cities in a short period of time. The price was lower in Geneva, the heart of Swiss watch retailing by Eur250, regardless of variant chosen, but was other identical in London and Barcelona. Manufacturer’s recommended retail price was being rigidly adhered to so the luxuriously-appointed shops in the high rent districts could be properly supported from the proceeds. As a manufacturer, you wouldn’t want the product being sold over the internet from a shed in Oban. It just wouldn’t allow the purchaser to irreversibly associate the purchase with the luxurious surroundings from which it was first glimpsed, tried on, thought about, naggingly desired and finally purchased after much debate and a misguided attempt to haggle.
I admit I could be a little harsh in my determination here. This is just an instance of the retailer being given scope and incentive to deliver the broad brand identity to the consumer as they see best in the public arena. In a different forum well away from the undecided and uninformed gaze of the style purchaser, such as specialist watch magazines, manufacturers are completely open about the prices they sell their wares for, or more precisely the prices they require their products to be sold to the public for.
I have no problem with such practices and indeed delight that they are so openly and transparently discussed. There are no secret deals or special prices for friends here. The price is the price. Nobody is forcing you as a consumer to make a purchase. You must make your own decision regarding the utility of the object and the cost. Need and usefulness must contend with allure and covetousness.
If you happen to fancy wearing an 18 karat rose gold item today, but left your regular timepiece back on the dressing table in the yacht, and you just happen to have US$15,000 about your person, then this minor wardrobe inconvenience can be readily addressed thanks to the plucky horlogeries of Geneva and your particular needs sated. If you know little of chronographs but like golf, you may prefer to purchase a Rolex because they use Jack Nicklaus in their advertisements and if it’s good enough for Jackie boy…well then that’s a different sort of investment. You will end up with a fine timepiece, but one that costs more than a perfectly feasible alternative. It is the joy of the free market that you have a choice to make. If your new purchase results in increased social standing down the clubhouse, your purchase may not have been poorly judged. You may simply have invested in allure and the credibility of others as well as metal and glass.
This premium pricing can of course be taken to extremes. It is well known that take-up of desserts and coffee considerably boosts the income of a restaurant. Similarly there exists a very profitable niche in ancillary products for watches. Just as the golfer with his Rolex isn’t fully complete without a pair of checked trousers and garish jumper, so the luxury watch has its own matching accessories.
For example, the greatest disadvantage of mechanical watches is that they are mechanical and require to be wound. This minor inconvenience is readily addressed by the invention of the automatic watch, where a half-disc mounted on a central axle is flung around inside the casing by the wearer’s own body movements, providing energy aplenty to wind the mainspring.
While an elegant and ingenious solution, this does actually require the watch to be worn by the user, which can be problematic if the timepiece in question doesn’t properly accessorise your outfit that day as well as another from your collection. Accordingly you can buy watch winders, which are barrel shaped affairs with cushioned jaws at one end and a spring-driven mechanism at the other. You simply purchase this device and place your watch into the jaws. The mechanism will then slowly and unceasingly rotate the barrel turning your watch as in a shop display. It is deliciously ironic that you require to purchase and wind a device to power a second machine you already own and have paid top dollar for, because the latter contains a sophisticated device designed to spare you the tedium of winding it and you can’t be bothered to simply wear it. This is truly a luxury good by any measure.
All this because you have more watches than arms and are scared to let your mechanical watch unwind lest it require the services of a skilled engineer with priority access to the World Atomic Clock in Berne to reset the perpetual calendar. Queen amongst these devices is the Scatola Del Tempo 1RTM which can be purchased with a 90 carat diamond-encrusted barrel for a mere Eur225,000. Let’s just remind ourselves – that’s not for the watch, that’s for the device to wind the watch. I would suggest that the only rational use for such a true luxury good as this would be to relieve Jennifer Lopez of some of her undeserved wealth and so restore a modicum of justice to the world.
Kind reader, there is a big world of excess out there. I implore you to explore some of it for yourselves, to see what marvels and nonsense man has wrought.
