Core Viewpoint - The luxury watch market, particularly for Rolex, is experiencing a significant decline in second-hand prices, indicating a broader systemic crisis in the luxury goods industry [2][3][4]. Group 1: Market Trends - Rolex's second-hand prices have plummeted from 1.2 million to 500,000, a drop of over 58% [2]. - Other luxury watch brands like Patek Philippe and Audemars Piguet have also seen price declines of 6.5% and 7.4% respectively [3]. - The luxury goods sector is facing challenges, with Kering Group's revenue dropping by 15% in 2023 and Prada reducing the price of its classic nylon bags by 20% [3]. Group 2: Supply and Demand Dynamics - The primary reason for the collapse in the second-hand market is Rolex's mismanagement of supply and demand, which has eroded the perceived value of its watches as investment items [5][6]. - Rolex increased its annual production from 1 million to 1.24 million watches in 2022, leading to a significant reduction in the exclusivity that previously supported high prices [7]. - The introduction of officially certified refurbished Rolex watches has further disrupted the second-hand market by providing consumers with a safer purchasing option, thus diminishing the expected scarcity [8]. Group 3: Consumer Behavior and Economic Factors - The luxury market is witnessing a shift in consumer behavior, with middle-class consumers moving towards practicality and value for money, leading to a decline in luxury spending [11][14]. - High net-worth individuals are increasingly favoring gold as a more stable investment compared to luxury watches, reflecting a broader trend of declining confidence in luxury goods as investment vehicles [9][13]. - The financial pressures of housing, education, and healthcare are forcing consumers to cut back on discretionary spending, contributing to the overall decline in luxury consumption [15]. Group 4: Future Directions for Luxury Brands - Luxury brands may need to pivot towards experiential consumption and technological integration to attract consumers, as evidenced by Moncler's successful experiential marketing strategies [21]. - The potential for "light luxury" products, which offer high-end technology at lower price points, could be a viable strategy for brands looking to expand their customer base [20]. - The luxury goods industry must find new value anchors, as the traditional notions of scarcity and financialization are being challenged by changing consumer perceptions [22][23].