What is a Artificial Scarcity?
This is a tactic which is sometimes employed by businesses to make it seem like a product or service can only be produced in small supply – when in actual fact the resources are available to create an abundance of product or service.
The effects of this is to create a product or service which becomes sought after by default – because the product is rarer and so more people want to buy it.
Artificial Scarcity Being Used In Other Markets
Before we go into a few signs that this tactic could be being used in the watch market, let’s look at some other markets first.
It’s interesting to see how this plays out elsewhere & how brands have profited from it.
Cleverley Shoes – A Luxury British Brand
George Cleverley is a British Shoemaker who created one of the most recognized Luxury British Fashion Brands for men. With clients like Sylvester Stallone and Gary Lineker, Cleverley shoes are known for their craftsmanship and are the epitome of luxury.
As Jason Statham puts it;
Best shoes on the planet.
(they also sell other items including this bespoke watch box)
Whilst it is possible to buy George Cleverley Shoes for around 500 GBP. Their bespoke i.e. scarce edition shoes can retail for between 3000 – 3,500 GBP and up. An example of a brand who has used the one to one exclusivity principle to increase their retail value.
For handmade items, we can’t say scarcity has been artificially implemented however on the next brand we will look at once which has been.
Stuffed Toy Sold For $5,000
How a stuffed animal retailed at $5 can be sold for $5000…
Do you remember Beanie Babies? If you are above 30 then it’s very likely you do, in 1998 they had sales of $1.4 billion making Ty Warner a billionaire in the process. How did TY Warner create a multiple billion dollar stuff toy company?
By using artificial scarcity and in this case it happened almost by accident.
One of his suppliers were no longer able to provide him with a certain line so instead of telling the stores about the blunder, he told them that he was discontinuing the line which had the effect of increasing the retail value. Customers were willing to pay $10 – $15 for a toy which originally sold for $5.
This gave TY Warner the idea to regularly discontinue lines which eventually led to some toys being worth up to $5000. Read more here. Reducing supply in a market full of demand can lead to some great consequences for retailers.
Signs Watch Brands Are Playing The Scarcity Game
So, are luxury watch brands playing the same game? Is artificial scarcity a tactic which they are using to inflate prices, let’s look at some signs.
Long Waiting Lists In Boutiques For Popular Models
Buying a luxury watch at a boutique store isn’t always as easy as you might think. In fact, it can be near on impossible unless you are one of the boutiques favourite and most elite customers.
We’ve heard of some clients putting down payments for watches just to be put on a waiting list – and they have no idea when they will be able to access the watch.
This is sometimes down to the fact that some watch brands don’t disclose which watches they will be sending to the boutique store, so often retailers have no clue as to wait their inventory will look like.
Popular Models Being Sold For Well Above Retail Price
Due to the difficulty of buying some of the more popular models often clients will pay well above the retail value to get hold of one. Putting down more money is one way to get to the top of a waiting list.
Watch Boutiques Pushing Other More Widely Available Models
It is common for watch boutiques to push more widely available models to clients who are after something different. This makes retail sense, sell what you have in stock already right! But, the effect of this is that customers want the more popular and rare models even more because they are unavailable. No-one wants to feel like they are getting second best!
How To Avoid Paying Too Much?
We suggest you don’t play to this game and purchase the models which are being unfairly bumped up in price. The price doesn’t always indicate the quality of the watch.
Scarcity can increase the resale value of a watch because it is rarer. But, if you are buying and selling watches then make sure you are confident it can be sold on for a higher price.
We have pre-owned watches which represent 100 years of horology on Chronoexpert.com. No waiting lists, no need to pay above what you agree with the seller. An easy retail experience is waiting.
Check out our watches in the store >> Chronoexpert.com