The Follies of Panerai and How Other Brands Can Learn From Their Mistakes | Watch Trading Academy

The Follies of Panerai and How Other Brands Can Learn From Their Mistakes

Of this writing (August 2020) Panerai has made some really big mistakes regarding the market’s perception of the prestige of the brand as a giant in the luxury timepiece space.  

Under the guidance of the new CEO, Jean-Marc Pontroue, there have been questionable decisions that have taken the brand from the once top-tier collector grade prestige aligned with Rolex to the now “Do Anything” type of brand to get the dollars up as ROI to their investors.  If you weren’t already aware, Rolex and Panerai have quite a similar history.  Rolex had used parts and watch-making techniques of Panerai historically as they were coming into full fruition.  

Panerai was the tool-function watch originally designed for the Italian Navy that could take a beating, illuminate under the darkest and wettest of conditions, and keep impeccable time.  The design truly originated in the context of all great art (form follows function).  As Panerai grew as a brand throughout the early 2000’s and until now they’ve re-invented what this history means to the design features of new models.  

The 90’s until approximately the mid-2010’s is when Panerai truly sky rocketed.  They won the hearts of their collectors and fans, labeled the Paneristi, to the tune of an almost cult following.  Their die-hard fans would purchase new models that they could enjoy not only to brag, but to complete their collections and even use as a retirement asset portfolio. 

So what has happened in the most recent years of the business that has caused the overall decrease of the resale value of the brand, and the Paneristi to abandon their die-hard collecting habits? 

It’s really all come down to some short-sighted decision making by the leadership at Officine Panerai.  Here are the 3 major causes of the recent rejection of the hardcore followers in the market.  Only time will tell if this will impact the overall value of the brand in the secondary global market, or if somehow Panerai will find a way to rebound from these ridiculous decisions.

  • Design Strategy – In the past 10 years Panerai seemed to go from a strategic, well thought out strategy when it came to new model releases and honoring their legacy brand models.  Think how Rolex has been able to keep value consistent and uptrending throughout the years.  It’s because the models are well-designed, well-known, and are consistent over extended periods of time.  If a new model comes out it’s a slight variation and only once every 10 years or so.  Panerai used to approach this in a similar way.  Either the new releases were a fresh look honoring a heritage model like a PAM00001 for example, or they were a totally cool new design that still followed the core of the brand’s soul.  Nowadays, there are new models being pumped out annually that either seemingly rush the new rendition of a heritage model, or have no functional purpose other than to make money.  For example, diver models are being manufactured with less and less ATM/Meter waterproof protection.  So much so that the measure of depth they can be worn at in the water is almost pointless.  This goes against everything the brand was founded upon being the only watch that could withstand the brute requirements of the Italian Navy.  It is design strategy like this that is a huge turnoff for the collectors, fans, and even one-time retail buyers as some of them over time start seeing how this all affects retained value. 

 

  • Profit Squeeze – It’s one thing to make business decisions based on making money.  No one can fault any entity for that.  It’s another to maximize profits at the expense of pushing out your fanbase to prioritize ROI to investors.  In the 2000’s Panerai decided to start making its own in-house movements instead of working with ETA (one of the largest movement makers that supplies many luxury timepiece brands).  Now this move could be seen as a strong play by Panerai to control quality of manufacturing and creative direction.  And it should have remained the sole purpose to do so for that.  But in essence, the move was made to make more profits as a priority, and it shows in some of the models of recent that have been released that don’t make any sense in the context of the heritage of the brand. 

 

  • Terrible Brand Marketing Judgement – Within the past few months of 2020 Panerai put the icing on the terrible decision making cake by letting their brand photographer post images of fake Panerai pieces on their social media platform.  This was caught by Wrist Busters, a social account notorious for calling out fake watch sightings, and continues to catch the attention of collectors globally.  The reason the brand even let this happen is yet to be clarified, but no matter what the answer is, this type of move is critically detrimental to the progress of keeping the faith of their fan base and future potential buyers.  People fortunately or unfortunately believe whatever they see the most in the age of information, and Panerai isn’t doing itself any favors at all by being exposed for this.  

As said before, time will tell if Panerai can change the shift of momentum from downward to upward.  It’s going to take some serious re-evaluation of their brand strategy and smart move making.  Other brands are struggling with similar issues and should be learning from one another so they don’t end up dissolved after generations of prestige and respected craftsmanship.  Take Audemars Piguet for example.  They tried to release the new Code 11.59 pieces and shove them down the market’s throat projecting how amazing the new concepts were.  When the market and collectors got wind of them, they rejected them grossly, and there was huge backlash.  This did not go as AP planned.  So why did this happen?  AP in all it’s elite remoteness didn’t have a gauge of what the market and their fans really wanted.  Nor did they care to ask.  They just executed on a design in their lab without any input or feedback.  This is what can happen when you get too far removed from the heart of what your brand does to your customers.  

Again, hopefully other luxury timepiece brands will take note of these follies, and stay true to their heritage and fans.  The ones that do will triumph in the coming years of tumultuous times, and the ones that don’t may not make it.

Cal Knight
 

I’ve had a passion for luxury timepieces my entire life, and it wasn’t until 2011 that I started collecting and flipping those assets with the techniques learned here at Watch Trading Academy. Mastering the intricacies of the watch market, the boutique brands, and how to approach the process have all been essential to making intelligent investment decisions which has resulted in $100k in profits in less than 5 months, be sure to check out how I did it here.

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