Q & A: Richard Mille Hype & Cartier Purpose

Let’s discuss the Richard Mille hype and Cartier Horology

Question: Do you think Richard Mille will be a hit for only a few years and fade later, or will it last? What is the limit of their prices rocketing? Do you think he can reinvent his brand without losing the DNA of the product?

This seems to be the hot topic these days. Richard Mille watches are flying off the shelves and selling way over retail.

It’s the kind of watch that sells $50,000 over retail because you can’t get it and it’s the hottest thing out there.

It’s very comparable to certain cars (like Ferrari). I’m not a car guy, but I couldn’t just go out and buy a Ferrari even if I wanted to.

The question everybody is asking is: is this the bubble? Let me jump into what the brand needs to do for Richard Mille to stay as hot as they are right now.

The biggest reason Richard Mille is so successful is because of the small number of goods that he produces.

He has probably the biggest markup between factory to an authorized dealer — supposedly he does a 1200 percent markup on his products.

Ask yourself a question: if you were the hottest watchmaker out there, wouldn’t you want to charge up for them?

I would! If my product is flying off the shelves, I’m raising the prices as much as I can to test the limits of the market.

Richard Mille has been testing these limits since 2005 when he raised his retail prices by 40%.

Today, his chronograph retails for $115,000 — it’s absolutely absurd!

People are willing to pay not just retail, but over retail. If this guy continues to stay innovative and produce a smaller number of watches every year (only a few thousand), he’s not likely to go anywhere anytime soon.

The business model that he’s taken on automatically makes the watches limited — there are only a small number of authorized dealers out there, while most Richard Mille watches are sold out of his own boutiques.

This lets him control what happens with his watches. There aren’t 500 ADs sitting between him and the customer.

It’s really supply and demand.

It’s not Richard Mille causing these watches to be sold over list price. It’s the resellers (like me!) that are offering the watches to those that want them. They’re in demand, so the price goes up.

But there is a downside: when a consumer buys a luxury watch for the purpose of reselling it, it tends to create a bubble.

They’ll sell it to a dealer, who then sells it to another dealer, and so on.

The minute these watches stop making it onto a customer’s wrist, that’s when a bubble happens.

You end up with a lot of dealers with a heavy Richard Mille inventory at astronomical prices. It’s happened with Patek Philippe.

But Richard Mille will not suffer the same fate.

The difference is the limited number of watches that they make. They make kickass watches and complications — and they make so very little of them that there will be a lot more demand than supply for years to come.

Richard Mille could mess this up by putting out more watches and getting greedy — but he doesn’t need to!

If you’re thinking about buying a Richard Mille watch, don’t be afraid to pick one up.

I don’t think it’s going anywhere 5, 10 or 15 years from now. I think 150 years from now people will still be talking about Richard Mille, provided the company continues in the same direction it’s going today.

Question: There’s a lot of talk about Cartier going into high horology in a strong manner, like what Rolex and APs do. Do you consider Cartier Haute horology or a fashion watch?

By high horology, I’m assuming you mean complicated watches, such as perpetual calendars, multi complication watches, tourbillons or mini repeaters. To clarify, Cartier has made these kinds of watches before — this isn’t something new for them.

If you’re referring to them pushing that route similar to AP, I’ll be honest: they’re doing something everyone and their mother is trying to do.

Harry Winston, case in point. Jacob & Co. moved toward making one of the most complicated watches out there.

Is it a good move for Cartier? Absolutely!

Everybody knows Cartier for their jewelry. It’s when you get into the complicated pieces that they could start to run into a problem.

Someone looking for a tourbillon probably won’t reach for a Cartier first.

Other companies have spent years releasing different series of watches with a range of complications. Then you have Cartier, which has released a few complications, but they haven’t been consistent with it.

If I’m a watch guy looking for a tourbillon, I’ll likely look for the guys that have been doing it for years.

So yes, it’s a good idea for Cartier to try to break into the complication market — but they’re not going to be as successful as AP or Richard Mille.

To me, Cartier has always been a fashion watch — mainly ladies pieces.

They have tapped into the men’s market (like with the Roadster), but it’s ladies that treat their watches as a piece of jewelry.

If you pinned me to the wall and asked — horology or fashion? — I would have to say fashion. But there’s nothing wrong with them going to that high-end market in small run production. They’re just trying to take a chunk of the market.

That’s it for this time! If you want to ask a question, head over to the YouTube video and leave a comment. I’ll be picking up questions from there for next week! See you next time.