The Tiny Jewel Box is growing.
The family-owned business, which has occupied space in the Washington, DC commercial landscape since 1930, has a rich connection to its hometown. The company has worked with presidents, first ladies, foreign dignitaries, superstars, tourists and ordinary customers.
It has also weathered a pandemic and stepped out on the other end of a burgeoning luxury watch company.
Last June, the retailer opened a 1,000 square foot space in its store dedicated to Swiss luxury watch brand Patek Philippe. And with the opening of another space dedicated to Rolex in early 2022, this historic retailer is becoming a global point of contact for collectors of luxury watches.
Would you buy a watch for $ 33,000?
To understand Tiny Jewel Box’s excitement about expanding, you need to understand what drives people to buy luxury watches. According to McKinsey & Company, the watchmaking activity accumulated annual sales of more than $ 49 billion in 2019. This segment of the market, as well as fine jewelry, “represent significant cultural assets that have reflected for centuries human concerns in matters of creativity, status, symbolism and self-expression, ”according to the company’s recent State of Fashion: Watches and Jewelry report.
One of the best examples of watchmaking in the luxury market is Patek Philippe. Founded in 1839, the company is the last independent and family-owned Geneva watchmaking manufacturer.
And collectors of the brand seriously love Patek Philippe. They revel in the craftsmanship, the elusiveness of its products, the pursuit of the collection, the ability to visually show the success and luxury of wearing the equivalent of a sports car on the wrist.
“People love to set their watches, to play with their watches, to understand the functionality of watches. There is a kind of connection that people develop,” said Matthew Rosenheim, president of Tiny Jewel Box. “There is a very large and growing culture of watch enthusiasts. So customers… love to come to the store and sit with us, talk about watches and share their own passion. So we do it all day. ”
And, this obsession with craftsmanship (and the bragging rights that come with ownership) comes at a price. Entry level The price of a Patek Philippe is just under $ 20,000, with an average price of around $ 44,000, Rosenheim explained. And it can go higher than that – over a million dollars. “These watches are generally not seen by the public,” he said.
But, Patek Philippe is a specific type of brand that will win over loyal collectors, according to Charlotte Sheridan, director of The Small Biz Expert. While some people may buy a once-in-a-lifetime indulgence piece, Patek Philippe “tends to be the second thing people buy after buying their own Rolex.” These are what Sheridan calls “regular dealers” who often buy luxury pieces, rather than as a one-off.
And Patek Philippe knows how to rock desire and make its collectors guess. The company recently shut down the Nautilus 5711 – his most seductive and coveted watch. The timepiece, which sold for over $ 33,000, is said to have a waiting list of up to 10 years. The news baffled watch collectors. “The willingness to move away from this successful watch and focus on the breadth of what they do is a perfect example of long-term thinking that has really shocked the watch market,” said Rosenheim.
The style is being resold for around $ 100,000 on platforms like eBay. So while some fashion products like handbags may go out of fashion, luxury watches have a much longer lifespan. “They actually increase in value over time, and they’re getting rarer,” Sheridan said.
But a big reason why some collectors never tire of Patek Philippe? It’s a great way to diversify their portfolios. “It’s different,” Sheridan said of investing in luxury watches. “We see the same thing with great wines. There is someone [who’s] enough money to invest. They want to invest in something worthwhile – and an alternative to stocks or stocks and bricks and mortar. “
Expansion during a pandemic
Throughout Tiny Jewel Box’s history, the company has resided in a few locations in DC, eventually landing in 2015 in a busy corner at the crossroads of Connecticut Avenue and M Street, NW. The retailer has grown from 1,500 square feet to nearly 12,500, allowing it to expand its collections of jewelry and designer watches. At that time, explained Rosenheim, “watch brands demanded this global and consistent brand presence.” So even then “a lot of the movement was about watches.”
In 2016, Tiny Jewel Box became an authorized reseller of Patek Philippe. The brand had 200 square feet of in-store exhibition space for four years. Discussions to expand the partnership began in late 2019 and lasted around two years, resulting in the construction of the Patek Philippe portion of the store in 2021.
But, like many small businesses deemed non-essential during the most difficult days of the pandemic, Tiny Jewel Box had to temporarily close its doors in mid-March 2020, only to reopen at the end of June of the same year. Yet the company always had its eyes on the future. Because as a global economy reacted to the pandemic, the luxury space continued to grow.
“Before the pandemic, demand far exceeded supply,” Rosenheim said. “Demand has never decreased during the pandemic. On the contrary, it has increased.”
During the pandemic, affluent customers were always looking for ways to celebrate occasions and commemorate milestones, and many marked these events by turning to the luxury watch market because they couldn’t do things like travel. “But the truth is, the demand for Patek as well as Rolex is definitely stronger than it has ever been in the history of brands,” said Rosenheim.
As Tiny Jewel Box has seen increased interest in its luxury brands, the watch market as a whole has taken a turn during the pandemic, experiencing a crisis. 25-30% drop in income. The segment is expected to rebound by 2025, with a modest increase of 1-3% per year, but luxury and ultra-luxury players continue to drive growth. In addition, McKinsey predicts that approximately $ 2.4 billion in revenue will flow from retailers to watchmakers as direct-to-consumer options increase in popularity, eliminating traditional retailers. Ultra-luxury watch segments (defined as products over $ 30,000) could increase DTC sales from 20% in 2019 to 30% over the next four years.
There are, however, exceptions to this projection. Two companies are designated by McKinsey as exempt from the upcoming trend: Patek Philippe and Rolex. These companies “remain outliers from the DTC wave,” analysts wrote, “and should not change that position.”
This means that Tiny Jewel Box, with its expanded Patek Philippe offering and upcoming build from Rolex, is well suited to do what it does best: build personal relationships with buyers and collectors. Their product offerings are expected to remain largely untouched by further growth in DTC.
Meanwhile, Tiny Jewel Box is trying to meet customer demand.
“I think the appreciation for fine watchmaking in the United States has a lot of room to develop,” Rosenheim said. “We have a real collector’s culture evolving in this country. And a beautiful Swiss watch is a product of aspiration for someone who has gotten their first promotion or their first job.”