Astonishing discussion with my local Rolex dealer.
Discussion
LaurasOtherHalf said:
Guycord said:
End result is total bloodbath for everyone. Rolex actions are short term and irresponsible.
If 200 people a year lose some money on a watch is it really going to be a bloodbath? How many of those people who buy would even need to sell should a recession come along?This is what I think will happen:
Something like a series of hikes in interest rates, loss of market liquidity, individuals more concerned keeping what they have, reduce disposable etc…. Everyone clamours up on cash. Greys get hit with excess stock they bought at keen prices in the good time – they now can’t shift – happy-hunting days are over. Maybe a few bargains to be had for a few but who will want a once-hot-watch when it’s not hot anymore?
AD’s will get completely stuffed because a few have shown arrogance and condescension to their customer bases. No SS’s, other than in Greys, so ADs go bump for more than one reason; no cash out there, nothing anyone wants to really buy and ultimately, the Punter votes with his wallet (empty or not). Stores will close big-time when this finally happens.
liner33 said:
I have heard of the "if you want a popular sports model then you have to buy a difficult to shift model first" strategy from AD's though
Anecdotal evidence suggests Rolex via the AD’s are tightening up on certain SS models and pushing PMs where they can make 6-7 times the margin on a single watch over the corresponding SS. Rolex are essentially selling PMs at approx. 3-4 times the Market Price of Au and Pt bars.After thought: What happens if Ponzi Financial Markets tank and money tries to pour into a safe-haven assets like Au and Pt? Do these PM Rolex's suddenly double in price? Where does that leave Buyers and ADs? Un-affordable PMs and no SS's??
BOR said:
As you've asked... my theory, based on no facts whatsoever, is that Rolex, even Rolex, have underestimated how many are born every minute, and how much they are prepared to pay for a mundane steel watch.
You only will buy a steel? OK, here's our Tudor GMT in steel for you.
So this suggests Rolex are really trying pi55 customers off. “Beef sir? Not possible sir. Only Quorn available for you today sir.”You only will buy a steel? OK, here's our Tudor GMT in steel for you.
So 200-250 watches may not be a bucket of beans in terms of out-right cash (not shifting??) but it could help precipitate businesses to inevitably fold when faced with a number of external factors as well.
I believe the strategy is flawed and will eventually fail. At the core of this strategy is the belief that Rolex can force choice to the Customer and be even more profitable. That has never ended well for any business.
Edited by Guycord on Tuesday 19th June 16:11
Lord.Vader said:
Not if you factor in the raw material cost, but its profit % will be higher.
Rolex are playing a blinder, build up the hype and build a 3-5 year backlog on waiting lists for their cheapest and highly profitable watches ( % wise rather than net profit. )
I don't why you think they are less in cash margin on the gold watches? They makes loads more cash. Rolex are playing a blinder, build up the hype and build a 3-5 year backlog on waiting lists for their cheapest and highly profitable watches ( % wise rather than net profit. )
A SS Skydweller is £10600 the everose version is £35,850 with the additional cost of the gold around £6000-7000 at market rates even if you discount the cost of the steel to zero they are making over 20k more on the gold watch above the steel watch profit ex VAT at retail. .
My view is they make more all round on the freely available watches and less on the SS sports models hence the need/want to make them rare to push people into the more profitable products.
.
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
The problem is that everything is just an assumption, Rolex don't publish their figures and any comment made on their production/sales volumes is based on either COSC or export numbers published by the Swiss association (there might be other sources too but they aren't Rolex specific). Whatever they do must make sense to them but doesn't necessarily mean that it's common sense to us. Richemont for example destroyed £400m worth of stock of unsold watches recently to protect their brands. Swatch has been increasing their balance sheet stock levels too recently meaning they make more than they sell or are willing to sell.So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
Was back in there yesterday and it was even worse.
They had a 4 yr old steel bezel Daytona, nice watch but just a plain old Daytona. £14,795 please !!!!
WTAF ? Less that 2 months ago that was a 10k watch at best.
Even the independents are horsing up the prices.
As an aside, I may be having a chat with someone about a 1675 GMT pepsi
They had a 4 yr old steel bezel Daytona, nice watch but just a plain old Daytona. £14,795 please !!!!
WTAF ? Less that 2 months ago that was a 10k watch at best.
Even the independents are horsing up the prices.
As an aside, I may be having a chat with someone about a 1675 GMT pepsi
Sam993 said:
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
The problem is that everything is just an assumption, Rolex don't publish their figures and any comment made on their production/sales volumes is based on either COSC or export numbers published by the Swiss association (there might be other sources too but they aren't Rolex specific). Whatever they do must make sense to them but doesn't necessarily mean that it's common sense to us. Richemont for example destroyed £400m worth of stock of unsold watches recently to protect their brands. Swatch has been increasing their balance sheet stock levels too recently meaning they make more than they sell or are willing to sell.So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
Hushed up or nothing to tell? Make no mistake, Rolex can and do sell every watch they make.
LaurasOtherHalf said:
Sam993 said:
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
The problem is that everything is just an assumption, Rolex don't publish their figures and any comment made on their production/sales volumes is based on either COSC or export numbers published by the Swiss association (there might be other sources too but they aren't Rolex specific). Whatever they do must make sense to them but doesn't necessarily mean that it's common sense to us. Richemont for example destroyed £400m worth of stock of unsold watches recently to protect their brands. Swatch has been increasing their balance sheet stock levels too recently meaning they make more than they sell or are willing to sell.So where are all these watches sitting then? What on earth are they going to do with all the obsolete cases and movements once they become out of date? If they're not being produced then where are the scores of redundant watchmakers in Switzerland?
You think a company that a company as well run as Rolex is running at under capacity?
I think that people don't understand marketing nor manufacturing. Rolex are, at the moment (and not for the first time), at the top of their game, in so far as they can sell every single watch they create. One way or another.
Hushed up or nothing to tell? Make no mistake, Rolex can and do sell every watch they make.
I very much doubt Rolex need to reduce production to create the scarcity. It's far more likely that they just are unwilling to ramp up production enough to meet the demand. Emerging markets like China, Russia, India etc really want Rolex. They could meet the demand but that means a big commitment, which is hard to ramp down and still needs a long lead time. Doing exactly this has proved a mistake for other luxury brands in the past.
Rolex are probably the biggest selling Swiss watch brand, producing between 600,000 and 1,000,000 pieces a year. I suspect that the shortage is exaggerated. For example, there seem to be a lot of examples on forums of people being told there's an eighteen month waiting list for a Submariner, only for one to turn up a couple of weeks later.
So why do it?
Part of it is undoubtedly a way of creating demand, which is luxury goods marketing 101. But it also keeps secondhand prices of Rolexes high. They're one of a couple of watch brands that retain most of their value, and that's probably a selling point in itself.
For example, I recently saw a Hermes In The Pocket for sale. It was one of a limited edition of 24 pieces, palladium case, and retailed for £25K to £30K. The asking price for a new and unworn example was $12,500. Someone took a bath there.
https://www.europeanwatch.com/28266.html
So why do it?
Part of it is undoubtedly a way of creating demand, which is luxury goods marketing 101. But it also keeps secondhand prices of Rolexes high. They're one of a couple of watch brands that retain most of their value, and that's probably a selling point in itself.
For example, I recently saw a Hermes In The Pocket for sale. It was one of a limited edition of 24 pieces, palladium case, and retailed for £25K to £30K. The asking price for a new and unworn example was $12,500. Someone took a bath there.
https://www.europeanwatch.com/28266.html
On reflection, the trouble with Rolex waiting lists isn't so much that they exist, but they're arbitrary. The big whales get the choice pieces, and the rest have to wait.
Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
Graemsay said:
On reflection, the trouble with Rolex waiting lists isn't so much that they exist, but they're arbitrary. The big whales get the choice pieces, and the rest have to wait.
Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
If you were dealing directly with Rolex I'd say this would be a good method, but technically you're the AD's customers rather than Rolex, and I suppose they'd rather reward their repeat customers.Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
That's what the people who are fans of Rolex are reporting yes , production from 1m to 600k, there are a few Rolex themed channels on youtube reporting this , whether its true of not I have no idea as said hard data is impossible to come by Graemsay said:
On reflection, the trouble with Rolex waiting lists isn't so much that they exist, but they're arbitrary. The big whales get the choice pieces, and the rest have to wait.
Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
I paid £500 deposit and waited over three years for my white faced Daytona, that was about 12 years ago.Were they run as a queue, say with a deposit, and you knew that you'd get your Daytona in (say) eighteen months, it'd feel much fairer.
liner33 said:
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
That's what the people who are fans of Rolex are reporting yes , production from 1m to 600k, there are a few Rolex themed channels on youtube reporting this , whether its true of not I have no idea as said hard data is impossible to come by My position is to say can Rolex re-adjust their production somewhat to at least indicate to Joe-public that things cant change overnight but will get better over time?
All the evidence is to the contrary and that it seems that Rolex are profiteering by skewing demand and ADs pumping unloved models to Greys which will ultimately collapse the market. If Rolex reacted to market conditions and put popular SS watch prices up wi9th limited supply, that would be transparent and no gripe from me.
Buster73 said:
I paid £500 deposit and waited over three years for my white faced Daytona, that was about 12 years ago.
That was a UK only issue. They were freely available elsewhere. AD beside me in Norway used to get 1 black faced and 1 white faced Daytona every 6 weeks...I bought a lot of Daytonas when people were losing their minds in the UK!!Wills2 said:
Lord.Vader said:
Not if you factor in the raw material cost, but its profit % will be higher.
Rolex are playing a blinder, build up the hype and build a 3-5 year backlog on waiting lists for their cheapest and highly profitable watches ( % wise rather than net profit. )
I don't why you think they are less in cash margin on the gold watches? They makes loads more cash. Rolex are playing a blinder, build up the hype and build a 3-5 year backlog on waiting lists for their cheapest and highly profitable watches ( % wise rather than net profit. )
A SS Skydweller is £10600 the everose version is £35,850 with the additional cost of the gold around £6000-7000 at market rates even if you discount the cost of the steel to zero they are making over 20k more on the gold watch above the steel watch profit ex VAT at retail. .
My view is they make more all round on the freely available watches and less on the SS sports models hence the need/want to make them rare to push people into the more profitable products.
.
Guycord said:
liner33 said:
LaurasOtherHalf said:
People seem to be under the impression that Rolex are withholding stock to pump the market, or slowing production yes?
That's what the people who are fans of Rolex are reporting yes , production from 1m to 600k, there are a few Rolex themed channels on youtube reporting this , whether its true of not I have no idea as said hard data is impossible to come by My position is to say can Rolex re-adjust their production somewhat to at least indicate to Joe-public that things cant change overnight but will get better over time?
All the evidence is to the contrary and that it seems that Rolex are profiteering by skewing demand and ADs pumping unloved models to Greys which will ultimately collapse the market. If Rolex reacted to market conditions and put popular SS watch prices up wi9th limited supply, that would be transparent and no gripe from me.
Rolex sell every single watch they make
"oh but they want to cut back numbers to make their watches more exclusive- it's basic luxury marketing" will be the reply. I get that and it may be entirely the case (none of us know because Rolex won't tell) but I strongly suggest it isn't. There are currently no stainless steel Daytonas in the windows of any of their ADs in Europe, not one. On the worlds largest watch trading platform (Chrono24) there are currently around 300 for sale in grey market dealerships. 300 watches for a total population of over 700M people. That's pretty flipping exclusive already!
"they want to drive sales of precious metal models and other models that don't sell so well" I can actually believe that but the very sentence suggests that Rolex don't, or didn't at some point know what they are doing. I absolutely don't believe that at all. Fashions change, spending goes up and down but Rolex will absolutely know their figures inside out.
Rolex sell every single watch they make
So if they do (and they really do!), why do they need to sell more precious metal watches? Because the margins are more advantageous? It's an absolutely fantastic way to increase profit-make the same movements but wrap them in more expensive glitter to make more money. But more money from what?
Rolex sell every single watch they make
So if they're selling every single watch and they are "apparently" going to reduce production numbers doesn't that mean they are going to make less money? The same money but by making fewer watches? More money by making fewer watches?
Answers on a postcard please, because no one is ever going to find out.
But you know what's really interesting? Who benefits if Rolex come more profitable than they already are? That's another conversation...
Let's bring it back to manufacturing and production numbers. Rolex, we assume (there are rumours to the contrary but no ones really knows as usual) make everything in house, they even have their own foundry to cast their own metal. So someone suddenly decides to cut production on some particular models. Rolex will be better placed to do this than most if they control everything but you don't just halt a production line-you can't. Even with something as hand made as a watch the entire facilities they wholly own are built up around the production lines.
The machinery that creates the parts to make the watches is lifed, you don't just suddenly switch it off because it will have been imagined and built to perform a certain number tasks over a certain period. There are people hired and trained to expert level just to facilitate it and hand finish those exact numbers.
It still doesn't matter though when Rolex sell every single watch they make, why bother?!
The exclusivity thing is a red herring, how on earth can they be more exclusive if they start selling more of their precious metal versions? Surely that's making their PM models (the ones with the biggest margins) less exclusive and the complete opposite of what all these blogs, vlogs, social media influencers and the rest of them are saying they're up to.
You know what it is (in my humble opinion)? It's all sales bulls
t.Rolex are hot property at the moment and the salesmen, the ADs, the grey market dealers, the flippers, the traders and the casual owner/seller like myself all have a huge vested interest in making people think the watches are rare and hard to come by.
Why? So we can sell them more watches for more money.
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