Astonishing discussion with my local Rolex dealer.

[Bedlamater]

Guycord said:

Camelot1971 said:

bonerp said:

Good post - so who's fault is it for the grey market?

It's the customers fault. If people didn't pay over list price and didn't buy if they were messed about with some BS list Rolex would be forced to change its practices with their AD's.

But demand (for some) is high so the dealers and Rolex can do what they like. Brand loyalty only gets you so far though. Eventually, people have enough and swap brands or don't buy at all. I'd imagine with all the emerging markets (China etc) Rolex don't care at all about European sales as it all adds to the brand desirability if you can't get one!

No. This is Rolex’s fault because they are effectively operating a supply cartel (DeBeers) of take it or else. A shift in production from less popular watches to more popular models is all that is required rather than pumping more and more unloved pieces to the market place.

Value retention I hear....your buying a watch, not 20 year t-bonds.

Collapse the market.....maybe but the current model will inevitably do the same but a little later.

Rolex are absolutely flying right now, why on earth would they flood the market with their most popular models, it would be brand suicide, come on..

They have seen sales in the UK alone double in the past 5 years with, profits up 5 fold in the same period... They are the worlds most valuable watch brand. They know what they are doing and they are doing it extremely well...

[Camelot1971]

Guycord said:

Camelot1971 said:

bonerp said:

Good post - so who's fault is it for the grey market?

It's the customers fault. If people didn't pay over list price and didn't buy if they were messed about with some BS list Rolex would be forced to change its practices with their AD's.

But demand (for some) is high so the dealers and Rolex can do what they like. Brand loyalty only gets you so far though. Eventually, people have enough and swap brands or don't buy at all. I'd imagine with all the emerging markets (China etc) Rolex don't care at all about European sales as it all adds to the brand desirability if you can't get one!

No. This is Rolex’s fault because they are effectively operating a supply cartel (DeBeers) of take it or else. A shift in production from less popular watches to more popular models is all that is required rather than pumping more and more unloved pieces to the market place.

Value retention I hear....your buying a watch, not 20 year t-bonds.

Collapse the market.....maybe but the current model will inevitably do the same but a little later.

It's the same argument with diamonds. If people didn't buy them, DeBeers would have to change their strategy.

All the people on here moaning about Rolex...and yet still want one!

[Guycord]

Bedlamater said:

Rolex are absolutely flying right now, why on earth would they flood the market with their most popular models, it would be brand suicide, come on..

They have seen sales in the UK alone double in the past 5 years with, profits up 5 fold in the same period... They are the worlds most valuable watch brand. They know what they are doing and they are doing it extremely well...

And with the 4 pieces I have, no wonder. I’m ok though. Have all the SS models I need. All AD purchased.

However, if there is a recession let’s say around the corner, ADs are done for and Rolex can bunker down like they always do. Market is currently buoyant for Rolex and they are getting away with delivering what the customer does not want. What happens WHEN and not IF this goes pear shaped? And sorry - No sympathy for anyone who feels “investments” like Rolex watches should have unfounded escalation into blue sky on and upward returns. It’s a watch. Many talk of them as “tool” watches for gawks sake.

End result is total bloodbath for everyone. Rolex actions are short term and irresponsible.

[Guycord]

Camelot1971 said:

It's the same argument with diamonds. If people didn't buy them, DeBeers would have to change their strategy.

This is close-ish to home for me.

De Beers did change their strategy. They played Cartel too long and “give them what we want”. Soon enough, people, jewellers, caught on to the BS when the Russians and Indian suppliers got fed up. Now the Cartel may not have disappeared but DeBeers have certainly had to restructure their mine finances (or holdings) since the ruse was up in the late 90s.

Plenty of places in Africa I know that still have the scars because of that even though the U.K. high street looks unaffected (for now)

[LaurasOtherHalf]

Guycord said:

End result is total bloodbath for everyone. Rolex actions are short term and irresponsible.

Hardly, look on C24 and eBay for how many SS new Daytonas are available on the grey market (let's use the Daytona as an example, you can do the figures for a Pepsi GMT if you like?).

You're probably looking at no more than 300 watches in Europe. Some of those will be private individuals trying their luck, some fake adverts simply trying to get leads and some overpriced so that they won't sell anyway.

So 200 Daytona sold via the grey market above list price in Europe? 250? Not a huge amount in the millions of people in the sample base is it?

So at a list price in the UK of just over £9k and you pay £15k the possibility to take a £7k bath is certainly there but 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?

It's infinitesimally small numbers we're talking about.

There is the fact that people still bought these watches when you expected to lose a chunk of money should you need to sell within the first few years too.

[bonerp]

Camelot1971 said:

All the people on here moaning about Rolex...and yet still want one!

I don't think anyone is 'moaning' about the products.....which is the problem. Rolex sell an 'affordable' SS watch(es) but its not available! If they want to sell exclusive gear, drop the £5000-£10,000 watches. Stop dangling a carrot.

This is a good debate (others view of the world etc) and your comment is about as useful as a chocolate teapot. :-p

Edited by bonerp on Tuesday 19th June 08:05

[bonerp]

LaurasOtherHalf said:

So at a list price in the UK of just over £9k and you pay £15k the possibility to take a £7k bath is certainly there but 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?

I wonder what they actually get for a 'new' Daytona. £18k is a typical advert price but I've seen the white face anywhere between £14k-£18k. I may eventually give up and buy a nearly new sub as it'll be at least half the price and more readily available!

[liner33]

So I'll admit to not understanding marketing in the slightest but can someone explain how, producing fewer watches, selling at fewer ADs will help Rolex make more money, logically if you reduce production by 40% you reduce profit but a large amount also.

Unless they are going to increase demand and then massively increase the retail price I can't see how this benefits anyone but the used market which is already strong and what I thought Rolex are trying to influence.

Where are all these grey market Rolex watches that this company hoovers up from the AD's ?

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

[BOR]

As you've asked... my theory, based on no facts whatsover, 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.

How can Rolex profit from this without increasing production ?

Rolex restrict supply of steels, and encourage sales of precious metal subs/gmts/daytonas etc with the additional profit that generates.

You only will buy a steel ? OK, here's our Tudor GMT in steel for you.

We are already seeing the emerging of waiting lists for Tudors, so begins the feeding frenzy yet again. I get the feeling that Tudors have jumped noticeably in price as that sub-brand has gained some profile.

Et voila. Rolex increase profits by going to gold metal whilst at the same time doubling volumes by using Tudor to sell steel watches.

[aeropilot]

BOR said:

Rolex restrict supply of steels, and encourage sales of precious metal subs/gmts/daytonas etc with the additional profit that generates.

You only will buy a steel ? OK, here's our Tudor GMT in steel for you.

We are already seeing the emerging of waiting lists for Tudors, so begins the feeding frenzy yet again. I get the feeling that Tudors have jumped noticeably in price as that sub-brand has gained some profile.

Et voila. Rolex increase profits by going to gold metal whilst at the same time doubling volumes by using Tudor to sell steel watches.

Bingo.....and to quote a famous movie line, "You win a cookie"

The massive brand regeneration of Tudor in the past few years is no co-incidence, all part of the game plan.

[liner33]

So a gold watch is cheaper to produce than a SS one ?

[aeropilot]

liner33 said:

So a gold watch is cheaper to produce than a SS one ?

No..........pretty much same price to produce, just much more profit per watch in PM.

[anonymous-user]

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'm on this list for a Daytona and more importantly a GMT II BLNR, I am happy to wait and wouldn't dream of paying over just to have one now, it was always a plan to get one for my 30th and one for my wedding present ...

Any which way, thankfully I got on the lists last year., any enquiries I have made since Christmas have all been lists are closed.

[detee]

bonerp said:

I wonder what they actually get for a 'new' Daytona. £18k is a typical advert price but I've seen the white face anywhere between £14k-£18k. I may eventually give up and buy a nearly new sub as it'll be at least half the price and more readily available!

I think the ceramic one sells well even at a premium, I have a white one and have been offered £13,500 from two of the well known grey dealers.

[Buster73]

detee said:

bonerp said:

I wonder what they actually get for a 'new' Daytona. £18k is a typical advert price but I've seen the white face anywhere between £14k-£18k. I may eventually give up and buy a nearly new sub as it'll be at least half the price and more readily available!

I think the ceramic one sells well even at a premium, I have a white one and have been offered £13,500 from two of the well known grey dealers.

Keep it a few more years and they’ll be offering you £16k +

Better than money in the bank.

[Mr Gearchange]

carphotographer said:

Just seen this thread tonight and haven't read it all.I popped into M&W yesterday as I'm in the market for a Sub date.
Five year waiting list, and they will remove the protective casing and keep the warranty for a year - to prevent flippers.

So where's a good place to buy a Sub Date ?

I don't think there is a 'good' place to buy one - you either wait your turn or pay over retail for a previously owned one.

I've wanted a SS Sub Date for about 20 years and about 2 years ago at the age of 40 decided I was going to buy one.

Waiting lists were silly everywhere - and being quite tight I really liked the thought of buying one at the airport for a few quid less than on the high street. As I am a frequent business traveller I figured it would be relatively easy to pick one up at an airport somewhere - yeah, right...

I think over 18-20 months I must have gone into Rolex stores 80 times at Heathrow, Amsterdam, Paris, Zurich, Geneva, Berlin, New York etc etc.

Answer was always the same. "No we don't have one, we get one SS Sports model about every 7-8 weeks at best, if it actually makes it to the display case its in there for less than 5 minutes".
Guy at Heathrow T2 each time tried to sell me a Yachtmaster instead

Anyway I eventually got one at Schiphol a couple of months back - I spotted it from about 60ft away and then went and stood in front of the display case furiously beckoning a sales assistant over before anyone else spotted it. It had been in the case < 3 minutes and I got it for £500 less than on the high street in the UK.

So try at the airports - they don't have any customer waiting lists so it's first come first served, you'll get it cheaper and it makes going to the airport a bit more exciting.

[liner33]

aeropilot said:

No..........pretty much same price to produce, just much more profit per watch in PM.

So why not just charge what the market will clearly support for the SS models , blanket 40% increase on all the sports range, increase production of those over the less popular models and stop the flipping overnight

[detee]

liner33 said:

So why not just charge what the market will clearly support for the SS models , blanket 40% increase on all the sports range, increase production of those over the less popular models and stop the flipping overnight

That is a great argument, but at 14K for a steel Daytona, you enter AP Royal Oak, Patek Aquanaut money and there really is no comparison. A steel Royal Oak with a plain dial is a very very cool piece.

[ReaperCushions]

aeropilot said:

Bingo.....and to quote a famous movie line, "You win a cookie"

The massive brand regeneration of Tudor in the past few years is no co-incidence, all part of the game plan.

A guy at work recently was trying to get a SS Rolex and upon his frustration said 'If they won't sell me one I'll take my business elsewhere'. He bought a Tudor GMT

[liner33]

detee said:

That is a great argument, but at 14K for a steel Daytona, you enter AP Royal Oak, Patek Aquanaut money and there really is no comparison. A steel Royal Oak with a plain dial is a very very cool piece.

Indeed the prices of a used Daytona are approaching that of a new Royal Oak Chrono and see no sign of slowing , and I know which one I'd rather have as well but they are only really doing that due to undersupply by Rolex so probably wont change at least in the short term