Rumor? Rolex ending partnerships with hundreds of ADs, focusing on boutiques

[NAUI1982]

Originally Posted by KatGirl

Doesn’t make much sense to me. My AD has been doing business with Rolex for 47 years and owns 3 ADs. They follow all the rules and are doing a buildout in one of their locations right now. I don’t see them being dropped. Might Rolex require more exclusive buildouts? Sure. But since each AD sells every Rolex they get, what would be the point of changing their business model? Remember, aside from Bucherer, all other ADs, including Boutiques, are not owned by Rolex. There aren’t any Bucherer stores in my area of CA. Sounds like nothing more than an unsubstantiated rumor, to me.

Kat


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…I don’t think they dump the model entirely. They may prefer to stick to pure watch only locations or multi-brand watch retailers inside their AD network.

Fun to speculate huh?

[Krash]

Originally Posted by NAUI1982

I don’t have all the stats but as I understood, Bucherer post purchase of Tourneau had the largest distribution network globally of any watch brand. I think the count was near 150-200. The Rolex AD network is what, 1000-1200 or so? So yea, it will take a couple of years to build that out. There are plenty of examples of corporate expansions in retail that open 1000s of stores annually. Think Starbucks for example, they were doing something like 1500 locations a year… Not that Rolex is Starbucks! I’m just saying an expansion buildout can happen reasonably fast.

As for timeline, I’m also thinking it’s inherently evident in the timeline Rolex has laid out with their manufacturing build plans, which are also a couple of years. So the strategy actually seems to match up.

I don’t think they eliminate ADs entirely… But shrink that network significantly could happen.

If I’m in charge of Rolex, what would the incentive be for me to spend billions on new boutiques?

I sell every watch I make. I don’t have stockpiles of inventory that I can’t sell.

What problem am I solving?


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[csaltphoto]

Honestly this has been going on for 20 years, maybe longer. There is a jeweler/watch shop in my small town in central CA that used to sell Rolex. Lost their account probably 10-15 years ago. When I was kid it seems Rolexes were pretty common in high end jewelry stores. That is a rarity these days.

Here's an old image I found on the web. Doesn't exactly look like the kind of exclusive locale that Rolex wants these days.

[codecow]

This is an outrage!

[Amadd]

I know an AD near Chicago that is loosing their Rolex dealership after 58 years. Massive store lots of brands lots of volume but Rolex just took it away. Idk the reason but was shocked as the store is beautiful but just wasn’t located in a big city.


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[Dave O]

Originally Posted by Dave O

With regards to comments about Bucherer. I don't think Rolex can funnel all of their watches through Bucherer. Let me explain. My numbers may be off by a bit, but I believe Rolex has around 2000 AD's. Bucherer only has around 100 stores and out of those 100 only half sell Rolex. Think about it. Bucherer only makes up about 2.5% of the overall AD network. How much of an impact could this impart on the other 1950 AD's?

Think of it another way. Rolex reportedly makes around 1.2 million watches a year. That means on average each of the 2000 AD's receive about 600 watches a year. If they only supplied Bucherer at it's 50 Rolex AD's that means they would receive 24,000 Rolex's a year, or 65 a day. I don't think Bucherer could keep up at that rate.

Is Rolex trying to weed out some of their AD's? Sure. But will they reduce them dramatically? Not likely. With the amount of volume Rolex produces, and the new factory scheduled in the near future, they will need these AD's to get the product out.

A great video on the subject here.
https://m.youtube.com/watch?si=Wm2-v...ature=youtu.be

Originally Posted by NAUI1982

I don’t have all the stats but as I understood, Bucherer post purchase of Tourneau had the largest distribution network globally of any watch brand. I think the count was near 150-200. The Rolex AD network is what, 1000-1200 or so? So yea, it will take a couple of years to build that out. There are plenty of examples of corporate expansions in retail that open 1000s of stores annually. Think Starbucks for example, they were doing something like 1500 locations a year… Not that Rolex is Starbucks! I’m just saying an expansion buildout can happen reasonably fast.

As for timeline, I’m also thinking it’s inherently evident in the timeline Rolex has laid out with their manufacturing build plans, which are also a couple of years. So the strategy actually seems to match up.

I don’t think they eliminate ADs entirely… But shrink that network significantly could happen.

Your numbers are WAY off. I gave you the numbers in my post above (reposted here) but you must have chosen to ignore it or not even read it. Let me repeat the numbers. Bucherer only has around 100 stores and out of those 100 only half sell Rolex. Rolex itself has around 2000 AD's. And building a Starbucks network is not even a comparable example of what it would cost to build out a Rolex network. I highly suggest you watch the video that I posted a link for above. It explains all of this.

[Stupot]

Yep, this is happening.

There are other threads where I talk about the UK market and the monopoly problems this has created.

There have been a fair few threads where it’s interesting the different opinions re AD’s and I have come to the conclusion it’s a local market thing, with the US forum members sounding much more positive and favourable about theirs.

Unfortunately the UK seems to be further down this road than the US at the moment, in a negative way, but I can assure you it’s coming to a town near you soon! The lovely smaller AD’s that you can be nice too, call in and chat with, develop a relationship with and then get that coveted allocation are about to be consigned to history, we are already there and it’s not pleasant.

Rolex only seem to want their distribution chain to be the bigger companies. In the UK it’s Watches Of Switzerland and they now have a huge percentage of the market. Gradually all the smaller AD’s have been served notice.

This has caused a distorted distribution market as the AD’s claim to only be allowed to sell in their local market territory, so you have no choice which retailer you can use.

Now you can imagine the complications for the customer this creates. They don’t need to bother with customer service, as you are a captive audience and have no choice but to deal with them, but more importantly you then need to buy on their terms, you are completely at their mercy which opens you up to the potential bundling, spend history nonsense, if they ask you to jump you need to ask how high.

Rest assured if a WOS store does allocate you something, it’s only because you have been profitable enough to them to justify the business decision. (I am aware there will be the odd exception)

This was the other thread it was being discussed.

https://www.rolexforums.com/showthre...=950274&page=7

Originally Posted by Stupot

The bizarre bit for me is it’s Rolex themselves that have decided this is the route to market to go down. You would think customer service and general perception would have been higher up their list of priorities, as its key to longevity, the current frenzy will only last so long. That’s why I think there is more at play here, Rolex aren’t daft! Understatement!

It’s been a conscious business decision at some point years ago to start putting all their distribution eggs in one basket and the UK unfortunately for us residents seems to be “ahead” of the game down this road.

Bigger corporate companies in any sector will never have a customer’s interests at heart, or treat a customer the way an independent would, so coupling that with geographical borders a customer can’t shop outwith, and within those borders there is only one company you can deal with is never going to end well for the customer. There is a bigger picture question as to whether this sort of set up should even be allowed, it would be severely dealt with in other sectors.

WOS are clearly a well run, from a profit perspective, successful business. They are taking full advantage of the above and making sure if they do you a favour allocating you a watch it is only because you have done them a favour by having a fat profitable spend history.

Without going in to too much detail, they have such a strict sign off policy for allocation which escalates depending on the grade of watch, sale execs referring you to the manager, some then going to the area manager, some then going to head office, this pretty much makes an allocation of something “tasty” to a “normal” genuine enthusiast almost impossible. I know someone will always come up with an example as an exception, but please believe that it is indeed not the norm and there has been a bit of luck involved and for whatever reason their normal process hasn’t been followed, it does happen.

Business 101, yes, but pretty understandable why genuine watch collectors would find it frustrating when they find themselves on the wrong side of the fence looking in, and surely it has to be damaging longer term for the brand.

As you correctly allude to, I think you can also see it starting to happen in the US, although given it’s such a huge market with the vast number of outlets it’s obviously a slower transition away from the independents.

I mentioned in a previous post, is there more going on, a bigger plot twist? Do they let WOS have a short period of fun, and then do a Bucherer on them, they then have the direct to consumer model they see AP having success with?

Very strange situation.

[fooey]

Originally Posted by L8r

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

A lot of people will hope they do!

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[BillA]

Originally Posted by watchmavan

There are far too many greys out there for people changing their mind and passing on a new Rolex. Supply by AD’s is the only reason. Yes many perhaps don’t do it but then there’s the crap you have to go through or spend to get on the list. I came up with a novel way to get on the list quick and get a GMT very quickly. But, this is brought about by a greedy industry of resellers.


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huh?

[xrole]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.

Yup, Rolex boutiques will generally mean a far higher standard of service and consistency.

[Lininq]

Originally Posted by Dave O

With regards to comments about Bucherer. I don't think Rolex can funnel all of their watches through Bucherer. Let me explain. My numbers may be off by a bit, but I believe Rolex has around 2000 AD's. Bucherer only has around 100 stores and out of those 100 only half sell Rolex. Think about it. Bucherer only makes up about 2.5% of the overall AD network. How much of an impact could this impart on the other 1950 AD's?

Think of it another way. Rolex reportedly makes around 1.2 million watches a year. That means on average each of the 2000 AD's receive about 600 watches a year. If they only supplied Bucherer at it's 50 Rolex AD's that means they would receive 24,000 Rolex's a year, or 65 a day. I don't think Bucherer could keep up at that rate.

Is Rolex trying to weed out some of their AD's? Sure. But will they reduce them dramatically? Not likely. With the amount of volume Rolex produces, and the new factory scheduled in the near future, they will need these AD's to get the product out.

A great video on the subject here.
https://m.youtube.com/watch?si=Wm2-v...ature=youtu.be

My thoughts exactly

[Fleetlord]

Originally Posted by csaltphoto

Honestly this has been going on for 20 years, maybe longer. There is a jeweler/watch shop in my small town in central CA that used to sell Rolex. Lost their account probably 10-15 years ago. When I was kid it seems Rolexes were pretty common in high end jewelry stores. That is a rarity these days.

Here's an old image I found on the web. Doesn't exactly look like the kind of exclusive locale that Rolex wants these days.

This is usually the case.

Someone posts that their local M&P Rolex dealer has lost their account and will no longer be an AD and they are stunned and dismayed by this.

A quick google search of the dealer reveals a picture and situation similar to one in the post I am responding to.

Old store front...ugly even. Older part of town. Small. Can't hold the correct merchandising display.. Not cosmopolitan in any way. Just a waste for inventory to go to as it has no brand reach.

These locations have been and will continue to be eliminated in favor of large, multi-chain, high end retailers that have centralized purchasing and management that makes it very streamlined and easy to deal with. They will commit to Rolex "boutique" locations and move the brand forward nicely.

[Jack T]

Rolex clearly has been reducing their distribution outlets and and creating a more exclusive image

And yet they seem to be producing and selling over 1 million watches a year

I don’t quite understand how they can so both.

[xrole]

Originally Posted by Jack T

Rolex clearly has been reducing their distribution outlets and and creating a more exclusive image

And yet they seem to be producing and selling over 1 million watches a year

I don’t quite understand how they can so both.

1 million watches is probably not as many as you think it is. It's a theoretical 2740 watches sold per day spread across hundreds of countries with an often increasingly populous middle class and rich population in many of those countries.

One boutique/AD usually has lets say 4 or 5 active staff dealing with customers over an 8 hour period which means each boutique can dish out around 65 watches per day in half hour appointments. 100 boutiques running every day of the year could sell 1 million watches so over a hundred working every day except holidays could likely easily do it. I am sure worldwide that there will be more than enough AD's or boutiques to copy with 1 million watches.

[WatchEater666]

ADs add almost no value. They are glorified order takers.

[illiguy]

Originally Posted by Amadd

I know an AD near Chicago that is loosing their Rolex dealership after 58 years. Massive store lots of brands lots of volume but Rolex just took it away. Idk the reason but was shocked as the store is beautiful but just wasn’t located in a big city.


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Which one?

[Krash]

Originally Posted by xrole

Yup, Rolex boutiques will generally mean a far higher standard of service and consistency.

If you tell me that they are phasing out some ADs, then that’s believable.

If you tell me they are phasing out all ADs in favor of boutiques, then that sounds like utter nonsense to me. I’ve seen episodes of Ancient Aliens on the History Channel that are more believable than that.


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[Krash]

Originally Posted by WatchEater666

ADs add almost no value. They are glorified order takers.

Perhaps there is no value add for you. But for Rolex, ADs are a rent free, expense free distribution channel. Once you add brick and mortar into the equation, then the monthly operating expenses begin to add up.

How much do you think the annual operating expenses are to maintain a boutique?


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[7enderbender]

This could be good if Rolex is willing to directly run or be involved with how these boutiques are run. Otherwise it’ll be the same old “pss, wanna buy a tennis bracelet?”
Rolex needs to worry about their reputation at this point that is being severely damaged by shops that carry their logo.

[Harry-57]

Originally Posted by Krash

How much do you think the annual operating expenses are to maintain a boutique?

Unknown, but I do know who would end up paying for it.

One of my local ADs opted to give up its Rolex franchise. Shock horror! No not really, it was part of a longer term plan to open a Rolex only store (not a Rolex owned boutique) one city over while moving Rolex out of their other multi brand store in the same city. I think there's a melding of terminology in this discussion which is giving a false impression that Rolex are going direct to retail and killing their ADs. It's never that simple. Those of us who believe the shortages are the fault of ADs should be careful what they wish for.

[travisb]

This has been happening for quite a while now.

[brandrea]

I sure miss the look and feel of the mom and pop ADs

[Old Expat Beast]

Rolex has been working the AD model since 1927. Probably time for a change.

[Tortoise99]

Hopefully it’s true - if Rolex watches are available only from Rolex owned boutiques it should put an end to the ridiculous games wannabe customers currently have to play. I don’t want to buy jewellery or other brands of watch before being granted the privilege of being allowed to buy a Rolex

[metallic]

Originally Posted by Krash

Perhaps there is no value add for you. But for Rolex, ADs are a rent free, expense free distribution channel. Once you add brick and mortar into the equation, then the monthly operating expenses begin to add up.

How much do you think the annual operating expenses are to maintain a boutique?


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AD's are not expense free. The expense is 35-40% of the cost of the watches Rolex sells to the AD, i.e. the wholesale price.

[ronricks]

Rolex has been ending/phasing out relationships with family owned and mom and pop type jewelry stores going on 5 years now. It’s nothing new and is going to continue.

[Krash]

Originally Posted by metallic

AD's are not expense free. The expense is 35-40% of the cost of the watches Rolex sells to the AD, i.e. the wholesale price.

Technically, that’s not an operating expense from an accounting perspective. But it is the ability for Rolex to sell at retail instead of wholesale. I just don’t believe that would offset the costs associated with operating a boutique. I’m not convinced there is any financial incentive for Rolex to get rid of Authorized Dealers and replace them with boutiques.

Plus, if they do decide to replace 2,000 authorized dealers with say 200 to 300 boutiques, that’s going to be worse for customers, not better.


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[Mathematoxic]

Until watches becomes available with reasonable wait times and thru a fair system, I wouldn’t care what happens to Rolex or these ADs.

[gerry100]

Porsche did this over the past 15-20 years

For example, my local Porsche dealer looked like a bus station that also sold VWs.

Replaced by a relatively palatial store.

Other dealers within 100-150miles gone

[davek35]

There 2 AD stores in my city. Both are the same company... different locations.

One is in the middle of an 8 figure expansion (longer story short). I got a little tour of the new area which is still under construction.

The new addition will have a walk in area for Rolex. Basically it's own store. Across the store, straight away from the Rolex store will be the same setup, but for Patek Philippe.

Huge expansion with much more area for the entire store. (new dress code for the employees, but I won't touch that topic.) I liked the Rolex corner in the store, but time moves forward. I just hope I dress well enough to enter the new store.