A rumor on next year's US supply

[blue lion]

A friend was talking to an authorized dealer's salesperson and the salesperson said that demand for Rolexes in other countries led to an anticipated reduction by 2/3 of new watches into the US in 2013.
No idea if this is true, or the cause of the rumored price increase.
Just thought I'd pass it along...

[patek.wis]

I have heard something similar straight from a rolex rep. Not quite as drastic as you put it, but they are reducing supply to all of North America and there will be a couple more hefty increases to sort out the supply. Who knows if its true, these days I dont believe anything!

[yessir69]

There's an old saying at The Supreme Court (viciously plagiarized from the Tao) that I believe also applies to Rolex: Those who speak do not know and those who do not know speak.

[Hairdude1]

Guess we will find out at basel!

[Tools]

It would not be a very good business decision to reduce imports into the largest market...

It would make much more sense to simply increase production and import to the emerging market..

If you reduce from one market to import to another, your net output increase is zero..

[fabini]

my take on it is that there will be a decrease of supply for the US based on the fact that the same watch can be sold in asia for at least 20% more. most luxury brands are shifting their products towards the very hungry and affluent asian market.

[sea-dweller]

Typical salesperson FUD.

[ersnyder]

Originally Posted by Tools

It would not be a very good business decision to reduce imports into the largest market...

It would make much more sense to simply increase production and import to the emerging market..

If you reduce from one market to import to another, your net output increase is zero..

I'd heard that Asia is Rolex's largest market Larry. Is it actually the US?

[Darlinboy]

Originally Posted by yessir69

Those who speak do not know and those who do not know speak.

[Tools]

Originally Posted by ersnyder

I'd heard that Asia is Rolex's largest market Larry. Is it actually the US?

The US is the largest market in the world for almost all luxury products, including Rolex.. That's why there is a Rolex USA, and a Rolex SA (rest of the world)

[ersnyder]

Originally Posted by Tools

The US is the largest market in the world for almost all products, including Rolex.. That's why there is a Rolex USA, and a Rolex SA (rest of the world)

OK, thanks!

[dlhussain]

Originally Posted by Tools

The US is the largest market in the world for almost all luxury products, including Rolex.. That's why there is a Rolex USA, and a Rolex SA (rest of the world)

That's not true, Rolex SA (parent) is the charity registered in Switzerland while each country has a presence which is the official importer (subsidiary), there's a Rolex UK and no doubt in other countries.

[MortgageGuy]

Originally Posted by Tools

It would not be a very good business decision to reduce imports into the largest market...

It would make much more sense to simply increase production and import to the emerging market..

If you reduce from one market to import to another, your net output increase is zero..

Exactly. I do see some other markets increasing their supply of Rolex however to reduce from one and send to another would just be silly

[patek.wis]

Originally Posted by Tools

The US is the largest market in the world for almost all luxury products, including Rolex.. That's why there is a Rolex USA, and a Rolex SA (rest of the world)

I'm sorry, but I believe you are incorrect. Asia is the largest market and growing rapidly. Far, far beyond any projected growth of the states for such markets.

[Tools]

Originally Posted by patek.wis

I'm sorry, but I believe you are incorrect. Asia is the largest market and growing rapidly. Far, far beyond any projected growth of the states for such markets.

No, I believe that I am correct and that many people seem to equate Asia's population and Central Governments holdings with it's peoples ability to play in the luxury markets... far, far different..

Here is an excerpt from Bloomberg Financial.. it is a couple years old, but still valid.. You will notice that China (largest Swiss watch importer in Asia) accounts for only about 5% of Rolex sales. Omega is a bigger player in Asia.

"Omega, whose entry-level timepieces cost about $2,500, gets 35 percent of sales from greater China, Jon Cox, an analyst at Kepler Capital Markets, estimates. The brand is sold in about 80 outlets in China. Rolex watches, which start from about $4,100, can be found in 200 Chinese stores and 80 in Hong Kong, the world’s largest market for Swiss watch exports. Rolex gets about 5 percent of sales from the region, Cox estimates. "

Rolex gets about a third of their sales in the USA alone..

full article:
http://www.bloomberg.com/apps/news?p...d=aG8H3YKlGUsU

[improviz]

This is true, but China has rapidly been closing the gap: according to Europa Star, China overtook US this year as leader in demand for luxury watches:
http://www.europastar.com/world-watc...l#.T-U6M4l5mc0

However, my understanding is that as of late, the economic downturn in China is reducing demand, so the US may well regain the top spot later this year, assuming we don't have our own economic meltdown.

[Davidokamoto]

Asia became rolexs #1 buyer about two years ago. Before that US was #1 they dropped to second. This is a main reason why they started focusing and designing models towards the Asian market like the flower dial and rainbow daytona.

[Boothroyd]

A 2/3 reduction of inventory to the US makes no sense with current sales channel, i.e. number of AD's. So if they they cut 66% of AD's in short order, I will believe the salesperson's hyperbole. Seems like they got they gist of the details (inventory decreasing) but added their own spin.

[Davidokamoto]

I don't think the cut is that drastic

[Runnin' Rebel]

Originally Posted by yessir69

There's an old saying at The Supreme Court (viciously plagiarized from the Tao) that I believe also applies to Rolex: Those who speak do not know and those who do not know speak.

Think you got that wrong

[Paladin]

Originally Posted by Tools

It would not be a very good business decision to reduce imports into the largest market...

It would make much more sense to simply increase production and import to the emerging market..

If you reduce from one market to import to another, your net output increase is zero..

At some point with rapidly growing sales, production will reach the capacity of a companies plant/equipment and infrastructure. Given that Rolex is a private and secretive company we can not be sure, but if the company is approaching max production capacity, reallocation of available product to more lucerative or strategically important markets would be a good indicator.

Given that all the new maxi cases and watches are built on new tooling, that too may lend credence to a production capacity limit being reached.

Just some thoughts....

[bondtoys]

Originally Posted by Tools

It would not be a very good business decision to reduce imports into the largest market...

It would make much more sense to simply increase production and import to the emerging market..

If you reduce from one market to import to another, your net output increase is zero..

Larry,

The US market lost it's number 1 status 2 years ago. Todays strongest market is Hong Kong for Rolex and China still booming.

2yrs ago, HK sold the double an the entire US market. If you ever go to there, you'll understand why.

[hdrazor251]

With Rolex USA dropping AD's a reduction would not surprise me. However, a 2/3 reduction would be a surprise.

[Michael M.]

I've heard this too, most of the rolexes production watches are being shipped to china because of high demand, especially the daytona and TT & YG Rolex models (dd, sub, daytona, gmt, etc,).

[tom2517]

Originally Posted by bondtoys

Larry,

The US market lost it's number 1 status 2 years ago. Todays strongest market is Hong Kong for Rolex and China still booming.

2yrs ago, HK sold the double an the entire US market. If you ever go to there, you'll understand why.

But most of the watches sold in HK don't stay in HK though. The same is happening in Taiwan, chain stores from Singapore and HK are opening stores in Taiwan to cater to the Chinese tourists.

[Matrim604]

Not sure if the rumour has any truth to it, but it's true North America makes up a fairly small portion of Swiss watch sales. The US is still the second largest single market though, I can't see the Swiss watch industry purposefully doing anything to hurt it. Although looks like the US will probably drop to 3rd place by next year.

Here is an article from June's Watch Time Magazine:

[caryyee]

Wow, for a population of 7m, they bought $4.1b in swiss watches?? Per head of population, that is staggering ... light years ahead of any other country by population! I'm guessing Rolex would be the biggest selling luxury swiss watch over there?

[bondtoys]

Originally Posted by tom2517

But most of the watches sold in HK don't stay in HK though.

Well, not many of them will end up on the US market for sure ;)
HK has always been the strongest market/ population for decades and I am sure, that even without the mainlanders from China they are able to rival the US market recenty.

And I am sure, that Rolex does not care much where the watches finally end - as long as their sales figures are correct.

[bigrustypig]

Among the last persons that I will ever believe with any info on sales movements, price increases etc is a sales rep of an AD. The more junior, the lesser to be "trusted". I'd rather talk very seriously to the AD himself/herself and even then, the best and most professional ADs make statements that are so carefully guarded.

[Grey.Coupe]

First of all, Rolex has been known to "throttle" volumes to hold prices up. There have been several models, notably the TT Sub introduction; watches were heavily advertised, written about, but not imported in big volumes until buzz reached very high levels. Wait lists and buzz do wonders for sales.

Secondly, some of us seem to be equating nations with regions. When discussing the US market versus "Asia" it is not China alone that is in the mix. Rolex is quite popular in Asia, but varies in sales from country to country. And many of these countries are easily of sufficient size to merit national analysis.