Businessweek: Rolex’s Swiss Watch Hegemony Threatened by ‘Trendier’ Omega

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Interesting article.

http://www.businessweek.com/news/201...ier-omega.html

March 18 (Bloomberg) -- When it came to choosing a new watch, Ma Jun had no hesitation in selecting a $6,800 Omega Constellation over a Rolex.

“Omega’s designs are newer and trendier,” said the 30-year- old businessman from Hangzhou, China. He bought the watch a month ago after seeing advertisements featuring swimmer Michael Phelps and actress Zhang Ziyi. “Rolex is old and traditional.”

That perception, together with a boom in Asian sales, helped Swatch Group AG’s Omega snatch market share from Rolex in the $35 billion Swiss watch industry last year, analysts say. Rolex, whose cheapest model is almost 60 percent more expensive than Omega’s, has also been hit harder by the U.S. recession.

“For the gorilla in the industry, you feel threatened when you have brands that are smaller than you growing fast and doing a good job,” said Scilla Huang Sun, head of equities at Swiss & Global Asset Management in Zurich, who oversees about 4 billion Swiss francs ($3.8 billion) including Swatch shares.

Swiss watch exports fell 22 percent in 2009, the biggest drop since the Great Depression, as retailers canceled orders. Both Swatch Group and Cie. Financiere Richemont SA, the owner of Cartier, have signaled their shipments outperformed the market, leading Rey Wium, an analyst at Nedbank in Johannesburg, to speculate Rolex’s shipments dropped more than the market did.

“If these two outperformed, clearly somebody else suffered much more, and we all know it was probably Rolex,” Wium said. “These things are notoriously difficult to gauge, but Rolex definitely lost out in terms of sales to retailers.”

What is more interesting is the trend. Omega is reaching out to new customers. Rolex is not doing anything to attract new customers.

Omega gained luster with younger consumers when actor Daniel Craig wore its Planet Ocean in the 2006 James Bond movie “Casino Royale.” Craig’s predecessor as 007, Pierce Brosnan, appeared with an Omega in the 1995 film “Golden Eye.” Rolex was in earlier Bond movies, Sean Connery wearing a Submariner model in 1962’s “Dr. No.”

“I won’t wear Rolex, that’s a brand for my dad,” said Dani Wen, a 23-year-old student from Guangzhou as she eyed a $3,800 ladies’ Omega Constellation in a Hong Kong watch shop.

I am on the bubble. I want to buy Omega and Rolex, but will only buy one. I should be the customer Rolex is fighting to get.

I went to a Rolex AD tonight for a second visit, and was prepared to buy a Submariner two tone. I asked for a discount and was told "only if you are serious" because we "need to call the Vice President of sales".

I know a ploy when I see one. I thanked her for her time and left. The sales lady knows the price and discount, and I am not playing a game that a used car salesman plays of "let me see what I can do for you with the manager".

Rolex is not losing market share because of marketing. Rolex is losing because the new generation of buyers does not want to play games. Give your best price, and be done. Don't try and pull me into a game of three card monty. Buying a Rolex should not be as difficult as negotiating the price of a used car. Give me the industry standard discount that every other watch maker gives, or I will not buy.

Rolex needs me more than I need them. I have another option. I can buy Omega. Omega is gaining popularity with the young professional college educated group.

Rolex, you are killing your own brand. I buy at Nordstorm. I buy at Tiffany's. Do you know why? Because they treat me like a King. I'll give one short story about Tiffany's. I purchased a solid silver money clip. A month later it started to tarnish. I went back to Tiffany's and they buffed it for FREE and gave me a silver buffing cloth for FREE. If Tiffany's sold Rolex or Omega, I would buy from them. Nordstrom treats me with the same good customer serivce. Yet the AD's think Rolex is like a used Buick and I have to walk out of the showroom a couple times before I get the best price.