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

[Flypanam]

Well, I have some possible bad news regarding the distribution and availability of Rolex watches. PLEASE TAKE IT ALL WITH A GRAIN OF SALT BECAUSE IT'S JUST INFORMATION I GOT FROM MY SA, PLUS A BIT OF SPECULATION ON BOTH OUR PART.

I went to the AD today to get a link removed from my Daytona. While the watchmaker in back was working on it, I was chatting with the SA. I noticed that they removed their Cartier section completely and that the Rolex section had even fewer than usual exhibition pieces. It was downright bare. I asked about it, and she said they "lost" Cartier and Rolex.

I asked what the heck does that mean... "lost"?? Where did you lose them!? She mentioned that Cartier pulled out of their store completely, citing plans focusing more on selling watches primarily through boutiques rather than jewelers. I asked what about Rolex, and she said they are doing the same thing.

While admittedly she is an SA and not one of the big bosses, she was involved in conversation because she is THE Rolex SA at this particular jewelry store, very knowledgeable not just some glorified sales clerk. They are apparently quite concerned about their business, and understandably so. This store is one of two remaining ADs in my state, with many customers coming from far and wide, and Rolex watches alone made up 60% of the store's revenue (the other 40% from their jewelry, diamonds, and other watch brands including Omega and Tag). It also sucks because they have a Rolex certified watchmaker on staff, and I believe they just hired a second one, and were really advertising how they could service watches professionally in-house without having to send them out.

Apparently they are no longer receiving shipments of new Rolex watches for the rest of the year, stuck with just their remaining stock, and according to her the plan is for Rolex to end partnership with 300-500 ADs worldwide over the course of the next year. The store's management is thinking that with the acquisition of Bucherer / Tourneau, Rolex's plan to expand and sell more from dedicated Rolex boutiques instead. This AD is in a bit of a holding pattern now to see what the end of the year brings as this all just kind of blindsided them.

Wonder if this is a bit of a hubris move on Rolex's part, or it it's part of some plan to try to cut down on ADs that Rolex has no direct control over (such as no oversight against selling to gray market retailers)... or both.. it's not mutually exclusive. I think this might be a credible idea, since back when the acquisition occurred the thought was "The Bucherer deal will give the brand a direct line to its customers and more control and oversight for distribution, allocations as well as pricing for pre-owned timepieces." per an August 2023 article. The other thing the SA thought was that Rolex seems to want big, opulent stores in big cities, rather than being distributed by random (though high-end) jewelers in suburbs, etc, for "brand image". My AD being one of these suburban high end jewelry stores. We agreed this is stupid, people don't want to drive into a busy city just to shop for watches when they used to be able to at their local jeweler, but on the other hand we also don't know what's going on in Rolex marketing's mind.

As mentioned, not sure if this is all 100% true (or even partially true) and it's partly speculation on my and the SA's behalf, but the store itself looked rather bleak and I can't really think of any ulterior motive for the SA to share all of this with me.

Wondering if anyone else has heard anything similar?

[Robison347]

My dealer in a small Northeastern city is still getting watches, but is also keenly aware that Rolex is canceling dealers all around. Their feeling is that all they can do is to offer to build a boutique, and sell as many watches as possible, and not have them end up on the grey market. They have to do their best and hope its enough

[Robison347]

Even a small dealer gets 400-500 watches a year, so that probably represents at least five millions in sales and several jobs for any dealer. No doubt they are bummed. I would be too.

[Flypanam]

Originally Posted by Robison347

My dealer in a small Northeastern city is still getting watches, but is also keenly aware that Rolex is canceling dealers all around. Their feeling is that all they can do is to offer to build a boutique, and sell as many watches as possible, and not have them end up on the grey market. They have to do their best and hope its enough

Man that's a shame. I knew Rolex wanted to build up their own more direct boutique network, but I had no idea the scope of them stopping working with ADs on such a large scale, and so suddenly as well.

[Casey VP-26]

Where has everybody been? This has been going on for the last 10 Years, or more

[L8r]

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

[Krash]

How many Rolex boutiques actually exist today?


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[Harry-57]

If they really are getting rid 300-500 ADs worldwide in the next 12 months we are going to hear about it and/or experience it soon enough.

[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.


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[metallic]

This is most definitely the trend for desirable watch manufacturers. Sell direct at retail price rather than wholesale. Of course they have to manage the brick and mortar but the Bucherer acquisition made that a very easy transition.

[Krash]

Originally Posted by Harry-57

If they really are getting rid 300-500 ADs worldwide in the next 12 months we are going to hear about it and/or experience it soon enough.

This is why I’m not buying it.


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[febie111]

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.


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+1

[Dave O]

My thoughts for what it is worth. Is Rolex getting rid of some smaller AD's? Yes. In large part they have either gotten in trouble by Rolex or they aren't willing to spend the money needed to upgrade the store per Rolex's request. My Rolex AD isn't large, but they are spending the money to upgrade their store per Rolex's wishes. It's a lot of money to invest just to upgrade your store, but it is required by Rolex if they want to continue to be a Rolex AD. The fact that this particular AD is losing both Cartier and Rolex makes me think there is more to the story here.

Are they down sizing their distribution network? Maybe a little, but not a lot. Rolex sold over 1.2 million watches last year. There are around 2000 AD's in the Rolex network. That means on average each AD is selling around 600 watches a year. Take 500 AD's out of the network and each store goes up to 800 watches/year. And with the new temporary facilities coming on line late this year and early next year output will most likely increase. That's a lot of volume per store.

Again, just my thoughts on the subject.

[HiDive]

Why wouldn't Rolex do this. Omega and Breitling have boutiques where they carry certain models that are not available (at least initially) to regular AD's. Rolex has it's new factories coming online in the next couple of years so they should be increasing their output of watches. I know that the Rolex AD's in my area have all built some very fancy Rolex areas in their stores which are taking a more significant percentage of their floorspace than previously. The Omega and Breitling boutiques That I have bought from in the last couple of years are only for those brands. I don't know if Rolex is doing that?

[Krash]

Originally Posted by HiDive

Why wouldn't Rolex do this. Omega and Breitling have boutiques where they carry certain models that are not available (at least initially) to regular AD's. Rolex has it's new factories coming online in the next couple of years so they should be increasing their output of watches. I know that the Rolex AD's in my area have all built some very fancy Rolex areas in their stores which are taking a more significant percentage of their floorspace than previously. The Omega and Breitling boutiques That I have bought from in the last couple of years are only for those brands. I don't know if Rolex is doing that?

Omega and Breitling are still sold at authorized dealers.

So how many boutiques do they need and how much will that cost?

Let’s use round numbers and say 300. Let’s assume $5 million up front costs per boutique. That’s $1.5 billion right there. And that doesn’t include ongoing operating costs.

If I put my business hat on, it’s hard for you to convince me they should get rid of the authorized dealer network.


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[SLWoodster]

I think it’s dumb. Global demand is reducing. They are also opening new factories soon.

They are a mass market brand. When there’s only 2 in that state I think it’s okay to keep them. But I’m sure they’ve done tons of research though. Most of the mom and pop ones in SoCal are pretty crooked. So if it’s to weed out a bunch of them… maybe it’s okay?

[TheVision]

Grain of salt it is. I have some bigger chain AD's in my area that literally thrive on Rolex sales and they've been in business for over 20 years.

Shyte ain't changing. Everyone nowadays appear to be a "rolex insider" but the reality other than Rolex itself, NO ONE knows what the company is doing. It's all smoke with no fire just like shyte Youtubers with ZERO source of credibility but pretending they know all business models inside Rolex chain.

[Zach69SS]

This could be the Rolex build out that they are requiring of their ADs , $500,000 -$1,000,000 cost , some small ADs can’t make that type of investment? I know of an AD in the Caribbean that I was a customer of in the past that lost their Rolex AD status last year.
This is one way to lose some ADs, no build out, no more Rolex AD.

Also the purchase of Bucherer, which put Rolex in retail business with everything there, that put Rolex in drivers seat with many locations all over the world. It was a beautiful move in my opinion. Full control with no down side. How much better it will be for us we shall see.

WoS is not going anywhere they move allot of pieces and are one of Rolex’s biggest customers all over the world, unless they have some type of falling out. WoS has updated all their locations with the build out, at least all the ones I have seen.

This is very sad for the mom and pop ADs, that offer the personalized service and experience to their clients. I feel bad for the loss of these ADs and people who will lose their livelihood. But this is the way things go and Rolex is the king.

Just my $02

[77T]

Originally Posted by Zach69SS

This could be the Rolex build out that they are requiring of their ADs

In both ADs that I know, that was the reason. There were other items in the new contract, but that was the major sticking point.

For the smaller of the two, he was very happy to have had 30 years with Rolex. But the low volume of new inventory made the refurb cost a 5-yr payback after tax based on total margin.

He happily now sells his own certified Rolex inventory at the same counters that Rolex said to rebuild. He has more inventory more happy customers more margin and can source any Rolex you want in a week's time.

Miss Rolex? Nah...

Locally, two ADs are building out per Rolex requirements.

So the OP's SA knows what she's told - but for her it makes sense.


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[NAUI1982]

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.


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I thought this was the end game when Rolex bought Bucherer! Makes total sense to me. Direct to consumer. Cut out the AD network, they’re the ones who are walking inventory out the back door. How is it we can’t buy a GMT-Master II PEPSI at retail, but Chrono24 has literally thousands of 2024 available right now. And further more, from direct personal experience, the Jewelry Store COMBO Watch Store is a broken model. I’m not spending $150k in jewelry to get on a list for a stainless steel Rolex. And I was 100% told that is what would be required by one of the most well known ADs in Southern California. I wrote a post about it earlier this year.

Yeah, I’m not torn up by this at all. But it’s also not enough to solve the problem either. The retail channel needs to be fixed, and a fair, transparent and equitable allocation to the consumer also needs to be implemented. It’s not cool that the idea of getting on some mythical list and wait to “GET THE CALL” is the standard of practice in this business. That list is maintained by an individual sales associate and has zero support from the OEM. We never know if or when that SA leaves, gets fired, changes ADs, whatever they do. It’s an insane model and it’s what I hate most about this brand. But if you’re an “Infuencer” you can walk into any store and walk out with your choice of Rolex. They magically appear!

Yea, I’m okay with this change 100%

Originally Posted by Zach69SS

This could be the Rolex build out that they are requiring of their ADs , $500,000 -$1,000,000 cost , some small ADs can’t make that type of investment? I know of an AD in the Caribbean that I was a customer of in the past that lost their Rolex AD status last year.
This is one way to lose some ADs, no build out, no more Rolex AD.

Also the purchase of Bucherer, which put Rolex in retail business with everything there, that put Rolex in drivers seat with many locations all over the world. It was a beautiful move in my opinion. Full control with no down side. How much better it will be for us we shall see.

WoS is not going anywhere they move allot of pieces and are one of Rolex’s biggest customers all over the world, unless they have some type of falling out. WoS has updated all their locations with the build out, at least all the ones I have seen.

This is very sad for the mom and pop ADs, that offer the personalized service and experience to their clients. I feel bad for the loss of these ADs and people who will lose their livelihood. But this is the way things go and Rolex is the king.

Just my $02

This! Yes. And at least with WoS, they’re all about watches, so it’s great that you can go to one location and look and luxury watches from lots of diff brands. But, they’re at risk too I suspect…

/Rant Off

[Krash]

Originally Posted by NAUI1982

I thought this was the end game when Rolex bought Bucherer! Makes total sense to me. Direct to consumer. Cut out the AD network, they’re the ones who are walking inventory out the back door. How is it we can’t buy a GMT-Master II PEPSI at retail, but Chrono24 has literally thousands of 2024 available right now. And further more, from direct personal experience, the Jewelry Store COMBO Watch Store is a broken model. I’m not spending $150k in jewelry to get on a list for a stainless steel Rolex. And I was 100% told that is what would be required by one of the most well known ADs in Southern California. I wrote a post about it earlier this year.


/Rant Off

What makes you think that getting rid of the AD model is going to make it easier for you to get watches?


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[NAUI1982]

Originally Posted by Krash

What makes you think that getting rid of the AD model is going to make it easier for you to get watches?


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Because the supply of watches going to the consumer will increase instead of going out the back door to the grey market first, and then sold to consumers at inflated prices, that’s why I think that.

If I may, what makes you think the model today works well?

[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

[Krash]

Originally Posted by NAUI1982

Because the supply of watches going to the consumer will increase instead of going out the back door to the grey market first, and then sold to consumers at inflated prices, that’s why I think that.

If I may, what makes you think the model today works well?

Let’s think things through.

How many ADs are there? How many boutiques will Rolex need to build and establish? How much will that cost? What is the timeline?


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[Krash]

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

Exactly. Facts and logic.


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[Dave O]

Originally Posted by NAUI1982

Because the supply of watches going to the consumer will increase instead of going out the back door to the grey market first, and then sold to consumers at inflated prices, that’s why I think that.

If I may, what makes you think the model today works well?

I hate flippers as much as anyone. But let's get real about the numbers. Let's say Chrono 24 sells 50,000 new Rolex's a year (which I don't think they do). That's only 4% of the total 1.2 million watches Rolex produces a year. The other 96% are most likely getting their watches at their AD. A lot of flipping going on? Yes, but in the overall scheme of things it's a relatively small number.

[garyk]

Originally Posted by L8r

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

In my city, Watches of Switzerland has built a Rolex only boutique store right next to their store that has all their other brands. I think they are protected for now?!

[BillA]

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.


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A tough love position. It is speculation that AD’s sell out the back door to greys. Perhaps some have, but some have not.

Now if you tell me you have no sympathy for the grey guys, I will agree with you. During Covid they were the ones jacking up prices to these crazy levels.

[KatGirl]

Originally Posted by Krash

Let’s think things through.

How many ADs are there? How many boutiques will Rolex need to build and establish? How much will that cost? What is the timeline?


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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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[NAUI1982]

Originally Posted by Krash

Let’s think things through.

How many ADs are there? How many boutiques will Rolex need to build and establish? How much will that cost? What is the timeline?


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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.