7 Reasons and Doubts on Rolex cutting SS Professional/Sport watch production

[Easy E]

[QUOTE=Fleetlord;8534922]

Originally Posted by Easy E

Are you suggesting that Rolex wants to drive the grey market prices higher????[/QUOTE

It looks trashy when brand new Submariners with stickers were all over the Internet for almost 20% off retail.

Now those watches are trading at or over retail on the grey side. Much better look.

Rolex has always seen the grey market as a another distribution channel...just not officially of course. Now it's just a lot more controlled than what it was in terms of pricing.

I am of the opinion that it looks more trashy for a brand when you can't walk into one of their authorized dealers and purchase their product, at any price.

[Gary.]

I'm not convinced that Rolex has cut- or is cutting -production.

These stories seem to be coming only from "a dealer I know" who can't supply the watch someone wants.

They may be retargeting supply but I think that is only to address the real problem which is the enormous Grey Market which is parasitising their business. I have a feeling that, at some point, a lot of the dealers that are currently supplying large quantities of their inventories to the Greys will find themselves in a drastically different business relationship with Rolex.

It's frustrating in the short term but, since the goal is to supply watches straight to people who want watches, genuine watch collectors might want to consider applauding their efforts.

[Fleetlord]

[QUOTE=Easy E;8535084]

Originally Posted by Fleetlord

I am of the opinion that it looks more trashy for a brand when you can't walk into one of their authorized dealers and purchase their product, at any price.

Less = More in Luxury goods.

Like it or not, Rolex is a Luxury Brand and this is how things are done.

Examples of this marketing are abundant in the luxury segment, so it really shouldn't be THIS alarming....

[c41006]

[QUOTE=Easy E;8535084]

Originally Posted by Fleetlord

I am of the opinion that it looks more trashy for a brand when you can't walk into one of their authorized dealers and purchase their product, at any price.

I disagree. You can’t deny that it’s better for the brand if all “new” watches are going for MSRP or more whether it be from an AD or grey. Sure the scarcity is a major inconvenience for us here on TRF but to the average Rolex buyer it makes them seem even more special.

[Fleetlord]

[QUOTE=c41006;8535214]

Originally Posted by Easy E

I disagree. You can’t deny that it’s better for the brand if all “new” watches are going for MSRP or more whether it be from an AD or grey. Sure the scarcity is a major inconvenience for us here on TRF but to the average Rolex buyer it makes them seem even more special.

Hey...that's not my quote. How'd that happen?

For the record...I totally agree with you...agreeing with me by disagreeing with the quote mistakenly credited to me.

[Fleetlord]

Ok. These Quotes are all discombulated.

I think it is better to have less product in the showcase than more. 100% of the time.

It is better for Grey market pricing to be higher than low and trashy.

I think Rolex is making the right moves for the brand.

[crazymcmichael]

Maybe it is interessing to add that they stop discounted sells in the airport inside the EU from july. This has been confirmed by the airport AD's. I think there is something happening, my guess is that they try to be a more exclusive brand...

[Token74]

Rolex only has the capacity to make a certain number of watches.

Rolex will not want to invest in increasing production capacity in terms of infrastructure or permanent headcount introduction at a time of acknowledged uncertainty with the smart watch emergence.

Rolex will not want to lose its premium status by making too many watches, even if the future was more certain.

Massive growth markets such as China are likely creating a high demand for PM watches where margins are higher and brand reputation.

Just my theory. No intelligence.


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[Easy E]

Rolex Submariner Date 116610LN $8550 (from Rolex web site)
Tag Heuer Aquaracer Cal5 WAY2013.BA0927 (from Tagheuer.com) $2300
Seiko SXK007K2 Automatic Dive Watch $199.99 (Jomashop)

The "luxury" component of the the Rolex is built into the price. There are only so many people that can and will pay that kind of money for a timepiece. It is already hard to get at $8550. If you have achieved the means to acquire such an item have at it. More people will buy a $200 watch than a $2300 and more will buy a $2300 than an $8550. That is how it works with a luxury item (IMO).

[c41006]

Originally Posted by Fleetlord

Ok. These Quotes are all discombulated.

I think it is better to have less product in the showcase than more. 100% of the time.

It is better for Grey market pricing to be higher than low and trashy.

I think Rolex is making the right moves for the brand.

So you are convinced that this is absolutely an intentional move by Rolex and not just some fluke? I’m not totally convinced that the current environment is the new normal. Either way I agree with you that it is a positive for the brand overall at least for now.

[AK797]

Originally Posted by Roger Lococco

Gut feel. I think that Rolex brought in a management consulting firm during the 2015 downturn and has changed their strategy. Part of the recommendations being based on a view of current and future product mix demand in China. Over time, cede the stainless steel tool watch market to Tudor. In parallel, move more "upmarket" and fill in a void that is the combination of expensive + durable + PM watches at a price point lower than PP, VC, ALS, AP - at the same time leveraging the Rolex scale and mass-production cost advantages, along with the Rolex brand and sales distribution network.

No this is giving the "geniuses of Rolex" way too much credit. They have been victims not creators of this demand surge. Two points of fact on this - Brexit in UK led to a sudden surge of demand while Rolex supply stayed the same as they were caught out by the changing market. Second, rumours of the LVc being discoed in Aug led to a huge rise in demand and resale prices and again Rolex did nothing different and supply was the same. In both cases they manipulated nothing.

However I can see Rolex in future on seeing how demanded their products are and how underpriced, start to move the brand more upscale but that was not the thought before all this unravelled before them. For now reducing or rather controlling supply allocation to stop flippers and the commoditization of their watches, is their short term aim.

[mg18]

I was just at my AD in Toronto and they said they aren't taking orders on subc date, only on no date and GMT (black). The wait times are about 2-4 months for each and they have 1 gmt and 1 sub in store as samples for fitting, which they claim they will not sell.

For the GMT and sub no date, it appears as though they are just meeting demand for people who don't mind paying full price, as they can guarantee the watch once you place the order. I'm not sure what to say about the sub date, blnr and hulk though..

[Mad Dog]

Originally Posted by the dark knight

Just my theory/opinion. But I think the explanation is rather simple. I believe the Swiss watch industry in general started seeing a slight comeback in 2017, especially towards the latter parts. Demand in mainland China seems to be surging again. I believe I read something that said the corruption crackdowns are easing, but still officials don't want to be seen in anything too ostentatious, so maybe instead of buying a PP they buy a SS Rolex.

2017 also saw an insane runup in most assets. Real estate, stock market, crypto, whatever. Towards the end of the year consumers worldwide were feeling wealthier and more optimistic. A great time to purchase a nice watch, particularly a Rolex.

So I think it's a massive and sudden surge in DEMAND that caught Rolex a bit off guard. And I doubt a company like Rolex can just all of a sudden start ramping up production at the snap of a finger. Nor do I think they'd want to, for fear of glutting the market if/when a recession occurs. So I personally don't think there's any kind of strategy afoot (yet). I think simply, again, there was a massive and sudden surge of demand that caught Rolex off guard (especially after 2015-2016 downturn in the industry).

This!!!

[Fleetlord]

Originally Posted by c41006

So you are convinced that this is absolutely an intentional move by Rolex and not just some fluke? I’m not totally convinced that the current environment is the new normal. Either way I agree with you that it is a positive for the brand overall at least for now.

It could be both...started out as a capacity issue which garnered positive results in a marketing sense...so they just kept it going, or they had this action in mind all along.

We may
never know the true origin.

[Rollei]

Originally Posted by Ticknaway

Eventually a huge swath of Rolex buyers will be at the same point. There are so many beautiful watches out there!

I agree some Rolex buyers may move on to another brands because there are so many beautiful watches with much better finishing and case design out there.

BUT AT WHAT COST?

Never mind complications watches, let's focus the basic three hands model from the top 7 brands; such as, Patek, VC, FP Journe, Moritz Grossmann, Lang and Heyne, A Lange & Sohne and Laurent Ferrier.

All of the above cost at least three times or more than a basic Rolex Oyster Perpetual watch. Well, some may argue that the top brands are made out of precious metals but even for the one who offered in stainless steel will likely to cost three times more. Most of them only have mediocre 30m waterproof case, but Rolex oyster case are all 100m waterproof with screw down crown.

I could go on if you also factoring the service cost and how long it takes to overhaul those "beautiful" watches. Good Luck!

[Charles Ford]

It's simple, Rolex is cutting the supply to increase the demand, when the demand is increased you can raise the price, still make a tidy profit doing and not have the costs of producing more watches.

Last time I checked the prices on the gray market were through the roof, Ceramic Sub at Jomashop $10K an Explorer 39mm $7K.

The Explorer was $5,600 less then 18 months ago.

I paid $1,800 for my brand new 16160 back in 1996, price of the Sub has went up 6 fold since then, unfortunately my income hasn't kept up with that fact! :(

[philweezer]

Originally Posted by Roger Lococco

Gut feel. I think that Rolex brought in a management consulting firm during the 2015 downturn and has changed their strategy. Part of the recommendations being based on a view of current and future product mix demand in China. Over time, cede the stainless steel tool watch market to Tudor. In parallel, move more "upmarket" and fill in a void that is the combination of expensive + durable + PM watches at a price point lower than PP, VC, ALS, AP - at the same time leveraging the Rolex scale and mass-production cost advantages, along with the Rolex brand and sales distribution network.

Make sense, but I’m not sure how people would like to buy a Tudor Submariner v the Rolex name.

[Bigblu10]

Originally Posted by AK797

No this is giving the "geniuses of Rolex" way too much credit. They have been victims not creators of this demand surge. Two points of fact on this - Brexit in UK led to a sudden surge of demand while Rolex supply stayed the same as they were caught out by the changing market. Second, rumours of the LVc being discoed in Aug led to a huge rise in demand and resale prices and again Rolex did nothing different and supply was the same. In both cases they manipulated nothing.

However I can see Rolex in future on seeing how demanded their products are and how underpriced, start to move the brand more upscale but that was not the thought before all this unravelled before them. For now reducing or rather controlling supply allocation to stop flippers and the commoditization of their watches, is their short term aim.

They can't and won't stop "flippers". Peruse the classifieds here and look at all the BNIB Hulks, BLNR's, SS SkyD's currently for sale by new pledge members with relatively low post counts. I look at them everyday. They are buying brand new watches and immediately posting them for sale here. These are not the "trusted sellers" who have been here for a decade or so. There is no possible way Rolex can stop this. Once you buy the watch, it is yours to do as you please. The situation here in USA is much different than UK.

[jonnyz1245]

Originally Posted by lecorsaire

The fact is that their sports models are highly desirable, especially the PM versions. .

Seriously? Every AD I have ever talked to said the Smurf and BLRO sit in their cases for a year or more before they are able to sell just the one. I know an AD that had a wg pepsi in his case for 3 years and its still sitting in his window at over 3 years old. White gold daytonas are also historically very slow movers. YG subs too.

Every time I am in NYC or Boston, one can have their pick of pm sport models. In Vegas this past weekend, they had a wg smurf, a wg pepsi, a TT Sub, and a couple gold Daytonas and that was IT for professional models in the case. No SS at all.

[Bostonbert]

Originally Posted by Mad Dog

This!!!

Yeah, I agree. The production managers at Rolex were caught off guard by the stock market surge. My IWC dealer was able to deliver a limited supply piece in 6 weeks, but my Rolex AD can’t predict when he’ll satisfy my request (it will be my 4th piece from that Rolex AD).

They have also been missing the US trend towards casual dress for several years. They should shift production towards more sport steel models for that reason alone or risk loosing market share to other brands.

Rolex should move to consignment sales (i e, find out who is the buyer at the AD is, and get documented proof that client still has the Rolex watches they purchased in prior years). That would reveal who is feeding the gray market dealers.