Market price more than retail is it sustainable?

[DTap]

Originally Posted by Mystro

I don’t know and neither does anybody else. To imply or even challenge Rolex does not have full masterful control of what they’re doing is shortsighted. Rolex is the standard of the industry for its long term sustainability and control of their product.

Let me explain it. Rolex is taking these actions to reduce speculation and flipping. They want a stable market, not a bubble.

[2nastie]

Originally Posted by DTap

Ok let’s say Rolex is driving the bus as you say. Why are the keeping msrp down and punishing ADs for enabling flipping, forcing sticker removal, and driving ADs to only sell to known local customers? To drive the price up?

MSRP across all product lines has to be kept relative. As a brand you can’t adjust one too significantly in order maintain the value of another.

Rolex is viewed upon as all sports models right now but they actually sell more of Datejust, Date-Dates, etc as a whole. Any great marketing company and brand doesn’t just jack up one product for short term benefits. They actually benefit more with the net gain in sales with people buying their other models as well as their competition to be frank.

Other models doing good is great for Rex. Entire watch market doing well is even better. The company strongly believes they have a superior product and many who leave do look back into a Rolex or those who haven’t lusts for one.

[Mystro]

Originally Posted by DTap

Let me explain it. Rolex is taking these actions to reduce speculation and flipping. They want a stable market, not a bubble.

Rolex recently needs to “look like” they are concerned about controlling the secondary market. As long as the products desirability is assured, they don’t care. Rolex is controlling both sides of the chess board. They are going to win regardless.

[DTap]

Also guys, I agree Rolex knows what they are doing, but some of these comments are implying an almost mystical power of controlling the market.

Let’s be serious. It’s an organization of people. People are not perfect and do make mistakes occasionally, or even every day.

[DTap]

Originally Posted by Mystro

Rolex recently needs to “look like” they are concerned about controlling the secondary market. As long as the products desirability is assured, they don’t care. Rolex is controlling both sides of the chess board. They are going to win regardless.

I’m gonna go ahead and say this is is grassy knoll level conspiracist theory. Maybe Rolex came up with the fake moon landing to discredit Omega...

[zian]

Originally Posted by DTap

Let me explain it. Rolex is taking these actions to reduce speculation and flipping. They want a stable market, not a bubble.

Agree, rolex don't want a buble that fireback on the brand, that's why they keep limited supply to keep it desirable, but I feel they are overdoing it now with waiting list of over 2 years, this drive prices on grey market to be much higher for high demand SS models , and if rolex don't upgrade the MSRP, then the winner will be grey dealers regardless of small actions to control flippers, in my humble opion if rolex still want to limit supply with this high demand, then they either need to align with market price or let dealers enjoy the profits

[locutus49]

You are bringing reality to imagination-propelled speculation. That's unfair.

Originally Posted by DTap

Also guys, I agree Rolex knows what they are doing, but some of these comments are implying an almost mystical power of controlling the market.

Let’s be serious. It’s an organization of people. People are not perfect and do make mistakes occasionally, or even every day.

[Tavli3]

Originally Posted by Mystro

Rolex recently needs to “look like” they are concerned about controlling the secondary market. As long as the products desirability is assured, they don’t care. Rolex is controlling both sides of the chess board. They are going to win regardless.

Rolex does not control both sides of the chess board. The fact is they’ve lost control of the gray market. All one has to do is look on C24 to see over 600 ceramic Daytona’s for sale and over 400 BLNRs and climbing.

If grays panic and start dropping prices because of fear of getting stuck with high price inventory this will decimate resell values, tarnish the Rolex value proposition and Rolex will be powerless to stop it.

In the past when there was an inventory bubble Cartier and such would buy back dealer stock. But today the inventory bubble is in the Grays stock not the dealers. Rolex is not going to buy up Gray inventory.

What Rolex needs to do as crazy as it sounds is to cut production to until the Gray inventory bubble deflates. Increasing production at this time would be disastrous.

I could be wrong but that’s the way I see it


Sent from my iPhone using Tapatalk

[Rado63]

Interesting topic. Seems everyone has an opinion, so I'll put in mine.

I am Looking at Patek 5711 / 1A at an MSRP $30620. A steel, time, date only watch. Looking for this watch on C24 I see 280 results with asking price ranging from $56K - $92K.

If Rolex MSRP was too low, how do we explain the 5711? A watch that has MSRP twice that of a Daytona, and secondary prices twice that of retail.

Rolex will continue to close AD's, reduce supply, sell to VIP clients, and the secondary market will continue to sell at a price greater than MSRP because I can't walk into a Patek dealer with my $30K and buy a 5711 1A today, and I can't walk into a Rolex dealer and buy a Daytona today because they claim they don't have one to sell to me.

[djgallo]

Originally Posted by DTap

Replace “Rolex” with “bitcoin” or “upper deck” in the above and google it.

Apples and oranges.....

[daOnlyBG]

How many people are still waiting for that Nautilus bubble to pop?

[djgallo]

Originally Posted by Tavli3

What Rolex needs to do as crazy as it sounds is to cut production to until the Gray inventory bubble deflates. Increasing production at this time would be disastrous.

I could be wrong but that’s the way I see it

If Rolex cuts production....it would make the current situation worse.

Besides...why should Rolex cut anything....they sell everything they make.

[daOnlyBG]

Originally Posted by Rado63

I am Looking at Patek 5711 / 1A at an MSRP $30620. A steel, time, date only watch. Looking for this watch on C24 I see 280 results with asking price ranging from $56K - $92K.

If Rolex MSRP was too low, how do we explain the 5711? A watch that has MSRP twice that of a Daytona, and secondary prices twice that of retail.

It's a good point you bring up.

People will be tempted to say "Well, the 5711 is a completely handmade watch" but before they do, let me stop them by saying that the aforementioned fact is irrelevant.

The fact that the 5711 is haute horology explains why its MSRP is priced higher, but it doesn't explain why it sells on the street at a high multiple over its MSRP. The fact that 5711s get that sort of premium and have continued to do so after decades should make people reconsider their theory that "whatever goes up, must come down." Maybe the GMT/Daytona prices will come back down. Maybe they won't. It's easy to argue either position, but it's difficult to completely dismiss the possibility that said Rolex models won't be priced high for years to come.

[Mystro]

Originally Posted by DTap

I’m gonna go ahead and say this is is grassy knoll level conspiracist theory. Maybe Rolex came up with the fake moon landing to discredit Omega...

This is very easy to understand. Rolex gets paid as soon as the watch is sold. Who and how that happens doesn’t matter.

[Tavli3]

Originally Posted by djgallo

If Rolex cuts production....it would make the current situation worse.

Besides...why should Rolex cut anything....they sell everything they make.

Thy don't need to cut production but if they want to regain control of their market they will. Also if they cut production and deflate the gray inventory they must do a better job policing their ADs selling to Grays and serial flippers otherwise as you say it would just make the situation worse once they ramp production back up. it has to be a two pronged approach.

[Rolly.BT]

Panerai stuffed up and that's why they tanked. Frank Muller imho are just plain expensive for what it's worth.
Rolex know what they do best and they do it well.
If not then why are you here?

[locutus49]

Don't know about Rolex plans but Thierry Stern said he will not increase production of the Nautilus and Aquanaut as he saw Patek business as primarily dress watch and complications. So with supply limited (for certain, not rampant speculation that surrounds Rolex), grey prices may drop but there will be a bottom especially if demand continues to increase.

Originally Posted by daOnlyBG

It's a good point you bring up.

People will be tempted to say "Well, the 5711 is a completely handmade watch" but before they do, let me stop them by saying that the aforementioned fact is irrelevant.

The fact that the 5711 is haute horology explains why its MSRP is priced higher, but it doesn't explain why it sells on the street at a high multiple over its MSRP. The fact that 5711s get that sort of premium and have continued to do so after decades should make people reconsider their theory that "whatever goes up, must come down." Maybe the GMT/Daytona prices will come back down. Maybe they won't. It's easy to argue either position, but it's difficult to completely dismiss the possibility that said Rolex models won't be priced high for years to come.

[djgallo]

Originally Posted by Tavli3

Thy don't need to cut production but if they want to regain control of their market they will. Also if they cut production and deflate the gray inventory they must do a better job policing their ADs selling to Grays and serial flippers otherwise as you say it would just make the situation worse once they ramp production back up. it has to be a two pronged approach.

If Rolex could police the AD’s and flippers....that’s a big IF. Not even sure they could if they wanted to...

Rolex is in business to 1. make watches, and 2. To sell them....period.

They don’t need to change anything.

[DTap]

best thing Rolex can do is just lengthen lifecycles on models and slow down new releases. Letting the market get bored will be the softest landing.

Upping production or reducing it could backfire.

[systematic.entropy]

Originally Posted by beshannon

Yes because the MSRP is too low

Yaaaaassss. So glad to be in a room where this is finally understood.

"If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage."
-Milton Friedman

See the relevancy?

[Wmrcer]

Originally Posted by DTap

Correction already happening. Grey inventories swelling, and the casual buyer will switch brands or loose interest.


“MSRP too low” is what people who paid too much tell themselves to feel better.

Agreed, and classifieds show it.

[Onikage]

This is the internet age. As long as the instapricks want these must have baubles it will continue. Instapricks who wouldn't have had any interest in watches and probably are unsure how to set one.

[DTap]

Originally Posted by Onikage

This is the internet age. As long as the instapricks want these must have baubles it will continue. Instapricks who wouldn't have had any interest in watches and probably are unsure how to set one.

Instaprick.... I learned a new word today!

[daOnlyBG]

Originally Posted by locutus49

Don't know about Rolex plans but Thierry Stern said he will not increase production of the Nautilus and Aquanaut as he saw Patek business as primarily dress watch and complications. So with supply limited (for certain, not rampant speculation that surrounds Rolex), grey prices may drop but there will be a bottom especially if demand continues to increase.

And I suspect Rolex might have similar plans.

[Smarties]

Rolex’s msrp too low???

You can say that to Panerai when they trade with hefty premium in secondary market.

[jpsmoove]

Originally Posted by Tavli3

Rolex does not control both sides of the chess board. The fact is they’ve lost control of the gray market. All one has to do is look on C24 to see over 600 ceramic Daytona’s for sale and over 400 BLNRs and climbing.

If grays panic and start dropping prices because of fear of getting stuck with high price inventory this will decimate resell values, tarnish the Rolex value proposition and Rolex will be powerless to stop it.

In the past when there was an inventory bubble Cartier and such would buy back dealer stock. But today the inventory bubble is in the Grays stock not the dealers. Rolex is not going to buy up Gray inventory.

What Rolex needs to do as crazy as it sounds is to cut production to until the Gray inventory bubble deflates. Increasing production at this time would be disastrous.

I could be wrong but that’s the way I see it


Sent from my iPhone using Tapatalk

That’s a nice analysis but reduced supply won’t stop a bubble, only a black swan event.

[No SUBctitute]

Originally Posted by old expat beast

i guess when a luxury watch brand can't supply one single ad on the planet with anything even approaching a full range of stock to display, something's got to give, eventually.

+1!

[akilis]

Originally Posted by Simon.DGV

Market price for Frank Muller and Panerai used to be greater than AD retail price in 2000-2006 and that was not sustainable after 2012.

I mean what the brand benefit from the hype in secondary market?
Not much, the pre owned dealers made the whole lot.



What do you think?

the biggest reason is somewhere on earth the middle class is rising and they want to buy Rolex

[rominvicta]

Originally Posted by Simon.DGV

Market price for Frank Muller and Panerai used to be greater than AD retail price in 2000-2006 and that was not sustainable after 2012.

I mean what the brand benefit from the hype in secondary market?
Not much, the pre owned dealers made the whole lot.



What do you think?

Come on, and where upon do you base that experience of yours concerning time span between 2000 and 2006? Even at that time annual LE of Panerai were available at between 20 to 30% off. I got myself a piece in 2007. FM in 2006 and 2007 was available at 30% off. Fortunately I got to my senses and did not commit myself doing that mistake of obtaining a FM!

[Tavli3]

Originally Posted by djgallo

If Rolex could police the AD’s and flippers....that’s a big IF. Not even sure they could if they wanted to...

Rolex is in business to 1. make watches, and 2. To sell them....period.

They don’t need to change anything.

In order for them to keep doing #2 they need #3
Which is keeping their main customers happy which are not us enthusiasts. Rolex's bread and butter customers want exclusivity and value retention as FleetLord wisely said elsewhere on the Forum. Lose the exclusivity and value retention part of the brand and you risk losing your main customer base.

Cut production, deflate the number of watches in gray hands and then ramp back up keeping a tight lid on watches going out the back door. Not sure how they do it, maybe close down a really high profile AD that's selling to the grays to send a message. All I know is there is a huge inventory of watches in the hands of the Grays. They are in control of the market at the moment not Rolex. As to what Rolex is actually thinking or doing or is going to do or not do, no one knows except for the very few Rolex execs that are allowed into the inner Sanctum at HQ where these decisions are made and never see the light of day as far as being leaked to the public.