Please help a Dorklehead understand.

[Ranger67]

Originally Posted by Hollie_Rollie

Actually, I can imagine it. I think back to 2000-2016 years...

I wasn't in the TRF then, what occurred?

[Nixshah]

Originally Posted by Snake Plissken

I'll repost something I wrote in another thread. Fwiw I work in marketing for luxury brands.

This sucks and it's frustrating but it's by no means a unique phenomenon in the luxury world. Ferrari does the exact same thing with their hot models. Hermes does this with the Birkin bag. Of course in the watch world Patek and AP also do this for their SS sports models.

It's important to remember that for all of these companies, their biggest asset is their brand itself. And what they understand very well is that the most important thing for a luxury brand to have is exclusivity. This is especially true in the Instagram era, where people have a mass avenue to project their status and image which builds hype for the brands. Even non-luxury brands like Supreme and Yeezy are prime examples of how powerful this is.

A lot of people seem to think that withholding production to generate exclusivity is "bad for business", but I don't believe this is true. The effect the exclusivity has on elevating the brand as a whole undoubtedly leads to a much higher sales of lesser demanded models as people get pulled into the brand by the "halo" products. And it allows the brand to keep prices high.

I would argue that if you've attained the level of status as a brand that Rolex has this is ultimately something you have to do. Decreasing exclusivity will dilute the brand, and it is much, much more difficult to reverse the loss of a top brand's value than to simply maintain or increase it. When you're just another luxury watch brand, you have to spend a lot more on marketing and price your products much more competitively to stay in business. When you're Rolex, you can do almost no marketing, charge way more than your competitors, and people will still be selling out your stores for years. It's hard to imagine a brand like Omega or TAG Heuer ever being able to reach that level of status from where they are now.

So, yeah this sucks for many of us, but if Rolex know what's good for them, I don't think it's going to change in the foreseeable future.

The Omega and Tag comparison resonate for me. Readily available, and don’t carry the same cache as Rolex. Omega is restricting supply and trying to create a buzz with the Speedmaster 321, maybe taking a page out of Rolex’s book.

[Fleetlord]

Originally Posted by Nixshah

The Omega and Tag comparison resonate for me. Readily available, and don’t carry the same cache as Rolex. Omega is restricting supply and trying to create a buzz with the Speedmaster 321, maybe taking a page out of Rolex’s book.

Absolutely they are. They have too to get any traction with that product.

[Jocke]

Whatever we say to you my friend you will never understand. 😂😂😂

[Chiboy]

My feeling is that after living through the Quartz era, and knowing that watches are hot now due to social media fixation, they are reluctant to build new facilities that may be superfluous if the bloom comes off the rose for luxury watches. I think they are tapped out with current capacity.

And of course it's better to have a few too many buyers than a few too many for sale.

[MRPWRPATX21]

The biggest thing to remember about a luxury goods company like Rolex, especially one as longstanding as they are, is that you don't make decisions to juice profits for this year or next, or even over the medium term. Your brand is everything, and you have to protect it (and increase it's value) with everything you do. They've done an excellent job slowly building that brand from simply the most robust tool watches available into THE image of high-end watches, and one of the most well-known status symbols globally.

One of the ways they have done this (and will continue to do this) is by restricting production so that it increases steadily over time, but never such that it outpaces demand; in reality, if done right, you can increase production at a slow enough rate to actually grow demand exponentially, and then you really fall into the sweet spot. At a bare minimum you want to grow demand at or slightly above the level of growth you allow in supply, but in this perfect world you can grow supply at a rate that it actually juices the demand growth beyond the intrinsic growth of population/economies/etc.

If they were to start releasing the supply at greater levels, this could not only eat into the supply/demand ratio in terms of the numerator, but also have the same but opposite exponential effect on demand that sees the denominator eroded significantly. Every little movement in the ratio has unintended consequences, as the easier it is to get a watch, the lower the value it holds longer term, which further reinforces a drop in demand, which further weighs on long-term value, etc. Think about what's happened (and how quickly) with watches like the Hulk, Daytona, GMT, etc.; if the opposite were happening, panic would set in, and all hell would break loose. Even watches that have become relatively popular today vs. historical periods (Explorer II, etc.), would fall again. If you told me the 5-digit Explorer II I bought for $6k+ a few months back would be trading at $3,500 again, I'm much less likely to go buy another Rolex from an AD. If you lose control of the equation, you end up producing enough watches tomorrow to meet today's demand, only tomorrow's demand is halved, and now you can't even sell all the watches you produce.

If you think about things that way, Rolex is perfectly fine doing what they're doing. If you are a luxury goods producer who is having to liquidate inventory (or even hang onto it for a while), you are in serious danger of running it all into the ground. A discount producer that doesn't rely on their reputation can handle a problem like this, but a "luxury" goods producer can't. Look at what happened with companies like Coach that fell into the cycle of having to continually produce more and more goods to try to juice sales, only to get hooked on the drug of having to wholesale and discount it through outlet channels, spiraling nearly to the point of collapse (some would say they got there for the most part).

All of this is made even easier because Rolex is not publicly traded but privately held, AND held by a trust/non-profit entity that isn't beholden to owners the same way other businesses are.

[MRPWRPATX21]

Originally Posted by Nixshah

The Omega and Tag comparison resonate for me. Readily available, and don’t carry the same cache as Rolex. Omega is restricting supply and trying to create a buzz with the Speedmaster 321, maybe taking a page out of Rolex’s book.

Tag and Omega are such great examples, specifically because a watch like Omega can be quite comparable to Rolex in terms of quality (at least ballpark neighborhood), yet retails for half or less of similar Rolex references.

[TheVTCGuy]

Originally Posted by Jocke

Whatever we say to you my friend you will never understand. 😂😂😂

Reported!!!!!

[jakemiller69]

During COVID (april-may), I was actually able to find my exact DD and PM Gold Submariner within 1 day from my AD. Sign of the times I guess, because there is nothing besides DateJust and Everose YM on Oysterflex bands now and they have been sitting there since February.

[Jocke]

Originally Posted by TheVTCGuy

Reported!!!!!

Thanks.

[Fleetlord]

I have feeling there will be more AD locations culled.

There is too much imbalance in the performance of the stores. Some sell everything and have no problem with moving PM references whatsoever, while others are struggling greatly with it.

The chain stores seem to be better at managing the new normal..so they shall rule the landscape.