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

[WTB007]

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.

[Grissom]

I had no idea Swatch owned Omega. I need to get out more! (Funny how the Plastic watch folks end up with, well.....)

Interesting article and perspective...thanks for sharing! Difficult to grab additional market share.....not so difficult to lose it, however!

Know your market! (and hopefully, Rolex does......)

[Submarino]

WTB007, great post! In complete agreement with you.

If the Rolex' marketing team really were to understand how the ADs treat their brand they would probably agree to realocate part of their marketing dollars to develop a solid sales incentive foundation and an AD clean up. They need to reinvent themselves.

[DWdrummer]

My friends in the UK and Japan tell me that Omega is very highly regarded there and very popular. I have always liked Omega myself. Many Rolex fans look down their nose at Omega. In the old days Omega was the watch many bought when they "made it" so to speak. Rolex was viewed as a very tough tool watch by many and while they were never cheap they did not enjoy the reputation for extravagence they do today. The prestige and inflated prices came much later. Both Rolex and Omega are fine watches.

[gazp]

Originally Posted by WTB007

Interesting article.

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



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



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.

What gives you the right to demand the best price when you have not even given the AD any commitment to buy the watch ,the price tag will be on the watch !

If you are serious then you should have decided on the watch eg the tt sub THEN haggled for the best price and driven a hard bargain but with a commitment to buy or did you just want his best price so that you could go to another AD and play his price of against their price and then come on here and call both AD s for not giving you the best price .

If you prefer the omega then buy the omega but if you prefer the Rolex then buy the Rolex simple as that !

I am sure if you buy the omega the Mr Rolex will not lose any sleep ,

By the way you get what you pay for and omega are good watches but im afraid that Rolex are in a different league ,but you do pay a premium for that league though.

The choice is yours so make it and stop whinging about things you have a nice dilema!

By the way i sell BMW cars and it is not a game we play because the managers do have to authorise any discounts etc and we do have to ask their permission ,that is why they are managers !!!!

By the way wear whatever you buy in good health

[psv]

I don't get this post. If you don't like the AD visit another one. If you don't like the brand and/or the product - go elsewhere.

[Danand]

Forgive me for asking but you didn't know sterling silver will tarnish? This is not a fault of the store that you aren't polishing it. That is like taking a car back to the dealer because it's dirty! I agree that customer service is key when buying luxury goods, but you can't find fault with a store, dealer, etc for something like that.
Also I would have to say there are a significant number of Omega dealers that will try to claim that they don't discount as well ( although it is often the same store that claims full list for rolex).
And when it comes to design it is purely an individual thing. I have loomed at the new constellations for my wife but have to say I don't like them. Yes they are modern, but I just am not a fan of the eccentric swirl face design. ( although I do like the men's aquaterra).
There have been some reported reliability issues with the coaxial escapement as far as I am aware, so you have to look at more than just pricing, discount, etc.
If you prefer omega that is your choice. To each their own.
Also basic economics will suggest that in a poor economic environment the more expensive watch will see demand fall faster so I cant say it is too surprising that rolex would lose market share to omega over the last couple of years.

[Tek]

Sellers will alway try to get the most they can and buyers will try to pay as little as possible. That's the name of the game isn't it? Omega gives big discount Rolex doesn't. That's the way it's always been.

[WTB007]

Originally Posted by Danand

Also basic economics will suggest that in a poor economic environment the more expensive watch will see demand fall faster so I cant say it is too surprising that rolex would lose market share to omega over the last couple of years.

The trend during the recession is to buy luxury goods. The higher end is selling. It is the middle that is not selling.

http://www.usatoday.com/money/econom...mer27_ST_N.htm

Yet more than one-third of the 350 spending categories tracked by the government remain in decline, as if the recession that technically ended in June 2009 was still underway. Spending on new cars has fallen another 8.2% this year, on top of disastrous drops in 2008 and 2009. Consumers are spending less on prescription drugs, life insurance and a wide range of everyday essentials while spending more on watches, wine and toys.

http://www.huffingtonpost.com/2010/1..._n_765924.html

Sales of designer clothes, fine leather goods, jewelry, watches and other indulgences around the globe is forecast to surge 10 percent to euro168 billion ($236.7 billion) in 2010

http://www.theaustralian.com.au/busi...-1225960649661

In the clearest sign yet that the very wealthy are spending again, Tiffany & Company reported third-quarter results that ripped through analysts' expectations.

Profits at the New York-based luxury jeweller rose 27 per cent to $US55.1 million ($56.1), up from $US43.3m a year earlier, while revenue rose to $US681.7m.

...

Last week Saks, owner of the luxury department store Saks Fifth Avenue, reported a sharply higher third-quarter profit of $US36.3m, up from $US6.3m, a year earlier.

Its rival Nordstrom reported that its profit had jumped by 43 per cent in the latest quarter, as revenue and margins increased.

http://abcnews.go.com/Business/Mello...1905823&page=2

Luxury Sales Expected to Hit Record Levels in 2011

...

The global market for luxury goods is expected to return to pre-crisis levels in 2011 on the back of a 10 percent growth this year

Rolex is doing something wrong. All other luxury brands are growing sales.

[zhiunit]

if ur rolex is rusted, its most likely covered under its 2 year warranty and WILL be rebuffed too....... -__-

The rolex vs omega decision is your personal preference in all honesty. Trends don't matter because a watch is something YOU wear everyday, and if you are wearing a watch to show off, then get a Jacob and Co watch with its 1000000 pieces of diamonds and unnecessary bling bling.

No AD is required to give you a discount, keep in mind they are trying to make a living too and be thoughtful of the fact that they too have families to feed. =D
just my two cents

[rxonmymind]

Hmmm. Rolex forever here baby!

But yeah, Omega make a good movement too. Can't go wrong with either. I'll never go with Omega, but good luck!

[Rogue884]

I read the article, and thought wow, the author just doesn't get it. The attitude the author exhibits, is very nouveau riche. It may be pretensious, but the old addage that with wealth does not come class, still hold very true today. Now obviously a Rolex doesn't equate to class, but the person with class will not look to get a deep discount on a luxory item right out of the gate, they know the value of what they are buying, and understand the relationships that have to be developed, as well as the expected customer service that comes with the purchase. Some peolpe call it a game, but usually those are the folks that really can't afford to pay the asking price in the first place and are offended that the salesperson sniffed them out, and high-end sales people generally have a good nose for these folks. Some people will be offended by this, if you are; go and try to test drive a Ferrari and see what happens.

To believe market share is being lost would make the assumption that Rolex perceives Omega as competition. Unfortunately what is lost on the author, as with many people, Rolex is a brand built on heritage, not the newest gimmick, fashion trend, or celebrity spokesman. Those things pass in short time, and those who would settle for an Omega because they couldn't get a good discount on a Rolex probably aren't the demographic Rolex is markleting towards anyway.

That being said, I like Omega, I like Breitling, I like JLC and BP, but I understand the value in what I am buying, and I am not settling because one is more affordable than the next. I am buying what I want from who I want. My jeweler has been mine for over twenty years and 6 Rolex's. His sales people know who I am when I come in, and whether I am buying a couple hundred dollars worth or ten thousand dollars worth they treat me very well. The average tire kicker who doesn't have that relationship would see me being catered to and just not get it.

[457689]

A money clip? seriously?

Let me guess, it was in the "$" shape, right?

[2005rivers]

So go buy the Omega, I'm not sure the point in beating a dead horse the way you do.

[Danand]

In the overall market for watches you could argue that omega and rolex are the middle( excluding high end gold/ platinum/ diamond encrusted). But the ss models from airking to say sub c, all in the 5-8k are purchased by many fairly regular people that save up for them. For instance I know of more than a few firemen that own a rolex and they are not high end on the income scale. So if you assume that these are the middle then my original statement about basic economics is to compare say a 7k subc to a 4k planet ocean. They are fairly similar at least to non wis types, so there shield be a higher demand for the PO. As the economy is poor this demand should drop faster for the more expensive model and thus the market share will go down. For sure there will be a difference if you look at quarter million dollar tourbillion watches. That is a different market entirely and therefore different demand curves.
Based on your apparent love of nordstroms and tiffanys I am surprised you haven't just gone out and bought the rolex at an AD that will fawn all over you-they are out there. And if you spend enough they will also give you a "free" polishing cloth!

[Grissom]

I don't see discounting (although this always seems to rear it's ugly head) having anything to do with the article or it's conclusions. I don't think Rolex needs "us" more (or less) than we need "them". They manufacture a product that many desire, and if at times, fashion trends change, then fashion trends change. Rolex seems to have a varied enough product line so as to address most folks needs and desires, and a long enough history of continued marketing successes. I think the article highlights how the big players continuously jockey for position/market share.....gaining one year, losing the next, and so forth, and how the recession has affected the major (and minor) Swiss Watch Industry players. And finally, the article seemed to be focused on the Asian market, noting that China and Hong Kong was responsible for some 20% of all Swiss Watch Sales. Certainly an interesting look into the Swiss Watch Industry, but not necessarily indicative of any failing on Rolex's part (as I read it), nor an indictment against non-discounting AD's, nor a foreboding sense of Rolex's imminent demise.

[panxiaoyan]

well , that is just other people opinion only , there was once i think the way other people think bout rolex been not modern , but when i started with breitling and when i got my first rolex , i think rolex is one of the watch that really does the job even the value for it wont drop too much compare to other brand like omega , breitling , and etc. doesnt really matter what brand u wear , at the end of it is what u like or dislike . and wear it in good health.cheers

[2005rivers]

Not to mention Rolex is #6 in top luxury brands, just fyi...Omega is not even on there...

[Danand]

By the way my above posted economics is high school level so I don't think it should be tough to understand.

[StarSovereign]

The very fact that Omega is such a "trendy" watch makes me even more loyal to Rolex...

[Badandy]

Originally Posted by Rogue884

It may be pretensious, but the old addage that with wealth does not come class, still hold very true today.

It does. Shall we examine the rest of your post then?

Now obviously a Rolex doesn't equate to class, but the person with class will not look to get a deep discount on a luxory item right out of the gate, they know the value of what they are buying, and understand the relationships that have to be developed, as well as the expected customer service that comes with the purchase.

What? Class has nothing to do with trying to get a discount on a luxury item, and the fact that you're equating possessing class with some element of fiscal irresponsibility leads me to believe that the epitome of class in your mind is someone who is somehow above caring about money.

Some peolpe call it a game, but usually those are the folks that really can't afford to pay the asking price in the first place and are offended that the salesperson sniffed them out, and high-end sales people generally have a good nose for these folks.

You have some lessons to learn and some preconceptions that need to be adjusted.

Some people will be offended by this, if you are; go and try to test drive a Ferrari and see what happens.

How 'bout buying a Ferrari. Did you pay MSRP?

Rolex is a brand built on heritage, not the newest gimmick, fashion trend, or celebrity spokesman.

There is no doubt Rolex's heritage is extremely impressive. There's also no doubt that Rolex spends the most on celebrity spokespeople to enhance their brand image.

That being said, I like Omega, I like Breitling, I like JLC and BP, but I understand the value in what I am buying, and I am not settling because one is more affordable than the next. I am buying what I want from who I want. My jeweler has been mine for over twenty years and 6 Rolex's. His sales people know who I am when I come in, and whether I am buying a couple hundred dollars worth or ten thousand dollars worth they treat me very well. The average tire kicker who doesn't have that relationship would see me being catered to and just not get it.

See above.

[Tachymeter]

Originally Posted by gazp

By the way i sell BMW cars and it is not a game we play...

Sorry, I've tried seversl times to write a response to this comment but am lost for words. Wow!

[Singslinger]

Interesting post.

I wonder how much of the Rolex mystique built up over the years is based on the fact that they only give minimal discounts and I wonder how much of Omega's commercial success comes from them giving large discounts.

I also sometimes wonder which one, from a marketing/strategy viewpoint, I would prefer if I was a watch company - to cultivate mystique or to try and gain market share quickly through discounting.

Incidentally, I own 9 Rolexes and 5 Omegas, so obviously both watches appeal to me (though one brand appeals more!)

[Newportkrieger]

I am begining to think the OP is just a troll playing games. Take a look at all his posts.... Tell me if there is'nt a "trollish pattern"...

[Z06]

I like, and respect um Both, and my Omega BA GMT is an AWESOME piece (IMHO)...However...When i bought my Omega, I was also considering the "brand new" Rolex GMT II... after finally aquiring it...I like it much better on my wrist (although it has taken a few days to get used to my new, smaller "sized watch"



bottomline...they are both finely made timepieces...

[StarSovereign]

Originally Posted by Newportkrieger

I am begining to think the OP is just a troll playing games. Take a look at all his posts.... Tell me if there is'nt a "trollish pattern"...

The OP certainly does have a trollish pattern, but his articles were interesting nonetheless. His ccommentary was a little pretentious though...

[Dweller of the Sea]

That the AD treated you the way they did, has nothing to do with Rolex.
Rolex deliveres watches to them-thats it. They do not tell the AD how to run their business, like when a customer asks for discount.
You´re mixing apples and bananas.

[Dweller of the Sea]

Originally Posted by 457689

A money clip? seriously?

Let me guess, it was in the "$" shape, right?

[Ck8]

Originally Posted by Rogue884

I read the article, and thought wow, the author just doesn't get it. The attitude the author exhibits, is very nouveau riche. It may be pretensious, but the old addage that with wealth does not come class, still hold very true today. Now obviously a Rolex doesn't equate to class, but the person with class will not look to get a deep discount on a luxory item right out of the gate, they know the value of what they are buying, and understand the relationships that have to be developed, as well as the expected customer service that comes with the purchase. Some peolpe call it a game, but usually those are the folks that really can't afford to pay the asking price in the first place and are offended that the salesperson sniffed them out, and high-end sales people generally have a good nose for these folks. Some people will be offended by this, if you are; go and try to test drive a Ferrari and see what happens.

To believe market share is being lost would make the assumption that Rolex perceives Omega as competition. Unfortunately what is lost on the author, as with many people, Rolex is a brand built on heritage, not the newest gimmick, fashion trend, or celebrity spokesman. Those things pass in short time, and those who would settle for an Omega because they couldn't get a good discount on a Rolex probably aren't the demographic Rolex is markleting towards anyway.

That being said, I like Omega, I like Breitling, I like JLC and BP, but I understand the value in what I am buying, and I am not settling because one is more affordable than the next. I am buying what I want from who I want. My jeweler has been mine for over twenty years and 6 Rolex's. His sales people know who I am when I come in, and whether I am buying a couple hundred dollars worth or ten thousand dollars worth they treat me very well. The average tire kicker who doesn't have that relationship would see me being catered to and just not get it.

Agree with you there but the original article was carried out on a small number of people from China and probably these were selected by the reporter who aimed at reporting people that were into Omega watches. The Chinese market is so huge that it does not matter what the trend is in the rest of the world or a small number of Chinese individual. Given the stance Rolex has with the Hong Kong Chinese there should be no reason why Rolex would not be the number one choice in the mainland.

[steubi1]

Interesting thread.

I have the following opinion:

The secret of the long-lasting top brands is that they never lose their identity.

PP, Rolex, partly Omega, who has changed from a 400 different models policy to a 4 family (Speedmaster, Seamaster, DeVille, Constellation) policy, they always had a limited choice of models, with traditional designs, based on heritage.

I think Rolex has done a good job with recent updates to attract younger people, too.

And in the end, it is a question what one likes. If I want a Rolex, then I want one, period.

Kind regards

Tom