Rolex Dealer Leaves

[FLB03TT]

Originally Posted by bewithabob

The AD agreement that Rolex makes with its dealers grants them certain rights no doubt, including the right to rescind or cancel the agreement with proper notice.

ADs need to 'turn' a certain amount of profit and volume in order to sustain their relationship with ROLEX, and 'earn' new shipments of high demand products. Rolex is certainly aware of the idea that an AD may be selling out the back door to sustain their volume, but that would seem to be a violation of their agreement. And it would be difficult to prove.

So put yourself in ROLEX shoes as you evaluate your ADs

You have one group of high performing dealers who are willing to invest in the infrastructure to make your brand more successful in the luxury segment, and you want them to put even more emphasis on your brand than your competitors. This group comprises 20% of your distribution, but they drive 80% of your volume and profits. Lets call this group your "A" Dealers. As such they earn your trust and you give them first class treatment from you in terms of inventory and orders.

On the other hand, you have another set of ADs who are not willing to step up to make your brand a success. This group is 70% of your distribution, but they drive only 17% of your volume and profits. They do a respectable volume, but are unwilling to step up and invest in their stores, retail displays, their sales team or their advertising. Lets call this group your "B" Dealers. They have the potential to do better but this group is inconsistently support the tenants that make the "A" group highly successful.

Then there is a third group of folks we will call the "C" Dealers. This group is 10% of your distribution, but they contribute only about 3% of your volume and profits. They are clearly underperforming, turn inventory very slowly and are unwilling to invest in your brand on any level as compared to the other dealers. In some cases, their stores are near A or B locations.

In the short term, for competitive reasons, you intend to elevate brand standards across your dealer network, and decide to close as many of the C Dealers as possible, knowing this will have minimal impact on your volume or profits, since that volume will transition to other locations You meanwhile raise prices to offset any short term negative impact.

Meanwhile you need to get more of the "B" group to perform like "A"s. And set higher volume goals for the B group, using high demand product models as leverage.

There is some dissent, but you have confidence, if this market does not perform, you can achieve profits objectives by tapping emerging markets in other countries.

This is an enviable position to be in. Fire bad customers and promote good ones!

A great analysis, I couldn't agree more

[Luggy]

Originally Posted by FLB03TT

Rolex will be a stronger, not weaker brand when all this is said and done.

only if the ADs they're leaving behind are really, really weak. Because now those ADs have other watches to show and will be pushing other brands. If I went into my local mall and the only major luxury watch shop didn't have Rolexes, I'd probably just purchase another type of watch. I'm not going to be driving all over town just to find a Rolex, and I doubt most people who are in the market for a luxury watch will either.

[gregmoeck]

We've been known to tell certain customers we no longer want to be their provider, they cost us money, they were rude to our staff, or they required a lot of attention (pain in the ass), or required a lot of support.

I would imagine Rolex is just thinning the heard just like most successful businesses do. If the AD is not willing to make the changes or they fit in category A B or C then they are voted off the island, its simple business.

[boogiebot]

Originally Posted by CashGap

I'm a terrific man, and a family man. Also named Sam! What does Rolex owe me?

How does Sam being a terrific family man in any way play into a Rolex distribution decision, unless they change the name to the Rolex Foundation?

i think we all get it....its business. but to be honest there is a ton of money to be still made without treating the people who have been with your for decades like Sh**. this is just my opinion.

obviously its not the rolex foundation and you saying this is just to be sarcastic/facetious.

whether or not Rolex needs him or not is not what I think most are saying....its the disregard for partnership through the years. now obviously i wasnt there when all this stuff went down nor do i pretend to know what happend between the 2 parties. my statements are purely based on what has been said on this thread. so maybe there is more to the story than we all know

[kkwn98]

Originally Posted by CashGap

I'm a terrific man, and a family man. Also named Sam! What does Rolex owe me?

How does Sam being a terrific family man in any way play into a Rolex distribution decision, unless they change the name to the Rolex Foundation?

I think the problem here is some attribute their own romanticised beliefs to Rolex and then get upset when Rolex don't in fact share those beliefs.

Then you have some hysterical types who compare Rolex sales and business decisions to an organisation that perpetrated crimes against humanity. These types really do need to reassess their outlook on reality.

[Art 1]

Originally Posted by gregmoeck

We've been known to tell certain customers we no longer want to be their provider, they cost us money, they were rude to our staff, or they required a lot of attention (pain in the ass), or required a lot of support.

I would imagine Rolex is just thinning the heard just like most successful businesses do. If the AD is not willing to make the changes or they fit in category A B or C then they are voted off the island, its simple business.

I do the same in my business. Life is too short.

[CashGap]

Originally Posted by boogiebot

whether or not Rolex needs him or not is not what I think most are saying....its the disregard for partnership through the years.

So to be reciprocal, Rolex would have had grounds to be upset with him if he exercised his right to discontinue his business for any reason, or if he decided to stop selling Rolex?

Of course not. Once the situation is reversed we can see it more clearly... the fact that he'd made a ton of money on Rolex over the years didn't make him obligated to continue the relationship. He was free to end the relationship within the guidelines of the written agreement, and he'd be foolish to make that decision contrary to his own best interests.

It is very easy for us to look down on the rational actions of anyone with the last name ", Inc.", and very easy for us to just assume that the big guy must be wrong. We need to guard against that tendency.

[Luggy]

To a certain extent that's true. But when we're comparing a mom-and-pop jewelry store in Hoboken or wherever to a multi-billion-dollar multinational corporation, then things get a little skewed.

Let's face it, if we just let enormous corporations do whatever was "logical" to them then we'd have massive monopolies that could, and probably would, control every aspect of our lives. There are laws that protect the little guy from the steamrolling nature of entering into contracts where one side has a tremendous amount of power and other other relatively none.

I'm not saying those laws apply here, I'm just speaking generally about the inequalities between Rolex and Joe Shmoe's Watch Shoppe.

[boogiebot]

Originally Posted by CashGap

So to be reciprocal, Rolex would have had grounds to be upset with him if he exercised his right to discontinue his business for any reason, or if he decided to stop selling Rolex?

Of course not. Once the situation is reversed we can see it more clearly... the fact that he'd made a ton of money on Rolex over the years didn't make him obligated to continue the relationship. He was free to end the relationship within the guidelines of the written agreement, and he'd be foolish to make that decision contrary to his own best interests.

It is very easy for us to look down on the rational actions of anyone with the last name ", Inc.", and very easy for us to just assume that the big guy must be wrong. We need to guard against that tendency.

like i said i have no idea of what happend between the 2 over the years. as stated by the op..

Originally Posted by KJM11379

I grabbed my sales guy and asked what the deal was. He told me that after 64 years of selling Rolex they simple could not keep up with the demands that Rolex was placing on them. 64 years selling Rolex has got to be one of the longest tenured AD's in the USA. He told me that Rolex wanted all new display cases and new modifications to the store, which the AD refused. He said Rolex also wanted 80-90 sales a month out of the store which they could no longer manage, due to the price increases and economy. So they just gave up there AD. Sam Yampell is in a historic district on a very busy (pedestrian and Motor vehicle) main street in a very affluent area. It just does not make sense to me to place these requirements on one of your most trusted and busiest dealers.

call me an idiot but this doesnt sound like the story of a guy that wanted to end their relationship with Rolex. And yes Rolex has every right to do whatever they want with their brand. but over half a century of dealing with someone and then demands like this? seems a bit harsh no? IMO this sounds like a bigger company saying do what we say or F*** off.

you have your opinion on it i have mine.

[CashGap]

Originally Posted by Luggy

To a certain extent that's true. But when we're comparing a mom-and-pop jewelry store in Hoboken or wherever to a multi-billion-dollar multinational corporation, then things get a little skewed.

Let's face it, if we just let enormous corporations do whatever was "logical" to them then we'd have massive monopolies that could, and probably would, control every aspect of our lives. There are laws that protect the little guy from the steamrolling nature of entering into contracts where one side has a tremendous amount of power and other other relatively none.

I'm not saying those laws apply here, I'm just speaking generally about the inequalities between Rolex and Joe Shmoe's Watch Shoppe.

Theoretically possible, but my view is that in the U.S. at least we have near totalitarian regulation over private enterprise, always trying to find the point of tax and regulation juuuuuuuust this side of destruction. Keep the host (businesses) alive enough to provide what we demand but not so frisky that they begin to pursue freedom. I find it hard to imagine a situation where businesses had the freedom to even consider predatory tactics, because I've only observed the environment of the past several decades.

The original situation described sounds very similar to the end of any relationship, business or otherwise. Someone decides it is time, the other party almost always disagrees. Their character is shown when they either accept the mutual free association of the relationship, or if they attempt force/cajole/whine to continue the relationship because it still benefits them, and they of course think they know better what is good for the other party as well.

[josh6262]

All kidding aside, I love this thread. This thread is why www.rolexforums.com is such a valuable website.

[acarriles]

Originally Posted by Rolex Junky

They might sell less; but at higer prices they do not need to sell an equal amount of volume to make the same amount of profit. Thereby retaining exclusivity of the brand and thus making it more desirable. There are still plenty of people in the world who can afford them and that will keep buying Rolexes. I doubt Rolex really wants every Tom ; Dick and Harry (figuratively speaking and no insult intended) to own a Rolex. That is just bad for brand perception.

Rolex will sell at exactly the same price they sell now to dealers. Rolex does not lose money if a dealer makes a discount. The dealer eats the discount. Rolex sells always at full price to the dealer.

I can't understand why people think that when a dealer discounts a watch, Rolex will make less money... ????

[CashGap]

Originally Posted by acarriles

Rolex will sell at exactly the same price they sell now to dealers. Rolex does not lose money if a dealer makes a discount. The dealer eats the discount. Rolex sells always at full price to the dealer.

I can't understand why people think that when a dealer discounts a watch, Rolex will make less money... ????

It decreases the dealer's margin, which decreasse the value of a Rolex dealership agreement, which decreases the amount Rolex can charge in the future.

If I tell you "AD status is worth X, because you will earn Y on Z watches annually", yet other dealers discount and force you to Y-discount, you will not agree with the AD value and will resist my demands for store and inventory investment. This will lead to lower retail, and then wholesale, pricing.

Discounting dealers and grey marketing cause Rolex pricing power to be limited, and they must act to preserve and grow the value of the brand. Or just let it fritter away.

[Coubs]

Is there any risk to the consumer who buys from a dealer who just lost there authorization from Rolex?

[Scunner]

Originally Posted by Coubs

Is there any risk to the consumer who buys from a dealer who just lost there authorization from Rolex?

Provided the warranty is completed correctly I would be confident of a NO on that one.

[DG123]

"Joe Shmoe mom & pop" rtetailer often complains about big store competition.
However, many times the small retailer is not doing enough job operator the store, and that is why customers shop elsewhere.
In many merchandise categories, the little guy can beat the big store every time. But, the little independent store needs to be a really good, smart, hard working operation.

Originally Posted by Luggy

To a certain extent that's true. But when we're comparing a mom-and-pop jewelry store in Hoboken or wherever to a multi-billion-dollar multinational corporation, then things get a little skewed.

Let's face it, if we just let enormous corporations do whatever was "logical" to them then we'd have massive monopolies that could, and probably would, control every aspect of our lives. There are laws that protect the little guy from the steamrolling nature of entering into contracts where one side has a tremendous amount of power and other other relatively none.

I'm not saying those laws apply here, I'm just speaking generally about the inequalities between Rolex and Joe Shmoe's Watch Shoppe.

[Art 1]

Originally Posted by Coubs

Is there any risk to the consumer who buys from a dealer who just lost there authorization from Rolex?

None.

[Traveler]

Originally Posted by boogiebot

thats a really big IF. personally i cant see them doing this intentionally. now due to economic situations of whats going on in the States I can see them not selling as many pieces. but their presence in Europe and Asia seems to be very strong

lets say we base the numbers (and this is just a guess) on the cosc numbers in 2009 and we do see a production cut of 30% that would mean 560k watches cosc certified (a 30%) drop. thats still not exclusive by any stretch of the immagination.

lets be honest these are very expenssive mass produced watches. not saying there is anything wrong with it. heck im a long time hater turned recent convert. so they must be doing something right

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX

Actually it is Asia and the Middle East that are booming in high cost top end luxury products. The USA and EU are in recession. China, SE Asia and Middle East have the citizens with the disposable income. They walk into a store, buy several. Dont need to ask price. Higher price means higer face. ROLEX is smart..they know what they are doing and who the PAYIING customers are. It used to be the Americans and Europeans. Now it is the Asians and Middle Easterners. Socio-economic pradigims shift, but retail capitalism follows the money.

[DG123]

The less developed countries depend on the USA and EU consumer markets.

Originally Posted by Traveler

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX

Actually it is Asia and the Middle East that are booming in high cost top end luxury products. The USA and EU are in recession. China, SE Asia and Middle East have the citizens with the disposable income. They walk into a store, buy several. Dont need to ask price. Higher price means higer face. ROLEX is smart..they know what they are doing and who the PAYIING customers are. It used to be the Americans and Europeans. Now it is the Asians and Middle Easterners. Socio-economic pradigims shift, but retail capitalism follows the money.

[springbar]

Wait a minute.

Every other thread on this forum is about a terrible AD experience (I've certainly had way more than my share).

Finally Rolex appears to be doing something about it and everybody's furious.

[Wisconsin Proud]

Originally Posted by springbar

Wait a minute.

Every other thread on this forum is about a terrible AD experience (I've certainly had way more than my share).

Finally Rolex appears to be doing something about it and everybody's furious.

For one reason - price!

The more Rolex removes ADs and creates boutiques, the more the price goes up. It's why people love boutiques but buy elsewhere.

[HKtoter]

Originally Posted by Wisconsin Proud

For one reason - price!

The more Rolex removes ADs and creates boutiques, the more the price goes up. It's why people love boutiques but buy elsewhere.

Thats why I prefer the small town family owned jeweler who is also a Rolex AD.
These are also the stores that give exceptional service and will deal with you.

[springbar]

Originally Posted by Wisconsin Proud

For one reason - price!

The more Rolex removes ADs and creates boutiques, the more the price goes up. It's why people love boutiques but buy elsewhere.

I'm hearing a lot more in this thread about loyalty and tradition and supporting small business and so on than I am about rock-bottom deals.

Rolex could use a lot of improvement in the sales and support departments. I hope the shopping/buying experience is improved after this purge is over. Then they can turn their attention to improving their warranty and rewriting the clear-as-mud terms.

[DocD]

I also know Sam Yampell and was shocked to learn that he no longer is an AD for Rolex. To me it's more than simply loyalty and it's also not an emotional or sentimental problem.

Shops like Sam Yampell existed far longer than some of the "big box" stores that sell larger quantities of Rolex. However, that does not negate the importance of stores like Sam's. Not everyone is comfortable walking into a big box store and dealing with a different salesperson every visit.

The beauty of a Sam Yampell is knowing that when you walk into the store, there will be consistency based on tradition and reputation. HIS name is on the door and there isn't a constant turnover of staff/employees. If Rolex is REALLY concerned about it's image and status, why don't they take that into consideration?

There already was a Rolex boutique store in Philadelphia owned by Govberg at Liberty Place, which is only a few miles from Sam's store in Haddonfield, NJ. The boutique store did not make it, and Govberg moved it's Rolex line into it's store with all it's other timepieces.

By the way, Sam used to have a small, non-descript store across the street from his present location. The dictators at Rolex didn't like his physical facility and as a result, Sam moved across the street into a new, updated and beautiful store with very prominent Rolex display. Now apparently several years later they are not happy with his present display and want him to update again at his expense.

The argument that Rolex will make more money or this move will increase sales boggles my mind. Even IF some of these AD's did discount, that had no impact on Rolex's bottom line. The discount cut into the AD's profit.....Rolex still received the same amount of money from the AD for the product. Additionally, logic would dictate that sales would be greater if you were able to purchase a product at a slight discount vs. full retail. And naturally, the greater the exposure/more retailers the greater the number of sales. If I'm up in the air regarding a Rolex vs. Breitling but the closest Rolex AD is 100 miles away, I may default to the Breitling.

Another point I really never understood and still don't understand is why Rolex will not allow an AD to list on the AD website that they are an authorized Rolex dealer or that they carry Rolex. The ONLY way to know who is an AD is by going to the Rolex site.

I was just at a jewelers and was surprised to learn when I entered that they carried Rolex. When I was on their website I knew they were AD's for Breitling, IWC, JLC, Audemars-Piquet (sp), Patek-Phillipe, Tag, etc. I don't believe anyone would argue that AP, JLC or PP aren't prestigious brands who want to maintain their reputations, yet THEY allow the AD to advertise on their website that they carry these brands, yet Rolex will not. In my opinion, that cost them sales and cost the AD sales.

I'm personally fed up with what I consider the "bully" tactics of Rolex. They are an excellent brand and I have one on my wrist at the moment, but they are certainly not the premier watch brand. Their actions have turned me off so much that I walked into that AD and purchased a beautiful new Breitling Chronograph for my son's 21st birthday.

[Milgauss-Green]

Originally Posted by train-time

Exactly! A long standing dealer in Baltimore, MD lost Rolex, Panerai and Breitling in the last few months because they were supplying gray market dealers.

x1

[ncj]

It's also becoming more difficult to compete in NJ, MD, or PA against Delaware - tax free shopping. Calculate 7-8% tax on a Rolex, and it's worth the drive to save.

[Mr. K]

The days of hard to get discounts may return if Rolex has their way.

[Z-Sub]

Not good for Rolex business.
They should subsidize cost of new display. I'm sure the company can get them for dirt cheap.
It's possible there will be a Rolex boutique popping up not too far as suggested by the other member.
It seems Omega is doing the same thing as Rolex