Starving the market to put greys under

[Vetracer]

I’ve heard people mention that certain manufacturers are starving the luxury watch market of popular models to put grey market dealers out of business.

Nobody knows the exact number of watches manufactured annually by the likes of Patek Philippe or Rolex but I’m wondering how long and how effective this strategy is.

In finance there’s a term called A “what-if calculation” where you simulate scenarios to forecast outcomes. Assuming market starvation is being done for this reason, how long before we start to see casualties?

How much further will desirable models appreciate? Some watches are already trading 60% higher than MSRP.

[Sal_UKSheffield]

ADs are feeding the grey market

[Shaky]

That’s like car manufacturers stopping making cars to drive the secondhand car dealers out of business. Don’t think that would work either.

[Likestheshiny]

As long as Rolex continues to force ADs to buy piles of unpopular watches to get the good ones, the grey market will continue to thrive. Those watches simply aren't going out the door at anywhere near retail price.

[peterpl]

It wont work.

[Teetime71]

By what methods exactly are the grey market dealers getting the premier pieces? Like the SS Daytona's for instance?


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[Calatrava r]

That would only make the popular models more scare and drive up their grey market price further incentivizing dealers and customers to resell the watches into the used market. Increase production is the way to end the grey market.

[gregmoeck]

Everyone make s $500 on each transaction, trade ins are more

[holdtime]

AD vs Gray market.
They depend on each other., both feed from us.

[Likestheshiny]

By what methods exactly are the grey market dealers getting the premier pieces? Like the SS Daytona's for instance?

You know how, when someone says they want a scarce model or a discount, the usual forum reaction is, "Build a relationship with your AD"? Well, guess who buys more watches from ADs than anyone else?

In this particular case, the AD can sell the watch to the GM dealer for better than full retail, and the GM dealer can still make a solid profit in no time at all. And maybe at the same time the GM dealer pays cost for a handful of expensive precious-metal watches that have been shelfwarming for months and locking up valuable store capital.

[bradyb]

Why would Rolex care? Most people don't really understand how this works (myself included) but it appears to be a great way to move product without causing any noticeable disturbances in the force.

I don't have any problems with ADs whatsoever but I really don't enjoy the experience so I stay away.

[Teetime71]

Originally Posted by Likestheshiny

You know how, when someone says they want a scarce model or a discount, the usual forum reaction is, "Build a relationship with your AD"? Well, guess who buys more watches from ADs than anyone else?

In this particular case, the AD can sell the watch to the GM dealer for better than full retail, and the GM dealer can still make a solid profit in no time at all. And maybe at the same time the GM dealer pays cost for a handful of expensive precious-metal watches that have been shelfwarming for months and locking up valuable store capital.

Makes perfect sense. I guess it is impossible for Rolex to know that ADs are selling above retail...or they just look the other way as long as all the pieces are moving.


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[justdate]

Please don't think that Rolex wants this to stop!

[powerfunk]

Originally Posted by Teetime71

I guess it is impossible for Rolex to know that ADs are selling above retail...

True, but I've read on here that AD's never sell above MSRP. Grey dealers probably effectively "pay" more by also taking, say, a couple Ladies' Pearlmasters off their hands along with the Daytona. Just guessing though

[Rocket_Man]

Rolex isn't dumb. They know what is going on. This is all just to create more demand.

[Andad]

Originally Posted by powerfunk

True, but I've read on here that AD's never sell above MSRP. Grey dealers probably effectively "pay" more by also taking, say, a couple Ladies' Pearlmasters off their hands along with the Daytona. Just guessing though

Do the grey dealers give the AD's an incentive to retail them the Rolex watches that can be resold at way over retail by taking hard to move Rolex watches at a small discount?

Or would an AD also want some of the profit on say a Daytona C?

Buying a Daytona C (etc.) even at retail does not explain some of the grey mark up to current prices.

Why are AD's allowed to become wholesalers to the grey market on selected pieces?

[Vetracer]

Excuse my naivety but from my perspective, there’s been nothing worth buying in the shop window of any London ADs for very a long time, It seems to me that this restriction of supply is hurting ADs especially where they sell the brand exclusively.

I’m guessing they’re staying in business by relying on jewellery sales and the sale of cheaper popular brands.

[BNA/LION]

Symbiotic Relationship.

As far as new models, the greys will always get them as long as AD's have sales targets they need to hit to be AD's. The AD's need to move units. They sell them to whoever will buy them you, me or a grey market reseller makes no difference to them.

[AK797]

Originally Posted by Vetracer

Excuse my naivety but from my perspective, there’s been nothing worth buying in the shop window of any London ADs for very a long time, It seems to me that this restriction of supply is hurting ADs especially where they sell the brand exclusively.

I’m guessing they’re staying in business by relying on jewellery sales and the sale of cheaper popular brands.

Rolex has engaged a policy of low/no SS in AD's windows for well over a year here in the UK and in many other countries. Even when they raised prices to correct for the Brexit currency collapse supply did not improve at all. The only explanation I can think of other than major production issues, is that something very significant is happening at Basel and so Rolex are focussing on that and nothing else. If Basel turns out to be normal then the tail is wagging the dog and the Grey's have taken over the Rolex asylum.

[DLRIDES]

Originally Posted by Teetime71

By what methods exactly are the grey market dealers getting the premier pieces? Like the SS Daytona's for instance?


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Volume + $ = $$

[HK Islandboy]

Originally Posted by Vetracer

Excuse my naivety but from my perspective, there’s been nothing worth buying in the shop window of any London ADs for very a long time, It seems to me that this restriction of supply is hurting ADs especially where they sell the brand exclusively.

I’m guessing they’re staying in business by relying on jewellery sales and the sale of cheaper popular brands.

It’s no different here - and a good number of the ADs have stand alone Rolex branded outlets, so have no other brands to carry the cost. It is beyond me how they maintain the, say, USD50k per month in rent plus 4-5 staff.

Sure, the popular models will go straight out the door without touching the display cabinets, but given how these are drip feeding into the market, I cannot imagine that this generates enough profit to keep the lights on.

[watchwatcher]

Well...it's happening/happened already on some select models. If you wanted a Daytona, SD43, steel Sky or a green sub right now the AD would be your only bet if you didn't want to pay a premium.

[dcash0615]

Originally Posted by directioneng

Do the grey dealers give the AD's an incentive to retail them the Rolex watches that can be resold at way over retail by taking hard to move Rolex watches at a small discount?

Or would an AD also want some of the profit on say a Daytona C?

Buying a Daytona C (etc.) even at retail does not explain some of the grey mark up to current prices.

Why are AD's allowed to become wholesalers to the grey market on selected pieces?

I suspect the grey dealers are paying over MSRP on the hot models in most cases. AD shows the watch was sold at MSRP and grey kicks the AD back some cash on top of the MSRP price. I also assume there are situations where the greys are getting hot models at MSRP as well. Just depends on relationship and what they are buying on that particular transaction with the AD. This is just me speculating of course.

[wach16]

I know a few brands (AP, etc) have tightened control of distribution, mainly pushing the hard to get pieces to the boutiques only.

[Patton250]

As the economy continues to get better I imagine it will make it even more difficult to get high demand pieces. I don’t know how that will affect the grey dealers.

[Bluside]

The whole AD/GM thing sounds like a well oiled machine to me. It will keep itself running for a long time.

[Egelber]

Sorry if it's been asked, but are Rolex watches consigned from Rolex to the AD? If so then I don't understand how this works ...

[Teetime71]

Buying a SS steel Daytona is like trying to buy Van Halen tickets in 1984 for us old dudes...the watch grey market is a lot like the "ticket broker/scalper" game


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[enjoythemusic]

I camped out for those tix. Great concert.... before the band went to sh*!. Maybe we should camp out at Rolex AD the night before Baselworld?

[Brian Page]

Originally Posted by Teetime71

Buying a SS steel Daytona is like trying to buy Van Halen tickets in 1984 for us old dudes...the watch grey market is a lot like the "ticket broker/scalper" game


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well put !