Rolex Dealer Leaves

[Sherwooddavid]

Thats too bad,Rolex doesn't have much loyalty to the people who got it where it is today.

[Al1988]

I wonder how the loss of AD status hits profits for both independents and large chain stores.

I'd imagine the bulk of the profits coming from other lines and items so obviously it'll result in a loss in profits but how badly will it affect them?

[boogiebot]

wow this just seems wrong to me. its almost like rolex set the bar so high that the dealer just had to comply with letting the brand.

i know this is business but this just seems wrong to me. i mean seriously 64 years of loyal sales partnership and then Rolex just puts the screws to them? ouch

[train-time]

Originally Posted by Al1988

I wonder how the loss of AD status hits profits for both independents and large chain stores.

I'd imagine the bulk of the profits coming from other lines and items so obviously it'll result in a loss in profits but how badly will it affect them?

There's no doubt that having the Rolex logo on an AD's store will bring people into the business, but with mark-ups over 100 - 200% on many of the other items in the jewelry store and Rolex at only 40%, Rolex is clearly not their bread and butter.

I am friends with a couple of jewelry store owners and from many discussions on the subject, they admit that their watch lines are a pain in the a@@ for them, but a necessity. There is one long term jeweler accross the street from my business that doesn't carry watches anymore because the margin is too low and providing service is too much trouble.

[youenjoymyself]

It's business. The bleeding hearts might see it as bad for the local business but this is good for Rolex and its shareholders.

The argument that these little ADs got Rolex to where it is, is a moot point. It was a mutually beneficial relationship and the ADs were not selling Rolex out of the goodness of their hearts.

Rolex is controlling their distribution better, managing their pricing into a higher level and ensuring that they have a uniform and polished brand internationally. I can assure they have done significant economic and statistical analysis of the cost/benefit of their actions.

If Rolex doesn't want competing brands sold next to their product, that is their choice. In a corporation, their is a duty to maximize shareholder value and that is what they are doing. If they want to ensure that their high end and expensive products are sold in an environment that matches the brand identity, that is entirely in their right.

A lot of people are making assertions that Rolex is doing this and that, but none of us know what is going on within the inner workings of the company. We do not know how financial performance has actually been as of late. We do not know whether they have really had success with their family owned/small ADs. I can assure you, that whatever they are doing is deliberate and thought out.

Again, it's just business.

[Lisa]

Originally Posted by youenjoymyself

It's business. The bleeding hearts might see it as bad for the local business but this is good for Rolex and its shareholders.

The argument that these little ADs got Rolex to where it is, is a moot point. It was a mutually beneficial relationship and the ADs were not selling Rolex out of the goodness of their hearts.

Rolex is controlling their distribution better, managing their pricing into a higher level and ensuring that they have a uniform and polished brand internationally. I can assure they have done significant economic and statistical analysis of the cost/benefit of their actions.

If Rolex doesn't want competing brands sold next to their product, that is their choice. In a corporation, their is a duty to maximize shareholder value and that is what they are doing. If they want to ensure that their high end and expensive products are sold in an environment that matches the brand identity, that is entirely in their right.

A lot of people are making assertions that Rolex is doing this and that, but none of us know what is going on within the inner workings of the company. We do not know how financial performance has actually been as of late. We do not know whether they have really had success with their family owned/small ADs. I can assure you, that whatever they are doing is deliberate and thought out.

Again, it's just business.

I understand your points... that's why I say that whatever they are doing, deliberate and strategic as that is, makes buying a new Rolex unappealing to me now. I've bought new from the AD in the past but doubt I ever will again. Whether I can afford it or not isn't the issue.

They're after a different kind of customer than I am... someone who is still willing to pay - at almost any cost - that premium for the prestige, image, or exclusivity of their product. My Midwestern sensibilities conflict with that.

[HL65]

Originally Posted by youenjoymyself

It's business. The bleeding hearts might see it as bad for the local business but this is good for Rolex and its shareholders.

The argument that these little ADs got Rolex to where it is, is a moot point. It was a mutually beneficial relationship and the ADs were not selling Rolex out of the goodness of their hearts.

Rolex is controlling their distribution better, managing their pricing into a higher level and ensuring that they have a uniform and polished brand internationally. I can assure they have done significant economic and statistical analysis of the cost/benefit of their actions.

If Rolex doesn't want competing brands sold next to their product, that is their choice. In a corporation, their is a duty to maximize shareholder value and that is what they are doing. If they want to ensure that their high end and expensive products are sold in an environment that matches the brand identity, that is entirely in their right.

A lot of people are making assertions that Rolex is doing this and that, but none of us know what is going on within the inner workings of the company. We do not know how financial performance has actually been as of late. We do not know whether they have really had success with their family owned/small ADs. I can assure you, that whatever they are doing is deliberate and thought out.

Again, it's just business.

I did not know Rolex had shareholders. Hmmmmm. What is their symbol so I can track the stock.

Ps- just kidding- They are owned by a private trust and have no shareholders!!

[Michael M.]

Very interesting, I heard the same thing about a dealer in NYC...

[HL65]

Originally Posted by Lisa

I understand your points... that's why I say that whatever they are doing, deliberate and strategic as that is, makes buying a new Rolex unappealing to me now. I've bought new from the AD in the past but doubt I ever will again. Whether I can afford it or not isn't the issue.

They're after a different kind of customer than I am... someone who is still willing to pay - at almost any cost - that premium for the prestige, image, or exclusivity of their product. My Midwestern sensibilities conflict with that.

I agree with you 100% Lisa!! Save the money and help a trusted grey dealer out!!

[Lisa]

Originally Posted by SteelerFan1965

Ps- just kidding- They are owned by a private trust and have no shareholders!!

That's what I thought, too - was going to check up on that.

[HL65]

Originally Posted by Lisa

That's what I thought, too - was going to check up on that.

So much for their shareholders!!

[youenjoymyself]

Originally Posted by SteelerFan1965

So much for their shareholders!!

Actually, there are unitholders in the trust. They are not publicly traded (in fact I think there is no liquidity). Some of the income goes to charity and development initiatives, and the rest likely to those who hold units in the trust (there seems to be less evidence as to who these individuals are - likely Hans Wildorf's descendants). Also note that the trust structure affords Rolex very favourable tax rates.

Wikipedia:
Upon the death of his wife in 1944, Wilsdorf established the Hans Wilsdorf Foundation in which he left all of his Rolex shares, making sure that some of the company's income would go to charity. The company is still owned by a private trust and shares are not traded on any stock exchange.

[HL65]

Originally Posted by youenjoymyself

Actually, there are unitholders in the trust. They are not publicly traded (in fact I think there is no liquidity). Some of the income goes to charity and development initiatives, and the rest likely to those who hold units in the trust (there seems to be less evidence as to who these individuals are - likely Hans Wildorf's descendants). Also note that the trust structure affords Rolex very favourable tax rates.

Wikipedia:
Upon the death of his wife in 1944, Wilsdorf established the Hans Wilsdorf Foundation in which he left all of his Rolex shares, making sure that some of the company's income would go to charity. The company is still owned by a private trust and shares are not traded on any stock exchange.

Yes- I knew that - that was the point of my post. It has nothing to do with shareholder( as there are none) and everything to do with Rolex. They are entitled to their own strategy and business execution. I personally could care less as I would never go into a Rolex store and buy a new watch for retail. Come to think of it I have no interest in new Rolex anyway. I am a vintage junkie and fellow curmudgeon who can only say Bah Humbug to it all!!

[youenjoymyself]

Originally Posted by SteelerFan1965

Yes- I knew that - that was the point of my post. It has nothing to do with shareholder( as there are none) and everything to do with Rolex. They are entitled to their own strategy and business execution. I personally could care less as I would never go into a Rolex store and buy a new watch for retail. Come to think of it I have no interest in new Rolex anyway. I am a vintage junkie and fellow crumudgeon who can only say Bah Humbug to it all!!

I respect what you are saying but I disagree on the shareholders issue. Whether you call them shareholders or unitholders it is the same thing. Rolex does not maintain a corporate legal structure for its ownership but rather a trust. This means that they do not get taxed as a corporate but rather have their profits flow through to the trust which can redistribute the income. That income is then taxed at the rate appropriate for the unit holding entity which can be an individual, another corporation or a charity (which will not be taxed).

In the end, the unitholders are the paramount stakeholders, and Rolex's primary goal is to maximize value and longevity.

Apologies for the rant.

[HL65]

Originally Posted by youenjoymyself

I respect what you are saying but I disagree on the shareholders issue. Whether you call them shareholders or unitholders it is the same thing. Rolex does not maintain a corporate legal structure for its ownership but rather a trust. This means that they do not get taxed as a corporate but rather have their profits flow through to the trust which can redistribute the income. That income is then taxed at the rate appropriate for the unit holding entity which can be an individual, another corporation or a charity (which will not be taxed).

In the end, the unitholders are the paramount stakeholders, and Rolex's primary goal is to maximize value and longevity.

Apologies for the rant.

I guess let me better state my opinion: I really could care less about how Rolex operates as a company and even more less for their unit holders. In my world it means nothing nor will it ever. I am happy you are versed in their management structure and if that interests you- terrific!! To me however it could not be more boring- snooze!! Now if you want to talk about Big Crown Subs, gilt dials vs. matte, Screw Down PN's , Milsubs, Comex, DRSD's, tropical dials, or Jean Claude Killy's etc etc --game on!! Rolex corporate structure, unit holders and corporate strategy- Bah Humbug!!

[gqllc]

I was at AD Long Jewelers in the Boston area yesterday. They showed me the whole area in the store that will be dedicated to Rolex. He also told me that 200 AD's are losing their dealerships over Memorial Day weekend. He pointed at their Breitling display and murmured some words...I should have paid more attention to what he was saying. He said letters were sent out and the dealers know who they are. He suggested we check out the Rolex dealer locator on Rolex web page after Memorial Day weekend. He was also saying that the Asian Market has so far exceeded the US Market that we (US) are of little concern to Rolex.

[wdalew5]

Originally Posted by kkwn98

Please, get a grip. That is just a stupid comparison, and you should know it.

YOU GET A GRIP !!!!! I feel the same way. Rolex is like a gestapo run company...

[Lisa]

Originally Posted by gqllc

I was at AD Long Jewelers in the Boston area yesterday. They showed me the whole area in the store that will be dedicated to Rolex. He also told me that 200 AD's are losing their dealerships over Memorial Day weekend. He pointed at their Breitling display and murmured some words...I should have paid more attention to what he was saying. He said letters were sent out and the dealers know who they are. He suggested we check out the Rolex dealer locator on Rolex web page after Memorial Day weekend. He was also saying that the Asian Market has so far exceeded the US Market that we (US) are of little concern to Rolex.

Interesting. Well, Tudor is gone from the US. Will Rolex be next?

[mrbill2mrbill2]

Originally Posted by Lisa

I understand your points... that's why I say that whatever they are doing, deliberate and strategic as that is, makes buying a new Rolex unappealing to me now. I've bought new from the AD in the past but doubt I ever will again. Whether I can afford it or not isn't the issue.

They're after a different kind of customer than I am... someone who is still willing to pay - at almost any cost - that premium for the prestige, image, or exclusivity of their product. My Midwestern sensibilities conflict with that.

I am originaly from the Mid-West - Ohio.

This supposed change, we will need to wait to see what actually happens, is capitalism. You promote your product the best way, in your business model, and charge what the market will pay.

[Lisa]

Originally Posted by mrbill2mrbill2

I am originaly from the Mid-West - Ohio.

This supposed change, we will need to wait to see what actually happens, is caitalism. You promote your product the best way, in your business model, and charge what the market will pay.

Absolutely. And I ain't payin,' but plenty of others will.

[CoopJr]

Can anyone explain how this will produce more sales? Because I don't see how it will.

[Lisa]

Originally Posted by CoopJr

Can anyone explain how this will produce more sales? Because I don't see how it will.

Maybe it won't produce more sales, but it will result in more profit per sale?

[CoopJr]

Originally Posted by Lisa

Maybe it won't produce more sales, but it will result in more profit per sale?

Possibly. This last price increase was a hard pill to swallow. I am finally priced out of the new Rolex market.

Worse things can happen I guess.

[TheDude]

Originally Posted by Lisa

Maybe it won't produce more sales, but it will result in more profit per sale?

Most certainly. I bet most of the smaller shops being lost are the ones willing to discount. They aren't converting inventory to revenue fast enough while a larger company can hold out for full price. The new requirements are going to ensure the ones left standing are going to be able to hold out for full price.

One positive is that an intractable MSRP will bolster second hand prices. When you can no longer find 15% on a new one, that will give used some room to increase in value.

Sent from my Nexus S 4G using Tapatalk

[Megalobyte]

I've heard Rolex's strategy is to maintain or increase exclusivity by raising prices, and keep demand high by cutting production about 30%. The reduction of AD's and tightening control over distribution and discounts seems to fit very well with the trimming of AD's. Raise prices, cut production and keep tight control over distribution, to make a good profit and maintain demand.

[Lisa]

Originally Posted by CoopJr

Possibly. This last price increase was a hard pill to swallow. I am finally priced out of the new Rolex market.

Worse things can happen I guess.

Two words: Buy used!

[Scunner]

Originally Posted by SteelerFan1965

I guess let me better state my opinion: I really could care less about how Rolex operates as a company and even more less for their unit holders. In my world it means nothing nor will it ever. I am happy you are versed in their management structure and if that interests you- terrific!! To me however it could not be more boring- snooze!! Now if you want to talk about Big Crown Subs, gilt dials vs. matte, Screw Down PN's , Milsubs, Comex, DRSD's, tropical dials, or Jean Claude Killy's etc etc --game on!! Rolex corporate structure, unit holders and corporate strategy- Bah Humbug!!

I'm a little confused that you couldn't care about how it operates as a company - where is all the lovely vintage that you are so passionate about going to come from in the long term future?

[HL65]

Originally Posted by Scunner

I'm a little confused that you couldn't care about how it operates as a company - where is all the lovely vintage that you are so passionate about going to come from in the long term future?

Not from anything they are making now!! In fact--nothing past 1970's in my book. Thanks and sorry you are confused. I know it can be hard to follow along at times. But-if you read carefully--it will get easier over time!

[Scunner]

Originally Posted by TheDude

Most certainly. I bet most of the smaller shops being lost are the ones willing to discount. They aren't converting inventory to revenue fast enough while a larger company can hold out for full price. The new requirements are going to ensure the ones left standing are going to be able to hold out for full price.

One positive is that an intractable MSRP will bolster second hand prices. When you can no longer find 15% on a new one, that will give used some room to increase in value.

Sent from my Nexus S 4G using Tapatalk

Yes but eventually due to market supply and demand will used also not become out of reach?

[CashGap]

Originally Posted by Lisa

Maybe it won't produce more sales, but it will result in more profit per sale?

Yield will definitely increase, this is a proven method of maximizing the value of the brand.

Rolex doesn't need to double production to double profits. It makes more sense to increase prices and reduce distribution costs, same final impact with much less effort. Also, more sustainable and without diluting the value of the brand.

Rolex is acting rationally, optimally and in their own best interests, as they should. Most ADs will be exposed as having little value to Rolex. A VERY few (likely low profit) customers will defect, but higher average selling prices will easily offset that.

Explain again why Rolex doing what they clearly should do is bad? Explain why everything we don't like or don't understand is bad?