The Rolex "Strategy" to go haute horolgy? -

[Speedbird-1]

Originally Posted by Muxi

That would be a new strategy that may or may not succeed.

Wise words, indeed.

[johnorpheus]

Like others have said, I don’t think it makes sense to do that. Market share is super small. Rolex is currently exactly where it wants to be in the market. I would say 100% of people have heard of Rolex. Fewer have heard of Omega, but many still have with the Bond connection. Then you have Breitling, Tudor, Tag, which fewer people still have heard of, but still a decent bet among people who generally like a bit nicer things. Nobody except WIS have heard of or give a rip about AP, PP, VC, etc.

[pearson1995]

Rolex don't make the best watches in the world, they just make the watches 99% of people want.

[SUPERDOC]

Originally Posted by trfChris

To me HH is all about

* Movement design, innovation & finishing
* High complications: tourbillons, minute repeaters, perpetual calendars, split seconds chrono, astronomical/celestial complications etc

Rolex does not play this game at all and I don’t see them wanting to play this game. Their movements are excellent for what they want them to be: well-built, sturdy and functional.

They have some great innovation (for instance skydweller bezel integrated with movement) but always in the service of making a robust & easy to use watch. I don’t think they have any interest in complications for the sake of complications.

They don’t show their movements so no need for elaborate finishing.

Is Rolex trying to go for higher-end luxury with precious metal and gem-set pieces - I think yes. But IMO they have little interest in HH in the sense of high complication and movement finishing.

OK - let's put aide the Definition of "Haute Horology" as grand complications, and just use it as a semantic variant for "Up-market".. an "upper tier" Luxury item compared to a "mid-tier"

Rolex Daytona Grey prices are in the company of a Royal Oak Chronograph - nothing overly "Haute" about that piece... but AP is considered a different class of good..

Now, Remember, I am playing Devil's advocate because I don't think there is an Ulterior motive, but at the same time, there are some questions that arise (like any good conspiracy theory, there's usually some smoke, but not fire)..

Rolex could be seeing some money left on the table, and want to precipitously raise prices to put them in a different class of luxury item ( a class that, thanks to their marketing, most uninitiated already believe they belong to )...

Rolex must be keenly aware of the emotional impact their watches have, they built an empire on the manipulation of emotion.. the current state has split the groups... those who can't get the watches they want are starting to resent the brand, and turn negative, while those who have their coveted watches are hoping that Rolex becomes more Exclusive to allow them more relishing in their achievement...

I realize that we are examining a small pimple with a microscope here in WIS-World - But I do get constant DM and calls from friends who are not Watch people, but want to celebrate that Achievement in life with a Rolex -
go to the website and see the one they want, then get told at the AD that there's a 5 yr waitlist - These guys do not just buy the TwoTone instead, or settle for an Oyster perpetual... they want a specific model to celebrate an achievement in their life - (just like the marketing states that they must) - so they leave rejected -

They come to me for answers/connections - Most often I give them suggestions for other brands to explore - brands they didn't know existed.

Rolex must be aware that they are losing potential generations worth of clients ( I was inspired by my Grandfather/father - might become "I was inspired by my grandfather/father's Omega") ..

So, Are they willing to lose these walk-in everyman customers, and make up the difference with higher prices... and a move Up-Market... higher prices, maybe a fancier Box

or is it just insignificant wastage for them, and a temporary glitch in a perfect storm of supply and demand, that will Balance itself --


I personally think that it's a bit of a tulipmania, not premeditated, and will smooth out...

but I wonder...

there seems to be no effort from Rolex to change the growing sentiment towards them from disgruntled customers, and Angry ADs, some have been threatening Lawsuits... so you wonder if closing more ADs, and ramping the exclusivity could be part of a bigger strategy...

[SUPERDOC]

Originally Posted by Stripiest

This reminds me of how British Airways ultimately turned a profit on their Concorde routes - in the mid 1980s, they conducted a survey that suggested their customers (whose tickets were mostly booked by secretaries) thought Concorde flights were much more expensive than they actually were. So they increased ticket prices accordingly. I can't believe Rolex wouldn't incrementally do that to a point where supply balances with demand.

So interesting... Rolex must be keenly aware of the Grey market - and although the official word is that they are not happy about it.. They must be loving it... and realizing that they are leaving money on the table -

[jltait]

Rolex definitely wants to move their pricing upmarket, and will get there eventually with enough regular price increases. I don’t think they will ever care to play in the “haute Horology” game through with regards to movement finishing, high complications, etc.

[alphadweller]

Rolex is about luxury watches aimed at the middle class (from low to upper), they appeal to a broad range of people, they're made for the masses. Sturdy movenents and water resistant cases. No elaborate manual and time consuming finishing on the movement, just some superficial machined decoration. High horology is on another level and appeals to a much smaller group of buyers.

Rolex has room for manoeuvre within the mid-tier segment. However, going high end would kill Rolex. Maybe they could create a different brand to cater for this segment, but a new brand having to compete against long established ones is no easy task. Rolex should stick to what they do best. The formula has proven to be a success, so why change it?

[brandrea]

Originally Posted by Chewbacca

There’s nothing ‘haute’ about anything reproduced 1000000 + times a year and occasionally punted new through middlemen wholesale buyers.

There also aren’t enough craftsmen alive to make that many ‘haute’ watches.

It’s just a premium aspirational thing. Like a common Mercedes, tumi bag or well made suit.

Yep, this ^^^

[alphasports]

Originally Posted by Cossak

Rolex makes nice watches and is not HH, too big and too corporate. 1,000,000 watches a year, a backward sales model with no online component. There’s no dignity in begging to buy a watch and thankfully more competition all the time. Demand is higher because of emerging markets thats all. They’ve strayed too far from the man that makes the watch towards the watch that makes the man. It’s a different product in a different age for a different customer now.

Accurate!

[DG123]

Originally Posted by SUPERDOC

But I do get constant DM and calls from friends who are not Watch people, but want to celebrate that Achievement in life with a Rolex -
go to the website and see the one they want, then get told at the AD that there's a 5 yr waitlist - These guys do not just buy the TwoTone instead, or settle for an Oyster perpetual... they want a specific model to celebrate an achievement in their life - (just like the marketing states that they must) - so they leave rejected -

..

Which Rolex model has a "5 year waitlist"?

[DG123]

Originally Posted by SUPERDOC

So interesting... Rolex must be keenly aware of the Grey market - and although the official word is that they are not happy about it.. They must be loving it... and realizing that they are leaving money on the table -

I doubt Rolex management cares much that 2 or 3 of the company's models are being sold at a premium by grey dealers. Remember, Rolex current line has hundreds of models.

[One&done]

Good thread! and a credit to you op for the way you set it up that it hasn’t gone of the rails.

IMHO Rolex could easily meet the PP/AP/VC trinity head on in their heartland and beat them should they so choose. Whether they will, or not, I’ve no idea. They will never go Haute Horlogerie though. That would be too big of a stretch. The trinity stopped being HH houses many years ago. Ok, they each have one or two HH pieces (representing a trivially small part of their turnover) but so do JLC, Cartier and Bulgari and nobody calls those HH manufactures.

The high art of watchmaking is practiced by the likes of Krayon, Greubel Forsey, Romain Gauthier and similar. Different world altogether.

[SUPERDOC]

Originally Posted by One&done

Good thread! and a credit to you op for the way you set it up that it hasn’t gone of the rails.

IMHO Rolex could easily meet the PP/AP/VC trinity head on in their heartland and beat them should they so choose. Whether they will, or not, I’ve no idea. They will never go Haute Horlogerie though. That would be too big of a stretch. The trinity stopped being HH houses many years ago. Ok, they each have one or two HH pieces (representing a trivially small part of their turnover) but so do JLC, Cartier and Bulgari and nobody calls those HH manufactures.

The high art of watchmaking is practiced by the likes of Krayon, Greubel Forsey, Romain Gauthier and similar. Different world altogether.

Agree 100%! And I regret use of the term Haute Horology, because what I meant was higher level Luxury...
There is nothing HH about a Nautilus...(I may get flamed like crazy there).. but it is all about the image they sell...
Ironically Rolex has already sold that image to the masses... which is why I think there is little gain for them to restrict supply intentionally..

But you do start to see a divide.. where for some people the exclusivity is the selling point..

[dtwer]

I agree with those who say HH is just another marketing term. It’s a gimmick to make people pay more than what they should, essentially.

IMO Rolex is successful exactly because they don’t cater to the market gimmicks. They just make the best quality watches at the fairest price point and let the market decides if they are a good value The market responds; with an overwhelming demand.

[Jpccarguy]

Very interesting thread, many provocative opinions.

When Rolex starts to make a clear case-back, with upgraded movement workmanship, then the term HH may start to be used.

But I don’t see it happening. What does Rolex need from VC/PP/AP? Nothing. What does the Holy Trinity need that Rolex has? Everything- customers, volume, profit, easy serviceability.

I don’t need a piece of art that has to be cared for like an antique. I need a well-made, historically significant watch that tells time, looks good, and has (at least some) value. Rolex makes an annual calendar- pretty cool, in my view. Do I need minute repeater/moon phase/turbillon? No. Do I admire HH? Yes. Do I want one? No. Do I admire Ferrari? Yes. Do I want one? No.

Rolex is right where I want to be.

[powerfunk]

Originally Posted by SUPERDOC

Rolex could be seeing some money left on the table, and want to precipitously raise prices to put them in a different class of luxury item

You could make the case that right now, Rolex is hotter than any watch brand has ever been, ever. I'm not sure why on Earth they'd start rapidly changing things, especially since "rapid change" is specifically something they tend to avoid.

Originally Posted by SUPERDOC

those who can't get the watches they want are starting to resent the brand

Yes, that is happening to some people. But what are they supposed to do about it? It's likely that their output is (or was pre-corona) at full capacity. For Rolex's first 50-60 years of existence, Omega outsold them. By the 1970's Omega had increased output and decreased quality and they've never recovered. Maybe they could try to hustle and build additional factories but that's easier said than done (at least to Rolex's standards) and may not be a good long-term strategy.

Originally Posted by SUPERDOC

those who have their coveted watches are hoping that Rolex becomes more Exclusive...I realize that we are examining a small pimple with a microscope here in WIS-World

Maybe the WIS collector crowd thinks that way but I don't think the average Joe who bought an OP36 to celebrate his anniversary cares about that.

Originally Posted by SUPERDOC

These guys do not just buy the TwoTone instead, or settle for an Oyster perpetual.

That's the opposite of what I'm hearing. People want a Rolex and go buy a Rolex they see. Joe Anniversary is absolutely buying two-tones and OP's.

Originally Posted by SUPERDOC

Rolex must be aware that they are losing potential generations worth of clients

Well they're making as many watches as they can and they're selling every watch they make.

Originally Posted by SUPERDOC

Are they willing to lose these walk-in everyman customers

No. Of course not.

[BroncoOne]

Originally Posted by SUPERDOC

Amazing that someone would comment on an out of context statement that he himself took out of the context...

The reader's digest version is that there is a group who believes Rolex is intentionally restricting supply as part of a strategy to move upmarket... (admittedly "Haute Horology" is a bit off the mark, because its not about changing its watches to be grand complications, but its image to be more of an upper tier luxury item rather than a midlevel luxury item)

Support for this idea might be the willingness of people to pay premiums. And the lack of stock at the ADs, possibly giving Rolex, a new perspective on price expectations, and having Tudor poised to take over the mid-level space Rolex leaves behind...

I personally think it would be dangerous for Rolex to stray from its current base, and I see the shortages being mostly a natural supply and demand issue that is not part of a deeper, premeditated master plan...

But, I have been embarrassingly wrong before... and might be naïve in my thinking, so I'm enjoying the discussion so far..

Another thought... how high could they raise prices until more would be expected from their watches... and what more would be expected? Finished movements? Fancier boxes? How would they become more luxury if that was the plan?

A very interesting conversation, OP.

I look at Rolex's business model, which appears to be bulletproof and has been for several years. Rolex sells every single watch that it makes at wholesale. Every. Single. One. The ADs are then stuck with moving the references that don't sell, rent, utilities, payroll, etc etc etc.-all of the retail headaches. it's a great model that if I were Rolex I would not want to change.

Your earlier comment about owning Dunkin shops versus a small boutique, overpriced coffee shop was spot on. That's a market that I know well. To support the stellar Rolex business model they need to appeal to as broad a base as possible. Rolex wants recognition and demand from people who know nothing about watches except that their favorite music video artist wears one to serious collectors.

Yes, some serious collectors consider Rolex pedestrian and boring, but most appreciate Rolex for what it is whether they would want to wear one or not. Rolex has succeeded in their marketing to capture that broad base. Perhaps the most renowned watchmaker alive, Phillipe Dufour, wears a Pepsi on a Jubilee bracelet, which I remind some of my friends who look down at Rolex about. His watches cost fortunes and very few will ever be able to own one despite having wealth.

I believe that your observation that Rolex restricts supply intentionally to support this success and maintain their market share and pricing power is partially true The gray market certainly protects the MSRP pricing power. However, I believe that Rolex has calibrated production to make as many of all of their different references as they can, and not load up on making stainless steel Daytonas and no DJs or Air Kingss,for example. That would threaten the market dominance that Rolex has achieved.

[sgwatchguy]

Originally Posted by powerfunk

You could make the case that right now, Rolex is hotter than any watch brand has ever been, ever. I'm not sure why on Earth they'd start rapidly changing things, especially since "rapid change" is specifically something they tend to avoid.



Yes, that is happening to some people. But what are they supposed to do about it? It's likely that their output is (or was pre-corona) at full capacity. For Rolex's first 50-60 years of existence, Omega outsold them. By the 1970's Omega had increased output and decreased quality and they've never recovered. Maybe they could try to hustle and build additional factories but that's easier said than done (at least to Rolex's standards) and may not be a good long-term strategy.



Maybe the WIS collector crowd thinks that way but I don't think the average Joe who bought an OP36 to celebrate his anniversary cares about that.



That's the opposite of what I'm hearing. People want a Rolex and go buy a Rolex they see. Joe Anniversary is absolutely buying two-tones and OP's.



Well they're making as many watches as they can and they're selling every watch they make.



No. Of course not.

Agree with each and every one of the responses

[macrowatch]

I guess when people are excited about even the prospects of an Oyster Perpetual in SS...the brand is just on fire! HH or not.

[htc8p]

I think Rolex is just interested in getting higher margins without having to go haute horology.. other brands are going to try to get the market that Rolex has left.


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[Brny11]

Originally Posted by SUPERDOC

Amazing that someone would comment on an out of context statement that he himself took out of the context...

The reader's digest version is that there is a group who believes Rolex is intentionally restricting supply as part of a strategy to move upmarket... (admittedly "Haute Horology" is a bit off the mark, because its not about changing its watches to be grand complications, but its image to be more of an upper tier luxury item rather than a midlevel luxury item)

Support for this idea might be the willingness of people to pay premiums. And the lack of stock at the ADs, possibly giving Rolex, a new perspective on price expectations, and having Tudor poised to take over the mid-level space Rolex leaves behind...

I personally think it would be dangerous for Rolex to stray from its current base, and I see the shortages being mostly a natural supply and demand issue that is not part of a deeper, premeditated master plan...

But, I have been embarrassingly wrong before... and might be naïve in my thinking, so I'm enjoying the discussion so far..

Another thought... how high could they raise prices until more would be expected from their watches... and what more would be expected? Finished movements? Fancier boxes? How would they become more luxury if that was the plan?

I appreciate the discussion aspect of the post. Didn’t mean to take it out of context, (not sure I did), but I just think that demand has sky rocketed (fueled as always, by difficulty to obtain and previously strong markets globally). I don’t personally believe Rolex produced less watches. Simply, they sold more.

I agree HH is not their game, but they did enjoy (intentionally or not), a perception change with the likes of Daytona’s and other hot models being as desirable as 5711s and certain Royal Oaks.

I am curious what the meetings look like at Rolex HQ, when out of the gate, certain references sell for 1.5-2x their asking price. Not sure it is a negative reflection of their product management / pricing teams, but i can’t imagine that it is not a major discussion point for them.

[htc8p]

[QUOTE
But you do start to see a divide.. where for some people the exclusivity is the selling point..[/QUOTE]

That would take effect maybe after 1-2 generations. In the meantime people know that there is no basis


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[DG123]

[QUOTE=Brny11;10649149I am curious what the meetings look like at Rolex HQ, when out of the gate, certain references sell for 1.5-2x their asking price. Not sure it is a negative reflection of their product management / pricing teams, but i can’t imagine that it is not a major discussion point for them.[/QUOTE]

One or two "hard to find" stainless steel Rolex models is a popular discussion here at this forum, but those reference numbers likely comprise less than 2% of Rolex Company's total annual sales revenues, so I doubt company management gives the subject much attention.

[Maiden]

A Rolex does not fit the definition of Haute Horology. If you are saying do they want to become one of the most exclusive, desired time pieces in the world then I would say yes they are trying (and succeeding) in doing that.

[trfChris]

Originally Posted by SUPERDOC

OK - let's put aide the Definition of "Haute Horology" as grand complications, and just use it as a semantic variant for "Up-market".. an "upper tier" Luxury item compared to a "mid-tier"

Yeah if we’re asking “Is Rolex trying to go more up-market pure luxury rather than tool watches for the everyman?” then I think the answer is definitely yes. I even remember seeing some quote from a Rolex executive to the effect of “We are not in the watch business, we are in the luxury business”.

From a business perspective it makes sense since watches are not an essential tool anymore. Divers do not need mechanical dive watches, engineers do not need “engineer watches” like Milgauss, racecar drivers do not need chronographs etc.

Thus watches today are more about respect for the artistic work of creating the watch and movement, the status signaling of wearing the watch etc so it’s much closer to luxury than any need for a watch as a tool to perform some function.

Having something be hard to get is very valuable in luxury which is why I think Rolex likes the current situation of unobtainable models even though I don’t think they’ve engineered it by restricting supply etc.

[Pongster]

Originally Posted by JohnnyBer

It all about the power of the brand that allows them to maximize a strategy currently driven by scarcity. People want what they can’t have, especially when it’s a powerful brand.

It would be interesting to see where branding experts rank Rolex amongst luxury goods.

Havent seen a list yet of luxury goods. But among watches, Rolex is in the mix -

https://www.wpdiamonds.com/12-expensive-watch-brands/

[ShawnK]

Originally Posted by LawyerFlyfisher

I would say that the sudden scarcity of previously very easy to find Rolex watches like the Sub seems like a push for Rolex to develop Tudor.

It’s very smart. Push up Rolex profits and push up Tudor demand. Frankly, it’s still working despite the pandemic.

I think you are spot-on with this assessment. I’m now on a WAITING LIST for a Tudor!!

Not long ago, the only “list” for a Rolex SS sport model was reserved for the Daytona, which Rolex has always marketed as an exclusive model.

[Jster]

No.

[Ihatecheese]

They aren't a tool watch company. They sell well made luxury jewellery with large logos to men and women. Their price point is such that some models are affordable to aspirational people which allow them to sell huge numbers.
If you want high end watchmaking you would go elsewhere. This is for Joe public acknowledgement and reliability. Rolex make great watches but let's be realistic.

[Psmith]

Rolex (actually then-CEO Patrick Heiniger) once declared that they were not in the watchmaking business, but in the luxury business. I think that sums it up pretty well...