The Rolex "Strategy" to go haute horolgy? -

[SUPERDOC]

I know that the forums have been overwhelmed by threads about pricing, and scarcity, and somewhere in between the name calling and angst there are actually some interesting points and thought provoking subjects raised.

Hopefully this can stay respectable...

One of the more interesting ideas that has stood out for me was the idea that it may be part of the Rolex strategy to intentionally restrict supply, to set a new baseline, and move up to that point where they are accepted as part of a new "trinity" .

One doesn't have to look further than the most Flex-worthy of Social media posts proudly showing their SS trio of Blue Royal Oak, Blue Nautilus, and blue Skydweller as the ultimate achievement in 3 watch collections.


A part of me can see this strategy, and the willingness that many seem to have to accept above MSRP for ANY Rolex (OP and DJ listed above RRP?!?) might suggest that they have been under-priced from the manufacturer.

Factor in the bullet like rise of Tudor into the luxury class - and you could argue that Rolex is aiming to reposition itself.

But I think that we are getting a selection bias - and projecting too much of our own psyche onto the Rolex Powers that be... We think it's exclusive, and haute horology, and belongs at the table with AP/PP, we have bestowed so many (undeserved?) virtues upon Rolex watches, that we might be wanting them to change Rolex to fit our image of it...

furthermore, a hero is mostly defined by his enemies - and it hasn't been Rolex vs Omega for years - now when you discuss Rolex (mostly because of pricing above MSRP) you pit it against AP and PP for value retention/investment competitions - movements and finishing have ceased to be relevant.


But personally, I can't imaging Rolex even wanting to be in that class, and I couldn't see them shift strategy.

Rolex, I would think, is Quite happy to be that aspirational everyman piece.

Something that anyone can achieve, creating a physical symbol of said achievement - the bulk of buyers are "one and done" watch people (not the microcosm of society you see here on forums) - very few AP/PP/Debethune are "one and done" watch people.


Would you rather own Dunkin Donuts - making billions selling coffee at $1 a cup... or own a small Chic cafe that is exclusive and sells coffee at $20 a cup... What is the better business model?

There is no way that Rolex could have it both ways..

I think that we have gotten so deep into our world that we are failing to see the forest for the trees... Rolex was not built on collectors, they were built on mass sales and mass production.

Although they have always been a bit ahead of the curve, and they may be seeing the erosion of the middle class (which is their main target) and might be shifting upward..

Again I can see both sides of the argument - I just don't see how they could stay exclusive, and continue to put out 1m watches per year - how much could they raise prices to cut down production in order to be exclusive?

Omega makes ~ 800k per yr and is far from exclusive, and they have many more models that they produce, so there might actually be LESS Planet oceans than Submariners made per year! (although I have no idea).

So a long winded bit of pontification, and far too much effort of thought for something so admittedly trivial..
but my question to those with more insight than me, is : Do you think this is part of a deeper Rolex strategy to move upmarket? or is it our biased perspective, and for Rolex it is business as usual?

[Becweb]

No i don't think so.

[Greg 59]

Thanks for a most interesting post. I enjoyed reading your thoughts and prognosis and whilst i don't really have a strong opinion, i do follow the trends and the comments made both here and elsewhere. I think you have made some very valid points and i look forward to seeing how this thread develops.

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[zion_rasta]

No. There is nothing HH about Rolex other than brand name recognition.

[watchmavan]

Ahhhh.... No.


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[joli160]

No, I don't think so. They are doing just fine.
The market for HH is very small and most HH brands struggle to survive.
Bread without butter

[horseShu]

Rolex gets to sit beside AP and PP not because of haute horology, but because of marketing hype. We're talking about the 3 more hyped brands here.

Kudos to their marketing departments. Building and sustaining this level of hype is no easy feat.

[Hutrmila]

Why would they ? There has to be a motive ... what additional value brings wholly trinity to brand like Rolex nowadays ? ... Rolex mrkt is so hilarious that few people can really understand ... I’d rather say they would like to stay faraway from the trinity ... they’ve created perfect island ... and seem to be continuing so


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[Ranger67]

Obviously Rolex want to be exclusive and do this by limiting supply, I think this works well for them now, what the future market will be is unknown as I saw a survey that said 25% of 16-25 year olds can’t tell the time on a normal watch (figures may not be totally correct) so will these be future Rolex buyers or have no interest, as I said in a previous reply I have a Chauffeur business in London UK and drive some very HNW people, hardly ever see a expensive watch, one guy a drive with a net worth of £50 million wears a £1.99 Casio, it used to be cars were a sign of status here but now no one really cares, in time people’s attitudes and wants change, maybe Rolex don’t want the middle classes but will there be enough HNW purchasers in the future no one knows.

[Yess]

Rolex loves limited supply.
They can charge their ADs more for stock because they know the ADs don't discount stock... On the limited models. Win financially and brand recognition for Rolex.

[sgwatchguy]

[sgwatchguy]

My submission.

The Rolex brand has migrated upwards very successfully.

Omega hasn’t. It can’t since they have amateurs running marketing.

Rolex has the best marketing game in town. Refer brand reports and financial results.

Addressing all demand by amping up supply, for these kinds of goods, makes no sense.

Rolex have no HH ambitions visible from either their social media or other marketing or their portfolio and product lines. HH is meaningless to the 99.99% of the watch buying population of this world outside of watch forums. HH brands inevitably get bought up or die. Or bought up and then die. Witness everything that Richemont or Swatch or Kering or LVMH have bought.

Comparing Rolex to PP or AP is a WIS preoccupation. Neither of those 3 brands care too much about it. PP probably hate that their relevance has been reduced to the two most basic references they put out.

Finally.... all opinion on such threads must be viewed as strongly biased stemming from an ownership of one or more brands and how much of the owners ego or self esteem has become entwined with the piece of jewelry on the wrist.

Back to my whisky.

[socalwatchcollector]

Originally Posted by zion_rasta

No. There is nothing HH about Rolex other than brand name recognition.

This^^^

[peterpl]

No. Rolex will need to do much more things to reach that status in terms of movements, complications and even their movement decorations etc....

For now its all hype and the brand recognition. Nothing more

[G.Montag]

Rolex’s strategy is to maximize profit. If they think that they can raise prices without losing too many sales, they will do it. Rolex couldn’t care less about being part of the “holy trinity” (a concept that doesn’t exist outside of a handful of Internet forums).

[Vipes]

Interesting post. I don’t think its Rolex’s strategy to directly compete with HH brands like AP/Patek/etc. I think Rolex’s advertising success (with Rolex ambassadors, social media exposure, celebrity endorsements, etc.) is one of the main reasons for the brand’s success. With this success, demand is much greater than supply thus the difficulty in acquiring SS models.

If Rolex was trying to directly compete with HH brands, it would start hand finishing parts, have transparent caseback, etc. I consider Rolex a luxury tool watch.

[onnomon]

Whatever Rolex does to their movements and cases, it's not their choice. It becomes the watch community, (especially the press) and the public to a lesser extent, to ordain Haute. At the current level of finishing and relatively static designs, this is a resounding NO. The lack of revolution, but evolution instead, is what has made Rolex successful. So this seems to be not in their best interest. "Upmarket" is a pricing/perception strategy. High prices do not equate to Haute.

[Chester01]

No, the reality is that VC, PP, and AP are dress watch companies, their so called sport watches are simply dress watches pretending to be sport watches. Rolex was and is a sport watch company and it’s in their DNA. It’s the trinity that is going after Rolex market share with their so called sport watches. They had to bring in an outside consultant (genta) to come up with a design that could compete and in my estimation never came close. You want proof, Rolex is the most copied design. If the nautilus or RO were great designs (without the label on the dial) companies would be ripping off their designs. They don’t because the sport watch offerings from the trinity look quite dated with the exception of the VC overseas.

[SUPERDOC]

I think the responses so far is consistent with my thoughts... to move upmarket, Rolex would have to do more with movement and finishes.. the cellini line, with moonphase complication is a stunning watch, but seems to languish in the AD showcase...

I think Rolex is just a victim of its own marketing power, and demand is truly outpacing supply.. I can't believe that it is an intentional effort to move upmarket.. because they would alienate the massive base which they need to buy millions of watches...
Although "artificial scarcity" is a valuable strategy - Hermes demonstrates this well...

I just think it's too delicate a balance to be a meaningful longterm strategy ..
Plus there are differences in the distribution model (Hernes is self-owned boutiques vs Authorized dealer strategy).

I still think this is a natural phenomenon, not a premeditated strategy... albeit a natural phenomenon enhanced by some special interest groups outside of Rolex that are seeing benefits...

[173rdabn]

When you go above a very specific price point, your potential market shrinks dramatically. Very few folks are willing or able to spend 100k plus on basically what is jewelry. The higher the price, the more bling incorporated to justify the cost. Exceptions are the million plus dollar watches that are unbelievably complicated and take years to make. You can't sell a million plus watches annually at a price of 100k +.

[Calatrava r]

Rolex has moved up market largely because the value of their product has continued to improve over the years. I remember when the watches had plastic crystals and bracelets made by some third party company that were hollow link and flimsy which streched like rubber bands after just a few years. Plus, the gold was 14 carat on most watches and even plated on some. Plus, the core DNA of Rolex while improving remains constant giving owners long term value not current fashion trends. Rolex is one of the best values for the money right now which is why the company products do so well.

[DG123]

Originally Posted by SUPERDOC

Again I can see both sides of the argument - I just don't see how they could stay exclusive, and continue to put out 1m watches per year - how much could they raise prices to cut down production in order to be exclusive?

Rolex product lines include a good business sense range of models, materials and price points. And the amount of annual production Rolex does for each also makes good business sense.
For its retail distribution Rolex maintains a worldwide network of AD's.
All factors considered, Rolex is a sensational company , owning and managing one of the world's strongest brands.
HH brands (or any watch brand) doing this or that is irrelevant to Rolex.

[kieselguhr]

I think you are confusing popularity and high horology.

I don’t believe Rolex has any intention of joining the ranks of high horology as it does not fit their historical and current theme of robust watches nor their marketing strategy. If they ever make a minute repeater, grand sonnerie, or any actual grand complication, I’ll change my mind. A moonphase and annual calendar does not qualify for high horology. Furthermore, Rolex are mass machine produced. Thus they are missing the essential criteria of being hand crafted, assembled, and finished.

Now, I do believe that Rolex has every intention of using its popularity to increase its price point.

[Cru Jones]

There is no strategy other than producing a good product. Demand has simply outstripped supply. The vast majority of Rolex consumers don’t care about “haute horlogerie”. I bet a majority don’t know much of anything about Patek, AP or VC, let alone micro independents.

[Johnpierpontmorgan]

Originally Posted by SUPERDOC

I think the responses so far is consistent with my thoughts... to move upmarket, Rolex would have to do more with movement and finishes.. the cellini line, with moonphase complication is a stunning watch, but seems to languish in the AD showcase...

I think Rolex is just a victim of its own marketing power, and demand is truly outpacing supply.. I can't believe that it is an intentional effort to move upmarket.. because they would alienate the massive base which they need to buy millions of watches...
Although "artificial scarcity" is a valuable strategy - Hermes demonstrates this well...

I just think it's too delicate a balance to be a meaningful longterm strategy ..
Plus there are differences in the distribution model (Hernes is self-owned boutiques vs Authorized dealer strategy).

I still think this is a natural phenomenon, not a premeditated strategy... albeit a natural phenomenon enhanced by some special interest groups outside of Rolex that are seeing benefits...

Plus one


And HH is nothing but just another type of branding/ marketing

These days most of the decoration and polishing is done by advanced tech tools instead of the traditional filing. The effect of the finishing is different and takes much lesser time to complete the finishing.

Rolex should really reinvest more into making their products even more superior in terms of innovation. Perhaps thinner and higher beat movement that can last longer without servicing for a start

[macrowatch]

Don't know about HH, but it's clear it's becoming a coke and diet coke (Rolex & Tudor) vs Pepsi (Omega) as a distant 3rd.

[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.

[Brny11]

Originally Posted by SUPERDOC

Rolex strategy to intentionally restrict supply,

Lost me right in the beginning. Not certain they restrict supply or demand went up. Until we know that, I assume the rest of what you wrote (admittedly didn’t read past this) is invalid.

[HogwldFLTR]

Rolex has the best brand recognition; HH brands are hardly known by the majority of the world. Sure they sell but they don't have a racket like Rolex has.

[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.