Rumor? Rolex ending partnerships with hundreds of ADs, focusing on boutiques

[Flypanam]

Well, I have some possible bad news regarding the distribution and availability of Rolex watches. PLEASE TAKE IT ALL WITH A GRAIN OF SALT BECAUSE IT'S JUST INFORMATION I GOT FROM MY SA, PLUS A BIT OF SPECULATION ON BOTH OUR PART.

I went to the AD today to get a link removed from my Daytona. While the watchmaker in back was working on it, I was chatting with the SA. I noticed that they removed their Cartier section completely and that the Rolex section had even fewer than usual exhibition pieces. It was downright bare. I asked about it, and she said they "lost" Cartier and Rolex.

I asked what the heck does that mean... "lost"?? Where did you lose them!? She mentioned that Cartier pulled out of their store completely, citing plans focusing more on selling watches primarily through boutiques rather than jewelers. I asked what about Rolex, and she said they are doing the same thing.

While admittedly she is an SA and not one of the big bosses, she was involved in conversation because she is THE Rolex SA at this particular jewelry store, very knowledgeable not just some glorified sales clerk. They are apparently quite concerned about their business, and understandably so. This store is one of two remaining ADs in my state, with many customers coming from far and wide, and Rolex watches alone made up 60% of the store's revenue (the other 40% from their jewelry, diamonds, and other watch brands including Omega and Tag). It also sucks because they have a Rolex certified watchmaker on staff, and I believe they just hired a second one, and were really advertising how they could service watches professionally in-house without having to send them out.

Apparently they are no longer receiving shipments of new Rolex watches for the rest of the year, stuck with just their remaining stock, and according to her the plan is for Rolex to end partnership with 300-500 ADs worldwide over the course of the next year. The store's management is thinking that with the acquisition of Bucherer / Tourneau, Rolex's plan to expand and sell more from dedicated Rolex boutiques instead. This AD is in a bit of a holding pattern now to see what the end of the year brings as this all just kind of blindsided them.

Wonder if this is a bit of a hubris move on Rolex's part, or it it's part of some plan to try to cut down on ADs that Rolex has no direct control over (such as no oversight against selling to gray market retailers)... or both.. it's not mutually exclusive. I think this might be a credible idea, since back when the acquisition occurred the thought was "The Bucherer deal will give the brand a direct line to its customers and more control and oversight for distribution, allocations as well as pricing for pre-owned timepieces." per an August 2023 article. The other thing the SA thought was that Rolex seems to want big, opulent stores in big cities, rather than being distributed by random (though high-end) jewelers in suburbs, etc, for "brand image". My AD being one of these suburban high end jewelry stores. We agreed this is stupid, people don't want to drive into a busy city just to shop for watches when they used to be able to at their local jeweler, but on the other hand we also don't know what's going on in Rolex marketing's mind.

As mentioned, not sure if this is all 100% true (or even partially true) and it's partly speculation on my and the SA's behalf, but the store itself looked rather bleak and I can't really think of any ulterior motive for the SA to share all of this with me.

Wondering if anyone else has heard anything similar?

[Robison347]

My dealer in a small Northeastern city is still getting watches, but is also keenly aware that Rolex is canceling dealers all around. Their feeling is that all they can do is to offer to build a boutique, and sell as many watches as possible, and not have them end up on the grey market. They have to do their best and hope its enough

[Flypanam]

Originally Posted by Robison347

My dealer in a small Northeastern city is still getting watches, but is also keenly aware that Rolex is canceling dealers all around. Their feeling is that all they can do is to offer to build a boutique, and sell as many watches as possible, and not have them end up on the grey market. They have to do their best and hope its enough

Man that's a shame. I knew Rolex wanted to build up their own more direct boutique network, but I had no idea the scope of them stopping working with ADs on such a large scale, and so suddenly as well.

[Robison347]

Even a small dealer gets 400-500 watches a year, so that probably represents at least five millions in sales and several jobs for any dealer. No doubt they are bummed. I would be too.

[Casey VP-26]

Where has everybody been? This has been going on for the last 10 Years, or more

[L8r]

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

[garyk]

Originally Posted by L8r

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

In my city, Watches of Switzerland has built a Rolex only boutique store right next to their store that has all their other brands. I think they are protected for now?!

[fooey]

Originally Posted by L8r

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

A lot of people will hope they do!

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[NigeG]

Originally Posted by L8r

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

I hope they do. Bunch of shysters


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[ratty]

Originally Posted by L8r

Hope they don't dump Watches of Switzerland. It's all we have out here in the sticks.

I really do hope they dump WoS.

[Krash]

How many Rolex boutiques actually exist today?


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[Harry-57]

If they really are getting rid 300-500 ADs worldwide in the next 12 months we are going to hear about it and/or experience it soon enough.

[Krash]

Originally Posted by Harry-57

If they really are getting rid 300-500 ADs worldwide in the next 12 months we are going to hear about it and/or experience it soon enough.

This is why I’m not buying it.


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[watchmavan]

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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[febie111]

Originally Posted by watchmavan

the evidence supports that ad’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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+1

[BillA]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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A tough love position. It is speculation that AD’s sell out the back door to greys. Perhaps some have, but some have not.

Now if you tell me you have no sympathy for the grey guys, I will agree with you. During Covid they were the ones jacking up prices to these crazy levels.

[xrole]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.

Yup, Rolex boutiques will generally mean a far higher standard of service and consistency.

[Krash]

Originally Posted by xrole

Yup, Rolex boutiques will generally mean a far higher standard of service and consistency.

If you tell me that they are phasing out some ADs, then that’s believable.

If you tell me they are phasing out all ADs in favor of boutiques, then that sounds like utter nonsense to me. I’ve seen episodes of Ancient Aliens on the History Channel that are more believable than that.


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[watchnwine]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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The cars the AD sales people drive that park outside the store reveals what's going on. No tears from me...

[hambone1983]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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I don't think this is entirely true. No doubt they've been feeding pieces to the greys, but if they were allowed to sell watches at the going rate they would have little incentive to do so. It's not a winning hand to tell a business that it has to sell something 30% below what his customer could get for it within 24 hours, then make the AD responsible if the customer does so. Rolex created this arbitrage problem, not the dealers.

[HiDive]

Originally Posted by hambone1983

I don't think this is entirely true. No doubt they've been feeding pieces to the greys, but if they were allowed to sell watches at the going rate they would have little incentive to do so. It's not a winning hand to tell a business that it has to sell something 30% below what his customer could get for it within 24 hours, then make the AD responsible if the customer does so. Rolex created this arbitrage problem, not the dealers.

At my AD they sell pre-owned Rolex and they send some off to other dealers. I don't know how they determine which go and which stay but I know they do both. The used watches are priced above the retail ones, but maybe not quite as high as what I see them for online.

[Golfbone]

Originally Posted by watchmavan

The evidence supports that AD’s have brought this upon themselves, if it does indeed happen. They have created and fed the grey market for years. No sympathy whatsoever.


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While this may be true I suspect a lot of small AD's who have been honest players are getting tossed out with the bathwater and this is really a killer for their businesses. My local jewelry store, from whom I've purchased a few Daytonas,a SkyDweller, Sub and OP from lost their Rolex account and while I used to go in their to browse, shoot the shit and buy some gifts for my wife and whatever, now I rarely go in because they no longer carry Rolex. It's a big loss for these guys when a marquee brand like that is cleared out and now they are pushing Breitling or whatever.

[metallic]

This is most definitely the trend for desirable watch manufacturers. Sell direct at retail price rather than wholesale. Of course they have to manage the brick and mortar but the Bucherer acquisition made that a very easy transition.

[Dave O]

My thoughts for what it is worth. Is Rolex getting rid of some smaller AD's? Yes. In large part they have either gotten in trouble by Rolex or they aren't willing to spend the money needed to upgrade the store per Rolex's request. My Rolex AD isn't large, but they are spending the money to upgrade their store per Rolex's wishes. It's a lot of money to invest just to upgrade your store, but it is required by Rolex if they want to continue to be a Rolex AD. The fact that this particular AD is losing both Cartier and Rolex makes me think there is more to the story here.

Are they down sizing their distribution network? Maybe a little, but not a lot. Rolex sold over 1.2 million watches last year. There are around 2000 AD's in the Rolex network. That means on average each AD is selling around 600 watches a year. Take 500 AD's out of the network and each store goes up to 800 watches/year. And with the new temporary facilities coming on line late this year and early next year output will most likely increase. That's a lot of volume per store.

Again, just my thoughts on the subject.

[BroncoOne]

Originally Posted by Dave O

My thoughts for what it is worth. Is Rolex getting rid of some smaller AD's? Yes. In large part they have either gotten in trouble by Rolex or they aren't willing to spend the money needed to upgrade the store per Rolex's request. My Rolex AD isn't large, but they are spending the money to upgrade their store per Rolex's wishes. It's a lot of money to invest just to upgrade your store, but it is required by Rolex if they want to continue to be a Rolex AD. The fact that this particular AD is losing both Cartier and Rolex makes me think there is more to the story here.

Are they down sizing their distribution network? Maybe a little, but not a lot. Rolex sold over 1.2 million watches last year. There are around 2000 AD's in the Rolex network. That means on average each AD is selling around 600 watches a year. Take 500 AD's out of the network and each store goes up to 800 watches/year. And with the new temporary facilities coming on line late this year and early next year output will most likely increase. That's a lot of volume per store.

Again, just my thoughts on the subject.

Agreed. Rolex has a brilliant business model. It has ADs spend all of the money on the stores and the upgrades and they pay in advance for whatever inventory Roles decides to ship the.

Rolex sells them every single watch that it produces, whether the ADs want those particular models or not

I’m not sure why Rolex would even want any more than a handful of its own boutiques.

[HiDive]

Why wouldn't Rolex do this. Omega and Breitling have boutiques where they carry certain models that are not available (at least initially) to regular AD's. Rolex has it's new factories coming online in the next couple of years so they should be increasing their output of watches. I know that the Rolex AD's in my area have all built some very fancy Rolex areas in their stores which are taking a more significant percentage of their floorspace than previously. The Omega and Breitling boutiques That I have bought from in the last couple of years are only for those brands. I don't know if Rolex is doing that?

[Krash]

Originally Posted by HiDive

Why wouldn't Rolex do this. Omega and Breitling have boutiques where they carry certain models that are not available (at least initially) to regular AD's. Rolex has it's new factories coming online in the next couple of years so they should be increasing their output of watches. I know that the Rolex AD's in my area have all built some very fancy Rolex areas in their stores which are taking a more significant percentage of their floorspace than previously. The Omega and Breitling boutiques That I have bought from in the last couple of years are only for those brands. I don't know if Rolex is doing that?

Omega and Breitling are still sold at authorized dealers.

So how many boutiques do they need and how much will that cost?

Let’s use round numbers and say 300. Let’s assume $5 million up front costs per boutique. That’s $1.5 billion right there. And that doesn’t include ongoing operating costs.

If I put my business hat on, it’s hard for you to convince me they should get rid of the authorized dealer network.


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[HiDive]

Originally Posted by Krash

Omega and Breitling are still sold at authorized dealers.

So how many boutiques do they need and how much will that cost?

Let’s use round numbers and say 300. Let’s assume $5 million up front costs per boutique. That’s $1.5 billion right there. And that doesn’t include ongoing operating costs.

If I put my business hat on, it’s hard for you to convince me they should get rid of the authorized dealer network.


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I am not trying to say that Rolex will have exclusive boutiques but that they could if they want to . They have actually had exclusive boutiques for many years. In NYC they have their own store in the Rolex Building midtown Manhattan. My wife used to go there on business, because she was the Aetna Rep for their company Health insurance. I don't know if they have more in other cities, but my guess is they do. There are a handful of single brand boutiques in Honolulu, but I think they are owned by a private company, Tourneau.

I definitely do not think that any of the brands should get rid of their AD's, I was just trying to make the point that even though Omega and Breitling have regular jewelers as AD's they also have company owned exclusive Boutiques and why shouldn't Rolex have both types of sales outlets as well. Omega and Breitling have certain models that are only offered through these company owned Boutiques but as far as I know Rolex does not do this.

[TomInNJ]

Originally Posted by HiDive

I am not trying to say that Rolex will have exclusive boutiques but that they could if they want to . They have actually had exclusive boutiques for many years. In NYC they have their own store in the Rolex Building midtown Manhattan. My wife used to go there on business, because she was the Aetna Rep for their company Health insurance. I don't know if they have more in other cities, but my guess is they do. There are a handful of single brand boutiques in Honolulu, but I think they are owned by a private company, Tourneau.

I definitely do not think that any of the brands should get rid of their AD's, I was just trying to make the point that even though Omega and Breitling have regular jewelers as AD's they also have company owned exclusive Boutiques and why shouldn't Rolex have both types of sales outlets as well. Omega and Breitling have certain models that are only offered through these company owned Boutiques but as far as I know Rolex does not do this.

The boutique in the Rolex building (which is closed at the moment because a new building is being built) is not Rolex owned. It is owned and operated by Wempe.

[HiDive]

Originally Posted by TomInNJ

The boutique in the Rolex building (which is closed at the moment because a new building is being built) is not Rolex owned. It is owned and operated by Wempe.

I had no idea. I have never been there, just my wife on her business trips to deal with Rolex. Does Wempe own / run the repair facility there as well?