Opinion: Prices below retail

[MRBolton]

Originally Posted by Kinnakeet

Eventually. All things run in cycles. I also have my doubts that Rolex is going to substantially increase volume like many are saying. I’ll have to see that to believe it.

If Rolex is opening up additional manufacturing capabilities, why wouldn't volume substantially increase?

[Kinnakeet]

Originally Posted by MRBolton

If Rolex is opening up additional manufacturing capabilities, why wouldn't volume substantially increase?

I know. I’m probably wrong. I just can’t see them wanting inventory sitting for sale like it was several years ago.

[MrMikee]

A friend of mine received a discount on his recent gold Daytona purchase.. it can happen. How are people here saying it’ll never happen.. I should add that he asked for the discount. I can’t see Rolex ever going on ‘sale’ or actively promoting discounts if that is what you mean.

[slide13]

I think definitely will happen on PM and perhaps TT pieces.

I think it is less likely we'll get back to a time when SS models, Sport models especially, are sold at discount. But it could happen too. You only have to go back to 2017 to a time when that was common. I got 15% off an 114060 that year just by asking for a discount at an AD I'd never set foot in before.

I feel like both Rolex and the ADs will try to protect retail price on those high demand and arguably lower margin (for Rolex) pieces. They'll probably be successful but who knows, if demand cools enough or if they overproduce with these new facilities coming online it could be a thing again.

I think more likely though is they'll protect MSRP and hold off longer on price hikes to effectively lower their price over time.

[Mystro]

On SS Professional models….never.
In fact we are not at even at walking in to a semi filled display cases with TT DJ models. The idea of even getting a SS Professional model on demand at msrp is probably never going to happen let alone below msrp.

This is how luxury goods maintain their exclusivity. Most everyone knows this that regularly buys luxury goods.
It has nothing to do with a “bubble” or current supply. It’s about perception and product management.
Porsche and Ferrari will never sell their more desirable models to anyone that just walks through the door with cash in hand. If anything it’s getting even harder each year.

Rolex is a monster and the very best at protecting its brand image. There will NEVER be a time in the economy that will force Rolex to do anything they don’t want to do.

[MRBolton]

Originally Posted by Kinnakeet

I know. I’m probably wrong. I just can’t see them wanting inventory sitting for sale like it was several years ago.

Publicly, Rolex said, "...we continue to increase as much as possible and always according to our quality criteria." https://finance.yahoo.com/news/why-t...144250922.html

Already it's not terribly uncommon to find a ladies model or a diamond bezel Day Date in the case for sale now, which is something that wasn't really happening two years ago. However, I wish we could truly know how Rolex feels about there not being a normal Submariner being for sale in the case.

On a side note, I just don't feel like it's a good long-term strategy for the brand to expect to always not have the products consumers generally want unavailable. Rolex being the leader of the luxury watch space shouldn't give would-be customers any more reason to have barriers to entry and push people towards no watch or smart watches.

[Sublovin]

Originally Posted by Kinnakeet

I know. I’m probably wrong. I just can’t see them wanting inventory sitting for sale like it was several years ago.

I agree with this. Many companies learned through the pandemic that it can be beneficial to control inventory supply. As demand decreases, I could see them decreasing supply to still maintain price integrity

[L_S_SHOE]

It’s the topic that just won’t die…


Sent from my iPhone using Tapatalk

[t65tampa]

I think the pendulum is swinging towards lower aftermarket prices for watches and some discounting in the new retail market. We'll see. I'm not really wanting anything right now, so not a big concern of mine. Doesn't hurt or help a watch collector if they buy for what they want and not for a profit goal.

[S.Explorer]

It's a possibility...wait for the resellers to drop their prices and ADs may have to discount once their order backlog has cleared.

[dannyboy123]

Originally Posted by MrMikee

A friend of mine received a discount on his recent gold Daytona purchase.. it can happen. How are people here saying it’ll never happen.. I should add that he asked for the discount. I can’t see Rolex ever going on ‘sale’ or actively promoting discounts if that is what you mean.

I take it that this via an AD and the discount was off MRSP? that's quite interesting. I paid full whack for my gold Daytona recently and there was no way the AD was going to offer a discount. That's quite a promising sign for those after PM models.

[dannyboy123]

I guess no one knows. I would be stunned if AD's start offering regular discounts, even on TT and PM, but potentially stand to be corrected by MrMikee as above, whilst feeling like a tool for paying MRSP for my Rose Daytona (I did save 15% going duty free though).

Isn't the point of veblen goods that you have to make them hard (ish) to get, not just expensive i.e. exclusive. The reality of Rolex is it's not either really, well not compared to AP and/or PP.

It would be nice if availability improved for all, but methinks they don't want these items to be available, and of course Rolex doesn't have a traditional business model regarding growth and returns to shareholders etc.

[Solo118]

Who knows what the future brings, but you can always find certain PM models for under MSRP at the grey market!

[Mathematoxic]

I believe TT and some PM models will see discounts in the future. Just in the recent weeks, a Brand New unworn NOV 2023 yellow gold Daytona 116508 with the “Paul Newman” dial got auctioned off in a popular and trusted watch group for USD $39751.
Many other listings sits there unsold with prices very very close to MSRP.
Flippers are gone! Yay!

[Zach69SS]

The discounts will return, when all the hype dies down and yes the Ads will continue their games of bundling and spend history. People who can afford a Rolex or 2 dislike all the these games.i know, I do. They will be calling all of us soon and maybe by then the grey’s will be like before always a better deal, even better when used. Some pieces will have a premium always.

[0nly5iv3Digits]

Plot twist - Rolex accelerates the “winding down” of their ADs, bringing the brand completely in-house via a boutique-only/bucherer experience. This is the play, gentlemen. And the price is the price.

[MrMikee]

Originally Posted by dannyboy123

I take it that this via an AD and the discount was off MRSP? that's quite interesting. I paid full whack for my gold Daytona recently and there was no way the AD was going to offer a discount. That's quite a promising sign for those after PM models.

Yes, it was from an AD and the MRSP. His SA let slip that a few people actually turned down the watch before he got the ‘call’. So he thought he’d try his luck and go for a discount. They gave it to him. I honestly think it’s somewhat country dependent. In the UK, most AD’s now have gold pieces available. I travel for work and noticed outside of a SS GMT or Daytona, different countries have models that are popular in that region. Something that might struggle to sell in the UK, may easily sell in New Zealand for example.

[Neil McCauley]

My 2p:

We're probably not far from widely being able to get discounts on certain pieces already. Hence why we've just seen a % price increase on PM models. The AD's can discount them and it still falls within profit margins for Rolex. AD's have struggled to shift a lot of PM models for a while now, such as WG Subs/GMTs etc.

However, there will be other models, mainly the big SS pieces that will never be discounted, ever. GMT masters, Submariners, Daytonas etc - these watches still today have a list as long as your arm of people dying to get one, that demand is not going away. Having these products, which are staples of the brand sat there for a discount is damaging for Rolex.

Importantly, these new production facilities don't mean that Rolex will immediately be pumping out double, maybe triple, the current production - it doesn't work like that. Note that they currently cannot meet demand AND their quality control standards. They could probably meet demand if they lowered standards, but (refreshingly in this world) they're not willing to lower their standards in order to ramp up production. It must be done incrementally rather than just doubling up watches that run through the process. It's no good producing 3 times the number of watches if 7 out of 10 watches that leave the factory fall apart within the first month.

You might find, that these 3 new factories may be focused on things like crystal growing, bezel production, hand production, or some new proprietary tech that Rolex is working on, perhaps it's titanium production. None of this means that Rolex will go from an estimated 1 million watches a year to 3 million in the space of a year. They will actively want to keep their production levels below demand, because why would you not?

[APPRF]

Originally Posted by rss723

Do you think there will ever be a time where ADs are giving a % off retail. Or are those days never coming back?

Rolex is already preparing for this time. Frequent increases of retail on FG and TT to give their ADs margin to discount unpopular models in the future. It's a psychology thing. All other brands are doing the same.

[Moonwatcher]

FWIW, i went to a well-known to me AD yesterday to enquire for a SD43. I got a courteous “not available anytime soon”. Maybe I’ll look for a 116600 after all.

A little and very recent backstory: in the course of 2023 and this spring, we’ve purchased a 126231 and a 126234 DJ’s, the former for my wife the latter for myself. Ok nothing extraordinary by any Rolex/TRF standards but still. The 126231 was a walk-in purchase, the 126234: 1,5 years wait, as i had been told.
I have also a GMT Master II 126713GRNR purchased from another AD in my same home country, after having been for 3 or so months on the “list”.

Yesterday however, the SA showed me their lists. Orders, declarations of interest or whatever that’s called are closed for ALL models but for the full gold Everose CHNR and the full YG Sub. So we d basically wouldn’t be even able to be admitted to be waiting for the watches we purchased last year, with acceptable or no waiting times, if we wanted today. I am not even talking about Subs or SS GMT’s. Da…onas? God forbid!
An explanation could be that my relevant domestic market is totally insignificant when compared to the US or Middle East markets, and that’s where the watches go. So when you guys and girls in the US or elsewhere rejoice about some form of increasing availability levels, it’s good news. In smaller markets in midsized European countries however, even Switzerland, things are not really moving, quite the contrary.

So, at least in the few European countries I have an experience in, demand is still extremely high and discounts not foreseeable anytime soon.

[Moonwatcher]

Originally Posted by Neil McCauley

My 2p:

We're probably not far from widely being able to get discounts on certain pieces already. Hence why we've just seen a % price increase on PM models. The AD's can discount them and it still falls within profit margins for Rolex. AD's have struggled to shift a lot of PM models for a while now, such as WG Subs/GMTs etc.

However, there will be other models, mainly the big SS pieces that will never be discounted, ever. GMT masters, Submariners, Daytonas etc - these watches still today have a list as long as your arm of people dying to get one, that demand is not going away. Having these products, which are staples of the brand sat there for a discount is damaging for Rolex.

Importantly, these new production facilities don't mean that Rolex will immediately be pumping out double, maybe triple, the current production - it doesn't work like that. Note that they currently cannot meet demand AND their quality control standards. They could probably meet demand if they lowered standards, but (refreshingly in this world) they're not willing to lower their standards in order to ramp up production. It must be done incrementally rather than just doubling up watches that run through the process. It's no good producing 3 times the number of watches if 7 out of 10 watches that leave the factory fall apart within the first month.

You might find, that these 3 new factories may be focused on things like crystal growing, bezel production, hand production, or some new proprietary tech that Rolex is working on, perhaps it's titanium production. None of this means that Rolex will go from an estimated 1 million watches a year to 3 million in the space of a year. They will actively want to keep their production levels below demand, because why would you not?

Very valuable 2p. Thank you.

[Daveh777]

[QUOTE=Giovannibravo;13286516]I wonder if Rolex begins to see PM sitting in cases, if they will begin to manufacture less and move to SS.

I strongly doubt this. Rolex have seen what happens to brands who tried that strategy of changing mix, and therefore will stick with a specific mix of PM, Rolesor and SS. What is happening now will continue and SS models will retain greater value due to scarcity and Rolesor models will be cheaper than SS.

Scarcity drives demand and therefore price. Think of the PP Nautilus advertisements in the mid to late 1970’s and what this model is worth in SS.

Buyers who buy the PM models are then preferenced for SS models, which they can either keep or sell at a premium. The brand positioning and prestige is thus maintained and the only losers are… guess… and I’m one.

[Harry-57]

Originally Posted by MrMikee

A friend of mine received a discount on his recent gold Daytona purchase.

That's useful to know. Thanks.

[colonelpurple]

Originally Posted by rss723

Do you think there will ever be a time where ADs are giving a % off retail. Or are those days never coming back?

Demand vs Supply
As soon as it flips
BTW Rolex is building a new factory, to increase production in 2025. Expect more flips in 2025-26. A new world

[Neil McCauley]

To those who think a new factory is going to make a huge difference in production quantities in the short term... think again people.

That's not how this works. You don't maintain this kind of quality control and just double/triple everything. The new factory will likely take care of certain things that may be currently done by outside providers (and roughly coated as "Rolex in-house")
The proper factory won't be outputting watches until 2029, and the current 3 new factories are "popups". The new factories will probably increase total output by about 25-30% max, because that's all it can do before you start to negatively affect quality. You essentially end up with Swatch.

Companies do this to take control of their entire manufacturing supply, in order to control their output more efficiently. It's not a case of "we now have 10X more machines all doing the same thing and 10X more people all doing the same thing"

[OTX]

For steel sports models, I doubt you’ll ever get a discount again. I think Rolex learned from the last few years that the scarcity of these models pushed up the interest for the Rolex brand in general and because of that, pieces that were harder to move in the past have been selling. Many people just wanted a Rolex.

From a business point of view, I think it would be smart for Rolex to keep the steel models hard to get to create an aura of exclusivity for the brand as a whole. Also, discounts kills the prestige of the brand.

Don’t forget, out of the 1.2 million watches sold by Rolex last year, Rolex made 54000 GMTs total(a lot less in steel) and 100000 Submariners(a lot less in steel). So basically over a million of their watches are not a GMT or a Sub. That’s where the real money is!.

[tacotaco]

It might happen but not likely in the near future (aka next 5 years)

Several reasons:
-Rolex will continue to exert more control over ADs, and monitor final sale price in line with recommended MSRP. If they see models going out at lower than MSRP that might ding the AD and even lose status to sell - which is huge revenue generator - therefore they will comply

-They are also now dipping into CPO space to control brand value and squeeze out resellers. In the future I will see resellers sell a minimal premium for hard to find pieces and catered to buyers who dont want to wait waiting

-Rolex has been doing this for decades. They can ramp up or down production or sell to different markets. Asia is still a big behemoth with new wealth in China and India, and they can work the same model there while holding back supplies to North America creating scarcity and thus that mindset

-Even if they ramp up production 100% to 2 million watches in 2029, the demand is there so unlikely discounts will happen

-Discounts will be likely in the pre-owned space with grey dealers but if you want new from AD, no discounts, and you wait - and if you dont want to wait pay a premium

The Paradox with luxury items is that scarcity breeds demand, and if you fulfill that demand, the demand goes down because its not exclusive now. Rolex knows how to create exclusivity by controlling supply and price. They will continue to raise prices in line with inflation and demand, and exclude out buyers on the lower end of socio-economic spectrum while controlling supply to certain markets. This is pure economics executed at a very high level because they create their own market.

[Neil McCauley]

Originally Posted by OTX

Don’t forget, out of the 1.2 million watches sold by Rolex last year, Rolex made 54000 GMTs total(a lot less in steel) and 100000 Submariners(a lot less in steel). So basically over a million of their watches are not a GMT or a Sub. That’s where the real money is!.

Where did you get those numbers?

[OTX]

Originally Posted by Neil McCauley

Where did you get those numbers?

https://quillandpad.com/2024/02/13/r...-rolex-make-2/