Should Rolex Increase Prices To Level Supply/Demand

[alphadweller]

It would be the worst time for Rolex to raise their prices to grey market level. I think they'd essentially kill demand. We are possibly entering a buyer's market, prices are correcting, non-watch enthusiasts want to get rid of their "investment" watches. In the meantime, Rolex are still churning 1m pieces a year, if not more. With inflation sky-high and the specter of recession looming, now's not the time to fool around with pricing.

[beshannon]

Originally Posted by alphadweller

It would be the worst time for Rolex to raise their prices to grey market level. I think they'd essentially kill demand.

If the demand is there in the secondary market, how would this kill it?

[alphadweller]

Originally Posted by beshannon

If the demand is there in the secondary market, how would this kill it?

A big chunk of the crazy demand of late comes from short term "investors". These might very well vanish if prices keep coming down.

[beshannon]

Originally Posted by alphadweller

A big chunk of the crazy demand of late comes from short term "investors". These might very well vanish if prices keep coming down.

Or will those with capital scoop up the available supplies?

Far too many people here that think they have the entire scenario figured out.

[alphadweller]

Originally Posted by beshannon

Far too many people here that think they have the entire scenario figured out.

Nope, only my take on what I think might happen, no certainties here.

[Kevin of Larchmont]

Originally Posted by beshannon

Or will those with capital scoop up the available supplies?

Far too many people here that think they have the entire scenario figured out.

Conversational speculation is one of the hallmarks of a forum. And as long as we are conversationally speculating buying on the way down is a bad bet, buying on the way up is how you make money. The art of this is predicting the bottom and the top.

[Xerxes77]

Originally Posted by Adam84

I suppose flip this question around.

If Rolex set their prices at the current market levels, would there be the demand?

I would suggest a good part of the appeal is the asset/ investment part, if the prices are raised to that level so there is 'no margin' left in it for flippers, will demand still be there? Youve already seen it on here in recent weeks, people panicking about losing a bit of money having paid at the peak.

Also while Rolex is expensive, the pieces are currenlty at a price point that is still attainable if you save money/ work hard. if a 7k GMT suddenly becomes a 25k watch at retail you will lose a portion of buyers that simply cant afford the market value.

Personally i think if they raised prices to market value, a lot of people would be turned off and would find better places to spend 25k like with Lange, H Moser etc.

Good point

[BlueLight]

They won’t increase prices to meet supply/demand but they will for inflationary pressures like the increase in steel prices and wages so their margins remain the same. The less desired pieces will slowly come back on the shelves, my local AD has three lady datejusts now on display but not expecting to see Daytonas just yet ! I don’t think its about buying for profit necessarily, Rolex is a luxury product that the rich can afford to buy easily and for those who are fairly well off but still have financial constraints, a Rolex holds its value in comparison to other brands, so it means you can wear it for many years and get your money back when you want to sell, sometimes with a profit which is a bonus. That’s a big factor in its popularity.

[Kevin of Larchmont]

Originally Posted by Driver8

Aside from the OP's question of who would be winners and loser, arbitrarily raising prices to cash-in on high demand is actually quite a dangerous thing for a luxury goods company to do.

If as a manufacturer you follow the fickle whims of consumer demand in your pricing (and production), you can very easily find yourself coming to a point where demand drops and you then have to lower your RRP, or start discounting. No prestige company worth it's salt wants to do that as brand image is often the single most important piece of capital they have - and Rolex is absolutely no exception in that regard.

A good case in point for me is Panerai - a few years ago they were one of the hottest properties in the watch world. Demand was sky-high and they followed the money by increasing production and pricing accordingly. In recent years that demand has dropped considerably, so discounting is now available where once there was only waiting lists. We're also seeing them "dumb-down" their movements these days - no doubt in an attempt to keep costs lower.

Rolex does not play that game, simply because it doesn't need to. With no share-holders to satisfy, they can go their own merry way, and as it stands they sell literally everything they make for the price they want to sell it for. There's zero incentive for them to change anything.

Not to mention the fickle whim of the consumer regarding style. Their watches with in-house eight day movements used to sensibly say “8 Days” on the dial until the Paneristi whined and they changed it to “8 Giorni” which would’ve been just fine in the first place but as a knee-jerk reaction just looked strained. Pick a lane.

[jsausley]

If Rolex marks a Submariner up to $20k, now flippers will try to push $30-40k, which leads to no one buying them, which leads to the hype dying down, which leads to Rolex sitting in stores again, which leads to dealers having to offer discounts to move watches, which is bad for Rolex.

So, no.

[jimcameron]

They should raise prices to the point where supply will meet demand.

[Kevin of Larchmont]

Originally Posted by jimcameron

They should raise prices to the point where supply will meet demand.

And when demand drops then what do they do.

[jimcameron]

Originally Posted by Kevin of Larchmont

And when demand drops then what do they do.

Lower prices, silly.

[joli160]

They should do nothing to disturb the way it is.

It has never been better than now. All models are sold without a discount.
AD’s making more than ever. Buyers feel privileged and everybody is happy.

[mountainjogger]

Originally Posted by joli160

They should do nothing to disturb the way it is.

It has never been better than now. All models are sold without a discount.
AD’s making more than ever. Buyers feel privileged and everybody is happy.

Agreed.

[webble1]

My thoughts only - I’m not a finance guy!!!

-Grey dealers…no impact long term. They will buy what they buy and add a margin. Whether they buy at todays inflated prices or less than retail I don’t think it matters. They may be making more of a margin at the moment though? They were doing this before these crazy times of over retail. There may not be so many of the newer dealers left if things do go back to where it was?


-Flippers….as long as they can sell above retail they will carry on. The lower the price above retail the less flippers I would think.


-Availability in ADs….only improvement is if the price for grey market with margin is equal to or less than retail.

[Driver8]

Originally Posted by jimcameron

Lower prices, silly.

Unfortunately as I said in my earlier post in this thread, yo-yo-ing prices to follow consumer demand is a sure-fire way to damage brand image. The fact that Rolex doesn't do that, and the fact they have one of the strongest brands on the planet, should tell you all you need to know.

[Andad]

Originally Posted by Rolexken

Who would be the winners and losers in the short and longer term ?

-Grey dealers
-Flippers
-Availability in ADs

Etc

Apologies if already covered to death in other threads.

Not covered ….. more like beaten.

[Kevin of Larchmont]

Originally Posted by jimcameron

Lower prices, silly.

Ahh… you said “Destroy the brand” wrong.

[diverbennett]

If they do increase prices, that will have consequences when inflation levels out.

[Time Out]

Originally Posted by beshannon

If the demand is there in the secondary market, how would this kill it?

You act like 50k Panda's and 35k BLRO's were being sold to end users. 99% of us just stood on the sidelines in disbelief.

[francoamerican]

Originally Posted by Time Out

You act like 50k Panda's and 35k BLRO's were being sold to end users. 99% of us just stood on the sidelines in disbelief.

yeah i've been rethinking what i have though of as "market price"

between capital gains taxes, transaction costs, bid ask spread, house money fallacy, sentimentality, sellers remorse, people are simply holding onto 500,000 daytonas made in the 6 years (across all models) generally leaving too small a secondary market supply.

If these floated, enough people would pass at say $23K that there would be inventory AD.

However since most of us believe rolex are NOT the magical hedge to hedge all hedges combined with the pinnacle of desire for the 1,000,000 billionaires out who will buy every rolex at every store, we believe that a true high volume rolex market price would sometimes go down if it floated.

[Andad]

We?

[AlbionJackal]

My limited understanding is that what is most important to the Trustees at Rolex, is the brand. Not income. Not growth but it's name and the brand.

Would another (third) price hike affect the brand? Of course not. Would if affect demand? Once again, of course not. Sure those poor (!) people who rely on calls from their pals at an AD might have to dig deeper buy hey, ain't life a bitch?

We're not talking Richemont or Swatch here. What matters most is the prestige of obtaining a Rolex, whether via an AD or otherwise.

One can bang on about haute horologie all one likes but that brand is worth the extra until it isn't. In the meantime you can count on the trustees at Rolex, price hike or no price hike, to protect the fact that it is.

If you don't want to pay... buy Omega.

In Rolex we trust.:cool: