Has Rolex played the greatest bait/switch?

[2ltdjorn]

It’s hard press to believe in modern times that any mass produced item is really scarce. In the terms of Rolex, the supposed shortage of stainless steel Rolex models have the essentially created a modern “tulip” craze?

By limiting Rolex supply. Greys have absorbed all they can of stainless models, often at above MRSP. The short term shortage has caused some other slow movers to be absorbed for those looking to buy anything.

Would a surge or release in models in the next year or two, particularly matched with a global recession leave grey dealers holding excessive stock in artificially inflated scarcity?

The Rolex shortage nothing more than brilliant business strategy that creates a market that moves less desirable models, in the same market destroys the grey market?

I guess we will know in a few years?

Thoughts?


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[Brew]

deleted

[AK797]

Rolex tried to use stickers as a way of combatting the flippers and by extension the grey market, they are complete amateurs on this side of the business and have thus quite rightly done nothing different for years, it is only the world around them that has exploded to their utter bewilderment for many well documented reasons. They know what they are good at, making watches, and what they are not, making market moves.

[Chester01]

Originally Posted by 2ltdjorn

It’s hard press to believe in modern times that any mass produced item is really scarce. In the terms of Rolex, the supposed shortage of stainless steel Rolex models have the essentially created a modern “tulip” craze?

By limiting Rolex supply. Greys have absorbed all they can of stainless models, often at above MRSP. The short term shortage has caused some other slow movers to be absorbed for those looking to buy anything.

Would a surge or release in models in the next year or two, particularly matched with a global recession leave grey dealers holding excessive stock in artificially inflated scarcity?

The Rolex shortage nothing more than brilliant business strategy that creates a market that moves less desirable models, in the same market destroys the grey market?

I guess we will know in a few years?

Thoughts?


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They are limited because people’s preferences shifted from the DD and DJ which were ubiquitous in the 80’s and consistent with that time period more loud (and apparent displays of wealth more common) and modesty on the decline to the ss models. The ss sport models were not as desired then. I have a u series sub, 97-98, but was given to me on Christmas 1999, so it sat for a while. So the sport models (which did not scream new money ) were not as in style. As people made more money and the economy became bad in 2007-2008, the wealthy still had the money, but wanted to be more modest about it.

However Rolex is not going to increase production to address the shift, why would they

[Nikrnic]

It seems to be working for now on the mass market but I'm sure many people have bought other brands more than going grey or PM so there's some backfire there. My last recent purchase was a Rolex, although it is 15 years old so that so called strategy did not apply to me. Only time will tell when, if and how the bubble will burst or slowly deflate.

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[othertbone]

A few models doubling in price and many trading way above retail is hardly a tulip craze or bubble waiting to happen. Far from it

[Notsoprobro]

I can't say I disagree with this logic but as stated before, its all speculation. While Rolex may produce 800,000 watches a year(https://www.est1905.com/about-rolex/...umbers/#800000), it's hard to say how many of each watch get produced.

When you think of the whole line up, from datejusts to pearl masters from SS to Platinum theres quite a variation. Then we look at the sheer number of AD's around the world, whom the busiest of which claim to only see 2-3 of a specific watch a month between thousands of customers.

Even if we ignored the less popular watches and the PM options we are left with many popular references.
Sub
Sub ND
Sub LV
BLRO
BLNR
White Daytona
Black Daytona
Black Sky D
Blue Sky D
White Sky D
Every variation of the Datejust
etc.

I didn't even get to touch on ladies datejusts...

My point is that while Rolex does mass produce their watches, their lineup is extremely diversified between many configurations and metals meaning there honestly is less coming into the market then the 800,000 number being thrown around. Furthermore, maybe by increasing the input the quality we all enjoy may go down?

I personally think the market is being driven by social media and demand is at an all time high because there is more money being spent right now. I think when the market slows down so will the demand. But with every youtuber and instagram influencer flaunting their RG SkyD and their fans looking for the cheaper alternatives in droves, or emerging economies looking for items to park their money into... it'll continue to be this way for a while.


Sorry if this is scattered/all over the place. Just my rambled thoughts

[Mystro]

A lot of long time watch makers believe Rolex is clearly pushing into the PM market harder and reducing SS models.

[Notsoprobro]

Originally Posted by Mystro

A lot of long time watch makers believe Rolex is clearly pushing into the PM market harder and reducing SS models.

Way more profit margin, especially having their own refinery.

[Crazy Lugs]

Originally Posted by Chester01

They are limited because people’s preferences shifted from the DD and DJ which were ubiquitous in the 80’s and consistent with that time period more loud (and apparent displays of wealth more common) and modesty on the decline to the ss models. The ss sport models were not as desired then. I have a u series sub, 97-98, but was given to me on Christmas 1999, so it sat for a while. So the sport models (which did not scream new money ) were not as in style. As people made more money and the economy became bad in 2007-2008, the wealthy still had the money, but wanted to be more modest about it.

However Rolex is not going to increase production to address the shift, why would they

Pretty astute, IMHO.

Also, I think there is greater profit margin in the DJ range, just judging by hand feel. It’s in Rolex’s best interest to move the most pieces with the highest profit margin.

When you take a step back from it all, it seems a bit gauche and contrary to the usual Swiss stereotype of modesty and reticence. It boggles the mind to consider how much money Rolex SA must be taking in these days. It feels more like an American company to me in that regard.

[bp1000]

This is nothing more than a demand problem.

Post global recession people have their affairs in order and more people have built up a disposable income or savings and after job security and a few pay rises since 2008-2014 they now want to buy watches.

As cliche of simple as that sounds this is the main factor along with asia significantly picking up pace.

It takes time to ramp up production lines and more pieces are being produced but these are for growth markets like Asia and South America.

Nobody can even measure the production numbers now random serial numbers are used. But you can gather a fairly accurate picture by speaking to ADs and they will all tell you a similar story regarding allocation.

The demand is simply off the charts. The hype is an additional factor. But ADs are still receiving a similar number of pieces each year as they always have done. Rolex is not limiting supply. Not all ADs carry all models, clearly. They have stock order models and by special order models: it’s just now with demand non hot special order models even take a while because of a wider backlog. As mentioned Rolex have added capacity but not to established markets, their extra resource goes to growth markets . The one issue here is the luxury sales tax is huge in China so they are buying tax free from Europe. Putting extra demand on European ADs

Greys are the way they are because it’s much harder to buy in bulk and with discount from ADs post crackdown.

So I reckon less than 50% of their stock is purchased via AD. The pieces they get they win big on. Otherwise they trade between sellers or buy from private buyers and mark up. This is pushing the price very high as everyone wants their 10% margin.

While we may see 10 LVc at a grey on Instagram that still a tiny fraction and a rarity. It’s entirely likely they were hoovered up in private sales for 11k and sold for 13-14k GBP

The ADs and Rolex are simply finding very high demand. This is driving up sales of gold pieces by 20% already this year as people can’t get steel.

[10klakes]

Originally Posted by othertbone

a few models doubling in price and many trading way above retail is hardly a tulip craze or bubble waiting to happen. Far from it

+1

[Stx]

Today's style is casual and 'modest'. Gold and diamond encrusted displays of wealth are out. Dress clothes and dress watches aren't in style. A steel sports watch goes boardroom to beach to chores. I think Rolex is in a quandry - their big profit watches aren't moving. Steel is selling way over MSRP. They should cut out the grey by raising steel prices to the market but that is harsh. Or, move production from gold to steel but that lowers profits.

In showrooms I see lots of gold ladies watches, with diamonds. Also some very pricey gold and platinum watches. As we all know, no steel sports watches. It's an old company, I suspect they'll just ride the trend out for a few years.

[Dlong]

China

[grimlock525]

Another day another conspiracy theory. Rolex’s primary goal is to still be relevant as a business and a brand well after you and I have departed from this life. They’ve already been through countless demand cycles spanning almost 100 years. I’m pretty sure they’ve developed a business formula that they have confidence in. Is it frustrating right now as a non-VVIP enthusiast that I can’t buy the watches I like? Absolutely. But don’t forget it was not that long ago that AD cases were flush with multiple SS sport watches. Just be patient, it could take a couple of years but the tide will stem. Take the money that’s burning a hole in your pocket and invest it. When things inevitably return to normal, there will be plenty of watches to go around.

[cbalster]

After speaking with no one at Rolex I have determined their strategy is to separate their customers from as much money as possible. And they’re doing ok there

[Mystro]

Originally Posted by cbalster

After speaking with no one at Rolex I have determined their strategy is to separate their customers from as much money as possible. And they’re doing ok there

and delay new movements as long as possible. Poor Submariner.

[bonovox]

shortage?

[Ichiran]

You don't have to buy a Rolex watch. There are many great brands out there.

[fsprow]

Originally Posted by grimlock525

another day another conspiracy theory. Rolex’s primary goal is to still be relevant as a business and a brand well after you and i have departed from this life. They’ve already been through countless demand cycles spanning almost 100 years. I’m pretty sure they’ve developed a business formula that they have confidence in. Is it frustrating right now as a non-vvip enthusiast that i can’t buy the watches i like? Absolutely. But don’t forget it was not that long ago that ad cases were flush with multiple ss sport watches. Just be patient, it could take a couple of years but the tide will stem. Take the money that’s burning a hole in your pocket and invest it. When things inevitably return to normal, there will be plenty of watches to go around.

100%

[saturdayAMswingers]

https://www.nytimes.com/1999/11/21/s...sultPosition=1

20 years ago, same problem, different “hot” reference. Credit is cheap, social media is omnipresent, and foreign markets have minted lots of millionaires in places that had never seen a Rolex 20 years ago.

[Monty22]

Originally Posted by saturdayAMswingers

https://www.nytimes.com/1999/11/21/s...sultPosition=1

20 years ago, same problem, different “hot” reference. Credit is cheap, social media is omnipresent, and foreign markets have minted lots of millionaires in places that had never seen a Rolex 20 years ago.

Thank you.


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[csaltphoto]

Originally Posted by saturdayAMswingers

https://www.nytimes.com/1999/11/21/s...sultPosition=1

20 years ago, same problem, different “hot” reference. Credit is cheap, social media is omnipresent, and foreign markets have minted lots of millionaires in places that had never seen a Rolex 20 years ago.

Wow, the Yachtmaster... Who'd a thunk it. I still think it's a great looking watch though (blue dial version)

[Boaters]

They have a strategy do not kid yourself and as for us we will keep guessing but someday in the not so distant future we will all know

[SkyJuice]

Rolex CEO is doing a great job imo.

[Scapegoat]

Originally Posted by SkyJuice

Rolex CEO is doing a great job imo.

He says thank you and sends his kindest regards.

[PeterC4]

Rolex is controlling production to ensure prices remain stable/high. There will not be a surge in supply by them. Their strategy has created a thriving secondary market. I doubt that will change any time soon, but it is more volatile.

[ademarco]

I agree the fiat currency wars going on and cheap money is minting a lot of new millionaires. Hope we all survive this coming credit bubble. Denmark is at negative interest rates for some mortgages and Japan has been stagnant for a long time. China is devaluing their currency and the U.S. just keeps raising the debt ceiling. The Fed Reserve is loaning money at 0%. What could go wrong?

Rolex is going to keep marketing and doing what they have always done, but I know I have purchased 4 within the past year and got into the watch game a little late. My friend always wore his Kermit and I always thought such a waste of money on a wrist. I prefer putting it into real estate and making a return through appreciation and rents.

Thanks for sharing the article from 99, as it was right before the Dotcom bust in the stock market. I wonder how much those $6800 YM cost now.

It is hard to blame the ADs having to bundle as they have to meet/exceed their overhead with their fancy showrooms in upscale locations. I don’t blame them one bit as they only get allocations of in demand products while the women’s DJs, PM, and YM sitting in the display cases collecting dust.


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[Singslinger]

To answer the question posed in the headline - no, I don't think so.

[Mike Jab]

No.