Has Rolex lost faith in the desirability of its product?

[Lord Hectic]

Rolex is a very much taking advantage of new money and a generation of young professionals that will do nearly anything to buy hard to get items. The social media aspect is very strong and puts pressure on the weak to be part of this glorified group.

[inadeje]

Originally Posted by brucethemanlee

1) there is no scarcity. Rolex is selling as much as they can make (but not more than they want). The overall demand far exceeds supply and Rolex is just not meeting that supply

2) I don't think Rolex has any insecurity in their brand. Rolex has been ranked number 1 in brand reputation for 4 years running. If there is insecurity it is not to rest on their laurels

https://www.forbes.com/sites/vickyva.../#60bd155f13b6

3) Current strategy haunt them? They've been at this game for over 100 years. Given their experience, $ resources, and all the experts they can hire, i think they will do fine

4) Rolex has never announced any kind of marketing strategy. They are not saying they are cutting supply or increasing supply or changing prices or saying anything. If customers are getting tricked it is those people who are incorrectly (or correctly) making their own assessment and deciding to purchase or not - Rolex hasn't said anything.

5) as for your "sources" telling you ADs getting less SS? unless your sources represent a sampling of the world (and not just Canada) there is no reliable conclusion Rolex is shipping less SS to ADs. As a country, Canada is but a blip in terms of Rolex sales

Excellent synopsis

[pepsiretail]

Originally Posted by VicLeChic

Can't take anything for granted. Massive companies have almost disappeared because they failed to adapt to changes or tried too late. Telecom examples like Palm, Nokia, Blackberry to name a few come to mind.

No one is fully protected from a downturn. Having a great product is not enough. All of a sudden it might just become obsolete, useless or less desirable, see Apple.

To survive and thrive, companies need to stimulate demand, especially in the luxury world. Rolex's marketing machine will carry on spending millions to keep the brand known, remembered and the products desirable.

The name of the game for Rolex is to push demand up while maintaining production at the same level, so you sell your stock at the price you've fixed (or as close as possible). I don't think there's much more to it really in Rolex's strategy. They don't seem to care for growth and to meet demand.

However, I see a problem with this. Rolex has become this fantastic factory of dreams, but lately they've been unable to deliver the goods to many potential buyers according to countless testimonies, thus creating frustration and disappointment with the brand for many.

This is the only real danger I perceive, Rolex eventually becoming a factory of unfulfilled dreams, this massive teasing machine ultimately destroying the desirability for what used to be Veblen goods.

I really enjoyed reading your post, thank you.

"massive teasing machine" lol

[RKTINC1]

I have seen the discount days and I have now seen the full retail wait list world. As a minor collector, I like the fact my Rolex collection has held or increased steadily in value in the last 20 years. Obviously not at pace with financial markets or real estate, but as expensive luxury goods go, the Rolex watch stands alone for value retention. If that means the 20% discounts I got in the 1990's and early 2000's are gone, then so be it. I like that the company I enjoy collecting from knows how to build and retain residual values. I am happy to pay retail for a high quality item that doesn't loose 50% of it value in a year. Economics will correct this over time and we will see more traditional demand and supply one day. Until then I am ok with how Rolex is managing this fantastic dilemma.

[Oyster84]

Originally Posted by zjd168

There is no confirmed evidence backing this statement at all.

I talked to four ADs I dealed with before, none of them claimed they got less SS shipments than before. The only huge difference is the demand.

My AD says that they can't GET the SS Pro series watches, not that they sell out as soon as they get them. The manager has been telling me this for quiet a while also. Of course they could be lying to me even though I've spent tens of thousands of dollars there...

[jeffnnj]

How’s this theory: They’re cutting down on shipments to starve their ADs prior to taking away their distribution agreements and opening their own factory owned stores.


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[pepsiretail]

Thanks to all the members who have taken the time to post a reply. I have only had brief moments today to check in and respond and indeed started the thread very quickly.

A little clarification to my thread. I meant to convey innate desirability as the sentiment. I started thinking while reading another thread yesterday that referenced and showed old print ads promoting the quality, reliability and companionship that a Rolex has and can give to its owner. An item that suited the great accomplishments and vision of those featured in them. That style and even the modern strategy of sponsoring only the top events and getting the champion to always pose with a Rolex on their wrist are meant to associate the greatness and capability of the person and watch.

Today it seems apparent that Rolex no longer thinks this past approach is adequate to create and sustain acceptable interest and sales. So, does Rolex then no longer believe that their product is desirable enough to attract, attach itself to and hold enraptured their clientele without the games and merit badges that the current buying experience has become?

I have enjoyed all the replies and have gained many new insights and there is never anything a whole lot wrong with that.

[rominvicta]

Originally Posted by zjd168

There is no confirmed evidence backing this statement at all.

I talked to four ADs I dealed with before, none of them claimed they got less SS shipments than before. The only huge difference is the demand.

Yups, my AD says the same. They got 20% increase of supply in the latest 2 years and all the same it was not enough, as of them demand in the same period more than doubled. Meanwhile they said a new factory is under construction. I never asked and got consequently info where is the tight place in chain, whether it would be movements, cases etc.

[archer1021]

I find it ironic that Rolex and ap and patek for that matter are going crazy in terms of demand in this time of mass utilization of smart watches, one would think it would lessen the demand for conventional time pieces, but it appears the demand is more now than ever.

Nice to see not everything is becoming applefied or googlfied.

[Wmesallem]

Originally Posted by Drpepper

I was just at Devon’s in Sacramento to check things out and the salesman
Was telling 2 guys that in order to get the desired watches they had to purchase what was in the case to build a relationship and then they would go to bat for them to get the desired models.... can’t blame the AD trying to move the unpopular merchandise. And in some ways if I wanted a ceramic bezel Daytona why pay 10k premium to a gray dealer and just buy 2 rolexes for the same price from the AD.

Devon’s is pretty good but I haven’t seen a professional model in there show rooms in over two years. Being told 1.5 years for a pepsi


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[Oyster84]

It's just amazing to me that there has been a massive increase in the number of people out there willing to throw down tens of thousands of hard earned dollars for a wristwatch. I thought we were the only ones crazy enough to do such a thing.

...One thing is for certain, it won't last! This is a bubble and like all bubbles it will eventually burst.

[TswaneNguni]

Originally Posted by pepsiretail

Thoughtful response and perhaps entirely accurate.

By false scarcity I mean purposeful underproduction of Professional models. Production manipulation in order to drive psychological manipulation, hence tricked. Yes, all marketing and advertising is a form of psychological and behavioural manipulation. However we are at a different level now, the customer is there and ready to buy but is told they can not. Perhaps another model then? Or if you buy these other two? Sounds a little tricky to me.

[Moggo]

Originally Posted by Terrakot

Chinese wave of nouveau rich is disgusting and many luxury brands would prefer don't appear on this photos.

Do these kids not have parents?! Burning money?? I would disown her on the spot, disgusting.


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[trelane]

Originally Posted by Jostack

I’m not sure if there is anything different about those photos than what you may see here in the US. Maybe that’s not your point, but this IS a relatively new thing in China, and it does add pressure to the market.


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It’s an echo chamber, photos like this are on IG and Twitter feeds and not just from the Chinese. The constant blaming of China is a constant scapegoating exercise on this forum. OP also posted his own independent thread stating the same thing about Chinese Nouveau Riche. So should they have just benefited their financial status the old fashioned way, through inheritance?

Arguing class warfare and social status on a Rolex forum... #firstworldproblems.


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[myusernamez]

So what about the Americans bragging about their sneakers, taking pictures on private jets, rolling around expensive cars all sponsored by some lame youtube channel? It's Asia but it's for sure everywhere. Rolex is just too cheap and too easy to get, the production is same'ish but the demand side if XX times bigger.

And if everyone has it - there will come a point where it's no longer special and no one wants is and I think we are getting there in the next few years. It happened to Gucci and LV just a few years back!

[AK797]

Originally Posted by pepsiretail

Rolex is happy to be the "hard to get" must have. "Hard to get" is what they are selling more so than the product, hence an unstated belief that the product is not desirable on its own merits.

Only on the Daytona, whose profit potential was sacrificed, much like the Birkin, to help keep the brand and other models desirable, but once Brexit, QE, China bribery laws and thus rising prices spiked demand, Rolex have done almost nothing different so there is no change in any belief they have of their products, other than surprise that demand is coming from everywhere now, billionaires and paupers, as happens in bubbles when people buy the profit/kudos not the item.

[1William]

I do not think there is anything wrong with Rolex except we can not readily get them at an AD for a discount. It does create resentment on some levels but it also creates opportunity to explore other brands. I have found Grand Seiko and have also gotten into some of the other collectable watches from Seiko. All is good and at some point things will change for the better with supply issues.

[AK797]

Originally Posted by Fleetlord

This is a VERY important point.

There is a difference between limiting production and limiting DISTRIBUTION.

Production can remain the same out of the factory, but tweaking who gets it and when...doesn’t take much to create the perception of scarcity.

Exactly, supply is the same but who gets the final product has changed completely, that is why billionaires want these simple basic b*tch watches over 100K grand complications, as there is far more kudos in being the chosen one and having the watch they all want, than just merely having the funds to buy an expensive watch that will fall heavily in value, that is so yesterday. It's a new game. And Patek demonstrates this change more clearly than even Rolex.

[AK797]

Originally Posted by myusernamez

So what about the Americans bragging about their sneakers, taking pictures on private jets, rolling around expensive cars all sponsored by some lame youtube channel? It's Asia but it's for sure everywhere. Rolex is just too cheap and too easy to get, the production is same'ish but the demand side if XX times bigger.

And if everyone has it - there will come a point where it's no longer special and no one wants is and I think we are getting there in the next few years. It happened to Gucci and LV just a few years back!

Yes, there are rich kids everywhere, no need to single out China, altho the relaxing of Chinese Bribery/Gift laws a couple of years ago did really boost global demand for Rolexes and other luxuries and was one of the initial hype drivers.

[Thanos]

Who said Rolex is scarce? TT & PM models easily obtained. Its only the SS sport models harder to obtain. Absolutely this is false scarcity. Rolex has made a choice moving forward in their business model. The new normal.

Rolex can ramp up production of SS sport models anytime they choose to do so but instead keep status quo while ADs are flush w TT datejusts.

[Terrakot]

Originally Posted by myusernamez

So what about the Americans bragging about their sneakers, taking pictures on private jets, rolling around expensive cars all sponsored by some lame youtube channel? It's Asia but it's for sure everywhere. Rolex is just too cheap and too easy to get, the production is same'ish but the demand side if XX times bigger.

And if everyone has it - there will come a point where it's no longer special and no one wants is and I think we are getting there in the next few years. It happened to Gucci and LV just a few years back!

I agree, it's everywhere but China’s billionaire population grew at a faster clip. The number of Asian billionaires is 637, while in the United States is 563 billionaires and Europe to 342. And unlike the US’s and Europe's rich lists, there are no trust fund billionaires or aristocratic heirs among China’s economic elite - all are self-made. New money.. New appetites for luxury goods

[Dashford]

The day I can walk into an AD and pick up a Rolex GMT for a discount, is the day I'll buy an AP. The ultimate expression of "luxury" is to have something that others can't get. It's not even tied to money, it's a power thing.

Just look at the lines outside of brands like Palace and Supreme, the hype machine works in the same way.

I believe Rolex is simply working with two sides of the same coin
1) Keep production low - stay exclusive
2) Keep production low - avoid crushing unsold stock (hello Richemont)

[Thanos]

Originally Posted by Dashford

The day I can walk into an AD and pick up a Rolex GMT for a discount, is the day I'll buy an AP. The ultimate expression of "luxury" is to have something that others can't get. It's not even tied to money, it's a power thing.

Just look at the lines outside of brands like Palace and Supreme, the hype machine works in the same way.

I believe Rolex is simply working with two sides of the same coin
1) Keep production low - stay exclusive
2) Keep production low - avoid crushing unsold stock (hello Richemont)

Lots of AP models are hard to find. You make it sound like AP is on every corner. Considering AP produces around 30000 annually compared to Rolex 1 million annual production.

I would say the AP is much much more ‘exclusive’ and its not even close.

[sillo]

Originally Posted by Dashford

The day I can walk into an AD and pick up a Rolex GMT for a discount, is the day I'll buy an AP.

Really? So what you’re saying is you only would buy one of these watches because of its perceived exclusiveness and status symbol? Why not just buy that AP now and
leave the Rolex for someone who actually appreciates it.

[Dashford]

Originally Posted by sillo38

Really? So what you’re saying is you only would buy one of these watches because of its perceived exclusiveness and status symbol? Why not just buy that AP now and
leave the Rolex for someone who actually appreciates it.

Thanks for the advice but I already have an AP and I'd argue that Rolex is more exclusive right now.

It was easy to walk into the store and pick up the AP (unlike Rolex). I'd also argue that Rolex makes a better watch.

[Vaxe]

My AD used to receive 2 shipments/month and this year has been 1 shipment every 2 months with hardly any steel professional. They’re not happy about it.

[pepsiretail]

Originally Posted by Dashford

The day I can walk into an AD and pick up a Rolex GMT for a discount, is the day I'll buy an AP. The ultimate expression of "luxury" is to have something that others can't get. It's not even tied to money, it's a power thing

Interesting. Maybe Rolex has fallen into the belief that your viewpoint is the prevailing one of the times. This is what I was getting at about Rolex losing faith in it’s innate desirability, you make the point quite well for me. I think Rolex has done very well without falling into this trap, and unless they can sustain this hard to « get ness » they risk losing in the long run.

[pepsiretail]

Originally Posted by Thanos

Who said Rolex is scarce? TT & PM models easily obtained. Its only the SS sport models harder to obtain. Absolutely this is false scarcity. Rolex has made a choice moving forward in their business model. The new normal.

Rolex can ramp up production of SS sport models anytime they choose to do so but instead keep status quo while ADs are flush w TT datejusts.

Sing it Thanos!

[LittleGothamDragon]

Originally Posted by MTdweller

This is what my AD told me. Except the watches sell faster and don’t sit around in the display case anymore.

agreed

[Pentameter]

Originally Posted by pepsiretail

Does the current false scarcity and new manipulative marketing strategy employed by Rolex point to a deep underlying insecurity on behalf of the brand? Does Rolex now think that customers must be tricked in order to win them over? If so, despite its apparent immediate success, will this strategy have long term effectiveness or will it come back to haunt them?

these are the posts that infuriate me the most - people making ridiculous sensationalist claims that imply they know all of Rolex desires and motivations, and that they're all nefarious or manipulative. Give me a f'ing break.

This isn't "false scarcity" - it's REAL genuine scarcity, based off a sudden & steep spike in demand.

There isn't a "new manipulative marketing strategy" being employed by Rolex - they're using the same old manipulative marketing strategy they always have, and that most other companies use too. Veblen goods.

None of this points to insecurity in their own product - it points to insecurity in the markets, the economy, the continued interest in luxury wristwatches which are by all means antiquated and virtually obsolete in terms of technology - and insecurity in the continued demand not just for Rolex, but for ANY luxury watches. As someone else posted earlier today, it was only 10 years ago that Rolex was in a much different situation, and I'm sure most of the people there today were around then, so it's not something lost to ancient memory - whatever increase in demand they are seeing now could easily be gone tomorrow. They're playing it cautious and adopting the slow & steady strategy.

No one is being "tricked" into anything here - at least not any more so than any other company that is utilizing marketing to try and sell you things that you don't need. I suppose you could look at the world that way, but I doubt you are critical of the "tricks" that other companies use every time you see a commercial either on tv or online.

Sometimes a cigar is just a cigar. Rolex is not the illuminati.