Quote:
Originally Posted by AK797
The thing is I do think this is the new norm for Rolex, as that is at a price point that can always be bought by many people, even if a recession hits, and the demands of social media will still be there as a strong buttress to keep demand high. With Patek I'm not quite as sure if the same ratios are sustainable, are there enough people who will buy these at such high prices when the economy changes to maintain this market, or will common sense prevail and demand and prices fall, not back to retail but still significantly. The market is so much smaller and so more niche that it is a delicate balance, not sure which way it will go, maybe the power of SM will just hold sway.
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I was thinking about a similar thing earlier today (i.e. the relative volume and demographic Rolex generally caters to vs much smaller world of a brand like PP)...
I was thinking about a slightly different context, however, that of 'bundling'...given the relative affluence of the PP market, I can see the company increasing revenue by 'forcing' their buyers to buy multiple pieces before getting some of the more coveted pieces...after all, if a buyer is potentially in the market for $100-200k pieces, what's another 100k in purchases to secure what they want...
With Rolex demographic, however, I don't know that just because someone may be in the market for a sub or gmt they are able/willing to spend another 50k+ on other pieces just to secure it.
I can see the price elasticity of PP being higher than that of Rolex (which I think is basically what you are saying) - but the means are much higher and its more likely a much less significant purchase in their grand scheme of things.
I still can't figure out Rolex is making a lot more money by selling a lot less volume of the watches they were previously disproportionately selling...they didn't significantly raise prices, so profitability is not going up?