Remember our comments on Rolex 'bad' decision on supply?

[GerardoG]

As you know, Luxotica owns the glasses market in the WORLD. Ran across this very interesting article from 60 minutes (business wise, worth watching)

https://youtu.be/voUiWOGv8ec

Please look closely around 6 minutes on what they did when they bought RayBan, the largest sunglass brand in the WORLD....and at 6'35" it is spelled out clearly. Very.

Remember I always said this was part of a larger marketing genius? I do know we all have our personal opinions (and respect that); but this supports Rolex decisions, with a tangible example of success. World wide success.

Enjoy the video

[harvey]

Thank you for sharing. Wow a lot I didn't know! Certainly similarities in how a luxury brand operates in order to maximise profits...by focusing on quality and controlling distribution channels.

[JCZ5]

Yep, say this years ago and boy how does it apply to the current Rolex market. Great find!

Can you imagine if sometime in the near future every industry started to do this?


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[arturob]

wow! Really intetesting documentary. Thank you for sharing. I can see how it relates to Rolex and other luxury brands.

[KBM]

Very interesting, G.! Thanks for sharing.

[HONDABBQ]

interesting concept, except that Rolex wasn't having financial difficulty, but they could be just playing the market with the same scenario.

[jvd99]

The difference is that Luxotica offers a wide variety of choices and they are available to purchase at multiple different retailers all owned by Luxotica, however, Luxotica sets the price because there's no competition. Rolex is not analogous because there is massive competition in the watch industry. Another difference is that Rolex has no supply at all. Unlike Luxotica retailers where luxury eyewear can be purchased at a variety of accessible stores, you can't buy a SS sports model at any AD anywhere. Nowhere in the video did it say that Luxotica was intentionally constricting supply of its most in demand products, let alone that such a tactic would be a successful strategy. I still don't see the genius in the Rolex situation.

[SeaDweller50]

Very interesting. There seems to be two, differing, trains of thought in relation to Rolex SS scarcity. Demand has outgrown supply chain, OR, they have cut back supply in order to make the product more desirable. I’m with the latter.

[Terrakot]

Ray-Ban are cheap made overpriced sunglasses. Plastic lenses for 170$? No thanks, I’d preffer Persol and OP

[4vCoupe]

Wow. That was a very eye opening video. Thanks G.


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[melrob1]

Originally Posted by jvd99

The difference is that Luxotica offers a wide variety of choices and they are available to purchase at multiple different retailers all owned by Luxotica, however, Luxotica sets the price because there's no competition. Rolex is not analogous because there is massive competition in the watch industry. Another difference is that Rolex has no supply at all. Unlike Luxotica retailers where luxury eyewear can be purchased at a variety of accessible stores, you can't buy a SS sports model at any AD anywhere. Nowhere in the video did it say that Luxotica was intentionally constricting supply of its most in demand products, let alone that such a tactic would be a successful strategy. I still don't see the genius in the Rolex situation.

You don’t get the point.
Rolex probably felt their brand was taking a hit and getting devalued based on more people purchasing them in general and receiving discounts. They don’t want to be that company. Once a brand is devalued it sometimes can never recover from that stigma. Rolex saw the brand going somewhere it didn’t want it to so in my opinion they decided to limit supply for while to clean up the market.

They did something similar years back when they pulled the line from hundreds if not thousands of dealers because they were discounting and devaluing the brand. I know of a major US retailer that had Rolex in almost all their locations and they lost Rolex in the majority of their locations. Now only have it is some of their stores and for the most part they have not discounted Rolex for years since that happened. Lexotixa had the ability to sit on Rayban for a year to increase demand. Now look at what it did. Now no even remembers it happening and they fixed the 29.00 issue just like that. In my industry, auto electronics, Sony used to be well respected. They limited supply even though they could have dominated. The name was Sony, one of the top 3 known names in the word in general. Then they decided to try to dominate the industry. Didn’t work so they had to drop price. Once they did that with the name it went to the masses and soon after they were known for the low prices and not for Sony quality. They still have not recovered. I’m sure the mothership could do something like Rayban did but it’s such a small part of their biz that they don’t want to deal with it. Point is the number one electronics name in the industry got one of their catagories devalued by price erosion. I can see why a luxury brand like Rolex would want to do what they are doing. In a a world of consumer goods race to zero from a price point standpoint few brands can hold msrp like Apple and others. Rolex wants to be like Apple. Perceived value and demand equals no discounting.

[enjoythemusic]

Originally Posted by jvd99

The difference is that Luxotica offers a wide variety of choices and they are available to purchase at multiple different retailers all owned by Luxotica, however, Luxotica sets the price because there's no competition. Rolex is not analogous because there is massive competition in the watch industry.

Agreed. Apples and oranges in this case. Luxotica has massive control at all levels and simply dominates the market.

[123Blueface]

Now I get it as to why I can no longer buy Maui Jim at Lens Crafters.
I guess that is until they buy them out as well.

[powerfunk]

Originally Posted by jvd99

I still don't see the genius in the Rolex situation.

I do. Not long ago "what % discount should I get" was a comically common question. Now, the answer is "buy it at full price if you can find one." People are happily paying MSRP for any sports model, even two-tones are selling well now, people are considering gold models, and lots of people are now asking "Oh well the sports models aren't available. Can I please have a new Datejust at full price?" They are absolutely 100% crushing it right now. Their strategy is working flawlessly in terms of the resulting consumer behavior.

[GerardoG]

...and how is Luxottica doing? Well...

http://www.luxottica.com/en/luxottic...trading-update

I would say that is VERY impressive numbers

[michaelodonnell123]

Originally Posted by melrob1

You don’t get the point...Sony used to be well respected....They still have not recovered.

What planet are you living on? Sony has fully recovered and is doing extremely well. Research before you post next time.

https://phys.org/news/2018-04-sony-p...n-fold-bn.html

[J!m]

Originally Posted by Terrakot

Ray-Ban are cheap made overpriced sunglasses. Plastic lenses for 170$? No thanks, I’d preffer Persol and OP

They were excellent when Bauch and Lomb owned them and the lenses were glass.

Oh, and they didn't cost $170 then either...

when they went plastic, I went back to Vuarnet. Then my eyes began to fail so I wear Zeni's now.

I want my old eyes back!!!

[The Joker]

yeah but can't/couldn't buy Rolex at a gas station for $29 in the first place.

[GerardoG]

I like RayBan but LOVE Persol. Which is manufactured by...yes, Luxottica

[Rashid.bk]

That video was eye opening. Thank you for sharing, definitely worth the watch.

[Bigblu10]

Originally Posted by GerardoG

I like RayBan but LOVE Persol. Which is manufactured by...yes, Luxottica

Do you wear eyeglasses? I would suppose if you are in your 50's yes. I wear Ray Ban frames for my prescription lenses. Not sure they exactly fall in the luxury category like Rolex.

[GB-man]

Thanks for sharing G


PS: Garrett Leight for sunglasses is the ticket. Son of the founder of now sold Oliver peoples.

[GerardoG]

Originally Posted by Bigblu10

Do you wear eyeglasses? I would suppose if you are in your 50's yes. I wear Ray Ban frames for my prescription lenses. Not sure they exactly fall in the luxury category like Rolex.

Not yet. Sunglasses for the moment...

[77T]

Yes I saw that story when if first was shown. Since they are in EU I wonder when or if the regulators will look into “monopolistic” price actions.

I don’t think luxury goods fit the monopoly model but distribution strategies abound - and Rolex has clearly (IMHO) demonstrated the scarcity play.

It is long past the timeframe when they would be “caught up” with any backlogs in other lines of production. If we don’t see a return to regular shipments to ADs then they have started down a path with diminished brand respect for customers.


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[SG56]

Wow. what an *eye* opening perspective.

[GerardoG]

Originally Posted by SG56

Wow. what an *eye* opening perspective.

[Rolex Essex]

Very interesting video, never heard of Luxotica untill now.
I cant wait to tell my wife that my Polo glasses are made by the same company who made her Italian branded glasses lol

[jvd99]

Originally Posted by melrob1

You don’t get the point.
Rolex probably felt their brand was taking a hit and getting devalued based on more people purchasing them in general and receiving discounts. They don’t want to be that company. Once a brand is devalued it sometimes can never recover from that stigma. Rolex saw the brand going somewhere it didn’t want it to so in my opinion they decided to limit supply for while to clean up the market.

They did something similar years back when they pulled the line from hundreds if not thousands of dealers because they were discounting and devaluing the brand. I know of a major US retailer that had Rolex in almost all their locations and they lost Rolex in the majority of their locations. Now only have it is some of their stores and for the most part they have not discounted Rolex for years since that happened. Lexotixa had the ability to sit on Rayban for a year to increase demand. Now look at what it did. Now no even remembers it happening and they fixed the 29.00 issue just like that. In my industry, auto electronics, Sony used to be well respected. They limited supply even though they could have dominated. The name was Sony, one of the top 3 known names in the word in general. Then they decided to try to dominate the industry. Didn’t work so they had to drop price. Once they did that with the name it went to the masses and soon after they were known for the low prices and not for Sony quality. They still have not recovered. I’m sure the mothership could do something like Rayban did but it’s such a small part of their biz that they don’t want to deal with it. Point is the number one electronics name in the industry got one of their catagories devalued by price erosion. I can see why a luxury brand like Rolex would want to do what they are doing. In a a world of consumer goods race to zero from a price point standpoint few brands can hold msrp like Apple and others. Rolex wants to be like Apple. Perceived value and demand equals no discounting.

If it takes that much explaining, I'd posit your point was not very clear - just sayin

[TheVTCGuy]

Originally Posted by michaelodonnell123

What planet are you living on? Sony has fully recovered and is doing extremely well. Research before you post next time.

https://phys.org/news/2018-04-sony-p...n-fold-bn.html

You may be right, but it is in a much more limited market. Oh, BTW, I was Director of Engineering for one of the (multiple) divisions that was dropped. You live in NJ, ever visit Park Ridge? See the bohemith Sony building on ONE SONY DRIVE? It’s no longer Sony. Neither is the Sony complex on Zanker road in San Jose, or the one in ILL. Sony used to make and sell everything, TVs, (no more) computers (no more) and my division, Visual communications (no more). Here in San Diego, the Sony campus was reduced from seven buildings to one. They were a gargantua in all electronic product lines, now they specialize in a few. Even their camera division was purchased by someone (I think Olympus). I guess it was the right thing to do, as they are making good profits now, but they are not, probably never will be the industry-wide monster that they were.

[Jocke]

Of course SONY have recovered, Paul don't work there longer.