Current state of affairs from a prominent NY AD.

[Sunny Arizona]

Just...wow

Originally Posted by Mystro

Why not? We spend more than that for one vacation alone. Add up the mini weekend vacations and there is a lot of disposable money not being spent. Then not going out on weekends, concerts, car events, etc... Pretty much all our entertainment budget isn’t being spent for the year. For example, my wife is spending more money this year on other expenses like landscaping projects, etc..
A lot of people are out of work but how many of them were even in the demographic of buying a luxury watch to begin with?

Neighbors of mine are buying new cars because of the deals everywhere. New pools, home improvement construction is everywhere in my middle class section of the state. Contractors are booked out 2 years in advance now. There is disposable money out there being spent.
It’s not all doom and gloom as the media likes reporting everywhere. Empathic platitudes are more socially acceptable than accurate media reporting.

Our county is the size of Rhode Island and has had a total of 14 reported Covid cases. Neighboring county about the same size has had 1 Covid case. I am sure thousands have probably had it and recovered without complications. It will never be reported and we just now finding out this has been the case all around the country since December.
I am pretty sure my entire family had it back in February. Thank goodness our area is finally opening back up.
A very common view point in my area is this entire Pandemic lacks accurate reporting and perspective from more than just North East metropolitan areas. No denying there are many hard-hit areas but more areas of the USA are not hit hard.

[Xenon]

Originally Posted by az2598

Disinfectant and UV rays also kill coronavirus in-vitro, as pointed out by a very special someone.

You joined this forum 4 months ago and your very first post is political.

[Bosscheto]

The big question is how Rolex and PP will reach to their ADs. There is still interest in SS, especially Rolex because the prices are lower than PP. If Rolex makes the SS entry level and available, a lot of ADs will survive, if not, I have no idea.

Here in Switzerland, we have humongous ADs in the mountains catering to Chinese and Russian tourists in the resorts. I have no idea how they will survive. Switzerland is a weird example, because the ADs cater to tourists, the watch shops are way bigger than the domestic market, and some industries are relatively fine, others - hotels are hit very hard. The best hotel in Lausanne refused to open after lockdown - Beau Rivage, I think they will open in June, but it is sad.

With PP is complicated. I think PP are not happy that the SS models have become applications pieces, and the applications pieces are available and discounted. I think prior 2009 was the opposite, Nautilusus traded at a small discount, my personal favorite Aquanaut was considered ugly and were everywhere like annual calendars now, and the Perpetual Calednar Chronographs, the split seconds etc were rare. From the complicated pieces only the World Time Enamel trades over-list. So if PP find a way to reverse the pyramid again, it will be great. But I genuinely do not know how

Both Rolex and PP have tone of cash and there is zero risk for the companies, the ADs are the issue.

[Doch]

Here in Denmark, the only watches selling are the top hyped ss Rolex sportswatches.

Everything else Isent moving, especially the more expensive stuff.

AD can not pay the bills from selling ss Rolex watches. They need revenue from all models and other brands.

We haven’t seen the top of the iceberg yet. The stock market will be hit hard, when the next quarterly accounts come in.

This will take years before it’s over.

[LndLord]

it's still early.

[GGGMT]

I think we’re in for some serious price declines other than the key watches.


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[powerfunk]

Originally Posted by mongrelnomoad

Just because it's popular *with you and your circle* does not mean it is either true or widespread.

And just because it's unpopular with you and your circle, doesn't mean it's untrue.

[NachoNeal]

Originally Posted by Bigblu10

You guys are living in a watch forum bubble . . .

Totally quote worthy.

[Patton250]

What an interesting thread. You can really see who the negative people are and who the positive people are. I wonder if it directly correlates to who owns businesses and who does not? Partially maybe? Anyway one thing is for certain death and life come from the tongue.

[Gee2789]

It’s interesting to see how bifurcated opinions are here with clear camps on both sides (eg No change in availability vs catastrophic change). But that is hardly surprising considering it reflects the antecdotal experience each of us have with COVID. Some regions have been hit hard with hospitals being overwhelmed and others barely seeing any cases.

To me, and specific to the US market, I would look at this on a macro-level scale with basic supply demand constraints. Certainly I expect demand for luxury goods to fall. This is driven by what I see as a decline in high paying white collar jobs in Aviation, Travel, and Oil and Gas industries (eg Boeing, all Airlines and their support features, Oil and Gas engineers and supporting services). These make a sizable portion of our GDP and I can’t see there being enough demand from high net worth buyers to offset this drop.

However, the supply side of the equation is equally interesting. Rolex is not a public traded organization. They do not have earnings estimates to meet nor potential activist investors threatening to undermine their board. Rolex can, and most likely will, ramp down supply if demand drops lock step. There’s no reason not to. Sure, you’ll see catastrophic drops in ADs as they cull supply. But Rolex doesn’t have exposure to that.

So my own opinion is that yes. You’ll see a weakening global economy where demand for this silly hobby will decline. However, given the supply control of Rolex/Patek they have levers to ensure their luxury product does not suffer.

That being said, all bets are off with prices on the secondary market. People who need money to make rent or pay bills are an X factor and we may see a wave of oversupply for a short period on those channels.

[Theoffice]

Here comes the doomsday predictions when in fact demand is at a record high; Rolex will have another record year.

[raretime]

If covid 19 didn't hit your earnings, you would definitely have a lot of cash to play around with since expenses has gone down, so ramping up productions wont be good idea for company like Rolex as demands keeps knocking.

[Yess]

There's always conflation on this board between AD and grey dealers that people don't qualify when they make their posts and this leads to confusion and debate where none likely exists.

Grey prices are sliding, and time will tell how far they will slide.

AD prices will obviously remain the same (and go up as they always have) - Rolex controls supply and demand of their watches. There's absolutely nothing in it for them to flood ADs with stock they can't move. That hurts the brand. All they will do is ship less stock to keep things exactly as they are now. That is if you believe people aren't still buying Rolex from ADs and they'll need to limit anything (I for one am still buying... And I know many others who are).

[Tavli3]

Originally Posted by Etschell

The Richemont report was very telling.

The Swiss watch market is going through a very tough time that wont end soon. Some projections are showing it is worse than the Quartz crisis. Many brands will go bust. Some estimates are up to 25 percent of Swiss brands.

The exports of Swiss watches under 3k are way way down. Rolex, Patek and AP prices have fallen from their 2019 highs.

Now will a SS BLRO or SS Daytona remain inflated? Yes. Part of this has to due with the price increase thar ocurred just 4.5 short months ago. Part of it has to due with the fact that these three waches are the most sought after. But the overall price increase saved Rolex prices from further drops.

Even a 2019 SS jubilee BLNR is now closing in on retail. Wait until there is more stock.

If I were an AD I would be deeply concerned. Rent is a killer and say what you will about bundling but good luck getting people to do it when you do not have that hot watch in the safe. An AD is a businessman or businesswoman. Showing weakness is a terrible play to customers.

I wouldn't count on there being more stock. Factory shut for 2 months means about 160K less watches produced this year from what I've read.

Maybe more supply to certain areas if demand destruction is bad enough in the Asian countries after lock downs. I have to think that demand has been hit harder in certain countries than others.

[Tavli3]

Originally Posted by AJMarcus

Lots of folks are blowing off quarantine steam from being stuck indoors. But lots are still self isolating too.

Resiliency and flexibility are key for business. But capital has been effected. It’s a completely shifted paradigm. Time will tell but there are changes coming to the luxury watch business for sure. .

Agree but a word of caution for everybody itching to get out to their favorite restaurant. Obviously no one in the restaurant will be wearing a mask otherwise they won't be able to eat. If anybody anywhere in the restaurant sheds virus cells it will be picked up by the HVAC system and recirculated throughout the whole restaurant so no matter how far apart you sit, it will be meaningless.

As far as who survives and who doesn't it comes down to one thing Duration. If there is no resurgences in new infections over the summer then there will be more survivors as in businesses and jobs. If new infections spike due to lax social distancing than there will be less survivors. This is not to mention if we get a full blown second wave this winter. I get the chills thinking about the normal flu season killing 40-50K and then having a full blown Covid19 second wave in addition to that.

The uncertainty of the duration is what is keeping a lot of my executive friends from buying new goodies. It's not that they all have taken salary haircuts up to 20%, they are still comfortable for now. It's not knowing how long it lasts and not knowing if it gets worse down the road. Fiscal prudence is a bigger priority than new watch buying right now for them.

So maybe availability will be better for the fortunate even though Rolex lost 2 months of production. My wild guess is if you're ever going to have a shot at your grail piece it's going to be between now and the end of the year.

[LJubel328]

Originally Posted by Gee2789

It’s interesting to see how bifurcated opinions are here with clear camps on both sides (eg No change in availability vs catastrophic change). But that is hardly surprising considering it reflects the antecdotal experience each of us have with COVID. Some regions have been hit hard with hospitals being overwhelmed and others barely seeing any cases.

To me, and specific to the US market, I would look at this on a macro-level scale with basic supply demand constraints. Certainly I expect demand for luxury goods to fall. This is driven by what I see as a decline in high paying white collar jobs in Aviation, Travel, and Oil and Gas industries (eg Boeing, all Airlines and their support features, Oil and Gas engineers and supporting services). These make a sizable portion of our GDP and I can’t see there being enough demand from high net worth buyers to offset this drop.

However, the supply side of the equation is equally interesting. Rolex is not a public traded organization. They do not have earnings estimates to meet nor potential activist investors threatening to undermine their board. Rolex can, and most likely will, ramp down supply if demand drops lock step. There’s no reason not to. Sure, you’ll see catastrophic drops in ADs as they cull supply. But Rolex doesn’t have exposure to that.

So my own opinion is that yes. You’ll see a weakening global economy where demand for this silly hobby will decline. However, given the supply control of Rolex/Patek they have levers to ensure their luxury product does not suffer.

That being said, all bets are off with prices on the secondary market. People who need money to make rent or pay bills are an X factor and we may see a wave of oversupply for a short period on those channels.

You put this economic perspective eloquently. Completely agree that Rolex has no need to pump up quarterly earnings to satisfy shareholders because well there are none; however, I do wonder what would happen to ADs if they cut back supply too much. If done too quickly, Rolex would essentially be slowly suffocating the ADS. I suspect many ADs do not balance sheets to withstand such a measure.

It'll be interesting to see how this panes out and how Rolex and PP play their cards.

[brandrea]

Originally Posted by Etschell

The Richemont report was very telling.

The Swiss watch market is going through a very tough time that wont end soon. Some projections are showing it is worse than the Quartz crisis. Many brands will go bust. Some estimates are up to 25 percent of Swiss brands.

The exports of Swiss watches under 3k are way way down. Rolex, Patek and AP prices have fallen from their 2019 highs.

Now will a SS BLRO or SS Daytona remain inflated? Yes. Part of this has to due with the price increase thar ocurred just 4.5 short months ago. Part of it has to due with the fact that these three waches are the most sought after. But the overall price increase saved Rolex prices from further drops.

Even a 2019 SS jubilee BLNR is now closing in on retail. Wait until there is more stock.

If I were an AD I would be deeply concerned. Rent is a killer and say what you will about bundling but good luck getting people to do it when you do not have that hot watch in the safe. An AD is a businessman or businesswoman. Showing weakness is a terrible play to customers.

I read that too and thought it was quite interesting and telling.

Nice to see you posting here my friend

[STLrolexfan]

Originally Posted by LJubel328

One more thing, you are speaking with an AD. What did you think they'd tell you?

"Yes, our business is struggling right now. Would you like to buy this ss daytona?"

It is delusional to think that of all the businesses hurting from this pandemic that ADs are thriving.

This. I’ve talked to a bunch watch dealers across the country in the last few weeks. they express confidence while at the same time are much more eager to build customer relationships than they were a few months ago. I don’t think anyone knows for certain what will happen in six months but they are nervous.


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[Gee2789]

Originally Posted by LJubel328

If done too quickly, Rolex would essentially be slowly suffocating the ADS. I suspect many ADs do not balance sheets to withstand such a measure. .

Without a doubt many ADs will either lose their Rolex status or go under. However, I’m not sure Rolex would care since they don’t have any direct financial exposure to these ADs. In fact, having fewer ADs matches their lower supply constraint.

For my own opinion, I think Rolex has more than enough leverage to pick and choose who gets an AD license. They essentially decoupled their exposure to brick and mortar stores. If many ADs go out of business during a downturn, it doesn’t necessarily affect Rolex if the can still match their lower supply of desirable watches. Then when the economy picks back up, they can then re-engage and provide new AD licenses.

[AshCashEmAll]

I personally can’t imagine a world where ADs are doing better after this quarantine. Sure they could sell the hot ss models any day but are people gonna buy the pm models knowing what the next person would be willing to pay. Sure... buy a watch you like and not for the value retention but that clearly isn’t the motivation behind the Rolex craze in recent years.

They’ll probably test the waters try to feed everyone that they are doing great so they don’t lose their leverage. In reality, the volume that they previously were doing should go down without a doubt and they’ll have to cut their margins by offering discounts again after a couple months.


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[DG123]

Originally Posted by Gee2789

Without a doubt many ADs will either lose their Rolex status or go under. However, I’m not sure Rolex would care since they don’t have any direct financial exposure to these ADs. In fact, having fewer ADs matches their lower supply constraint.

For my own opinion, I think Rolex has more than enough leverage to pick and choose who gets an AD license. They essentially decoupled their exposure to brick and mortar stores. If many ADs go out of business during a downturn, it doesn’t necessarily affect Rolex if the can still match their lower supply of desirable watches. Then when the economy picks back up, they can then re-engage and provide new AD licenses.

I think the purge of Rolex AD's happened 10 years ago . At this time the number of current AD's is relatively small, financially stable, and going forward able to resume business as usual.

[Soondooboo]

Title should be "AD being an AD and telling you demand is high". Why would they say anything different? They still want people to buy the less desirable models.

[Giangos]

Originally Posted by peterpl

Funny you using that analogy. One of my best friends whom I grew up with since I was 12 years old is the national sales manager for Toyota/Lexus actually. He said the sales have dropped more than 60%-70% and that's not including the entire time we have been in lock down as the numbers are delayed 1 month.

He has sent home 80% of sales staff. No sales targets are being met at all by anyone and no commissions and bonuses for the foreseeable future.

No one is spending on big ticket items at all. Anything above a few grand the customer base is all dry. The only things flying in sales right now is toilet paper, netflix subscriptions and internet connections.

My buddy works at Mercedes Benz here in Melbourne. He tells me that sales just stopped for about a month and have just resumed at about 50% of normal.

The media reported that BMW got busted registering 400 new cars as demo models in order to drop the price significantly.

Discretionary spending has taken a hit.

Having said all that, I don’t really see the hard to get Rolex models dropping in price or even hitting the market in any meaningful way. Not yet at least. If the current situation drags a few more months it might, but I would expect that ADs continue their bundling tactic for as long as they are still in business.

SS models at retail will remain as hard as ever for to find for a long time yet.


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[madmax21]

Originally Posted by Frank McKay

I spoke with an AD in NY yesterday who I have a solid relationship with for many years now. While the boutique(s) may be closed, the inquiries, calls and emails have increased. Those who were previously on the list or inquiring on the hot pieces are under the impression that due to the current economic conditions, the watches may be easier to source right now. AD stated that he doesn’t see anything changing in the near future in terms of wait times. He believes that it will only take longer to acquire sought after pieces. Rolex supply will take a while to ramp up with the closing of the facilities overseas.

I think this is something smart for an authorized dealer to bring to the table making everyone understand that they're not going to get a deal from him none the less people are losing their houses and in a month or two may not have money to even eat I think this will definitely affect Supply demand and customers being able to buy luxury goods as a whole

[madmax21]

Originally Posted by schoolboy

While I still have a job, and family and I are healthy, this covid crap has taught me to appreciate other things in life.

I asked to be put on a list for a watch I wanted a few times in the past.

I honestly think I fell for the hype.

After realizing how many people have lost lives and jobs and probably homes due to corona, I am very very extra grateful for what I have.

I don’t think I am ever going to beg an AD to take my money ever again.

I completely agree with you friend don't minimize this whole thing it's serious a cousin of mine got it and he was in the hospital for 3 weeks I'm in Canada where we have government Healthcare thank God and even if I lose my job I'll still have Healthcare nonetheless it's not a time to buy luxury goods the prices will fall in my opinion for sure

[madmax21]

padi56...I'm sorry to hear of your illness I wish you nothing but the best stay well and healthy my friend Godspeed

[madmax21]

Originally Posted by Gaijin

One thing I'd like to add is a regional perspective.

Where I live prior to this situation the famous greys in Tokyo that we have talked about on here before, Housekihoroba, Kame Kichi, Quark, Bic Camera, Jackroad etc were packed with cash carrying Chinese tourists. The stores all had Chinese speaking staff, sometimes several just to handle the huge volume of sales. Prices were high and were maintained by that volume of sales.

Those days are over. Will they ever return? Maybe. The only airport allowing incoming international flights is Narita. Used to be Narita, Haneda, Nagoya, Osaka, Fukuoka and in Okinawa Naha and maybe Sapporo. Now only Narita has incoming international flights. About 10 % of previous volume.

When you arrive ( and I know this because my friend from the States just did ) you are tested. Long swab up the nasal cavity. The people testing you are wearing quasi hazmat suits.

If you are a foreigner you are escorted to a bus and driven to one ( yes one ) hotel. The bus windows are covered with plastic and the operator is wearing protective gear. My buddy believes Japanese self defense force personnel were doing the testing and on the bus. He could not see their uniforms but they were in JSDF boots.

Once there you are placed in a room and you are not allowed to leave for 48 hours. Your meals are announced on a speaker in your room and delivered to your door. 3 times a day. You have no say in what you are given to eat unless you have allergies or are a vegetarian/vegan.

Once that 48 hours are up and your test results returned ( my friend tested negative ) you are allowed to change hotels. Within the area.

However you are not allowed to use public transportation for an additional 12 days. So no flights or bullet train to another city. No local trains, subway or bus use is allowed.

You can rent a car to go to another city but you still must quarantine once there. Renting a car and the tolls involved from say Narita to anywhere far would be pretty darn expensive.

What was driving the grey market prices here and keeping the ADs full of pretty much Datejusts is gone.

In my city today. There were 3 ADs. Now there are two. One closed forever. Of the greys that I know of ( 5 ) three were reopened. They were completely empty.

There used to be busloads of Chinese tourists here. They even had open roof double decker buses that catered to Chinese and Korean tourists. Those are gone.

So I think at least in Japan at least for some time that is not going to change. That influx of buyers are gone. The rest of Asia I can't speak for.

Will the remaining ADs start having some desirable pieces? Unlikely. As usual they will go straight to greys. Will the greys have reality set in and will this translate to price reductions? Yes I think so.

X2 I completely agree and I think we would be naive to think the AD s out there will not sell watches below MSRP is ridiculous to think it could mean them losing their business completely let's face it a lot of these dealers depend heavily on Rolex even though they sell other brands generally speaking Rolex is there mean profit and if they have to sell a few hundred Below Retail they'll do so

[SudiYunus]

Originally Posted by Tavli3

I wouldn't count on there being more stock. Factory shut for 2 months means about 160K less watches produced this year from what I've read.

Maybe more supply to certain areas if demand destruction is bad enough in the Asian countries after lock downs. I have to think that demand has been hit harder in certain countries than others.

Have u been to any Asian countries in the last 6-10 years? Asia was the biggest market for luxury brands in the world before this pandemic n will bounce back the fastest.

https://www.businessinsider.com/weal...n-china-2020-4

Biz will be bad in general, but certain strong brands, incl Rolex won't be hurt as much. Chanel and Louis Vuitton have increased their prices, others will follow suit.

https://www.businessinsider.com/fash...-prices-2020-5

I have witnessed 1977 n 2008 crises, the rich gets richer no matter what n they r the one who has money to spend. Middle class is different story.

[schoolboy]

Originally Posted by madmax21

I completely agree with you friend don't minimize this whole thing it's serious a cousin of mine got it and he was in the hospital for 3 weeks I'm in Canada where we have government Healthcare thank God and even if I lose my job I'll still have Healthcare nonetheless it's not a time to buy luxury goods the prices will fall in my opinion for sure

One of my uncles died. I wasn’t very close to him, but still RIP

It’s crazy how people are dying across the globe, and then I check in on the forum and many are still obsessed with a scratch or two, and the hyped up watches

I’m at the point where all I want is to enjoy what I have, and try to survive this crap with my loved ones


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[madmax21]

Originally Posted by schoolboy

One of my uncles died. I wasn’t very close to him, but still RIP

It’s crazy how people are dying across the globe, and then I check in on the forum and many are still obsessed with a scratch or two, and the hyped up watches

I’m at the point where all I want is to enjoy what I have, and try to survive this crap with my loved ones


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I'm very sorry to hear of your uncle passing I hope you and your family stay safe Godspeed