"Rolex does NOT know about business"

[77T]

G. Thanks for the note after I cleaned out the PM box. Some interesting stuff for sure.

Morgan Stanley analyzed the public companies and had to extrapolate the data on private companies. In a broad sense I have to agree Rolex knows their business (as in the business they choose to operate). What puzzles us is “what is their definition of their business”?

I can’t say what their strategy is. But I can say they don’t have an over-supply problem Well, at least in SS Professional lineup.

Some other competitors have had to buyback excess inventory as reported in the media. I don’t think that’ll be a Rolex issue. Maybe what we see is a product reaction by Rolex after the boardroom discussions (as in “we don’t want that to happen to us”).

But let me step away from the data analysis to touch on a couple of phenomena that will likely continue. Today, most potential Rolex buyers will start their shopping on the Rolex website. They plan to make their ultimate purchase in a store. But once they’ve been to Rolex.com, their browser or search engine provider will pepper them with ads from Chrono24, Bob’s Watches, etc. Tracking cookies will see to that. They may ultimately buy online from a grey dealer. That is a trend to watch in the future among the non-WIS (sure we know about it, but we are prolly 2% of overall demand). But smart makers will capture lost profit by embracing DRC model methinks...

(Edit to add chart).
From a 2017 Deloitte Study...







Last phenomenon is macro economic factors in the industry. It is still one of the least integrated, loosely coupled set of supply chains I’ve ever seen. Policies like shipping anything they wish to ADs is an outgrowth of that. The waste and lost opportunity cost whipsaws the distribution channels badly. ADs suffer, we potential buyers suffer and few can get what they want without excess prices by grey dealers.



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[watchmavan]

Originally Posted by Etschell

I'm not asking either.

Was referring to previous comment from Fanboy.


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[AzHadEnuf]

Originally Posted by timedate

regarding your comparison between the the rolex submariner and the porsche 911, and how you are saying that they are timeless designs and great products,


what you should have written was,

Too funny! Work on that Gus!

[pickettt]

Originally Posted by timedate

i think what did it for me, is when i was about 8 or 9, this man in a restaurant was wearing a gold watch, i was told by my parents that this was a 'rolex'

and entering my teens, this 'rolex' kept appearing, always gold, showing a day and a date,
it was spoken about in hallowed terms, it belonged to the rich, the want to be rich, the naughty, the celebrities,

i was told the price and put it out of my head and bought sensible brands like, seiko, timex, sekonda, swatch etc,


then i went all omega, 007, 60s seamasters etc,

then a few years ago i got interested in rolex, but only the sports models, i purchased and enjoyed, but the daydate was pulling at me, like it did when i was a kid, so off went the gmt and in came the daydate.


Yes, it is a strong brand, but you have to say, they are the best lookers.

You’ve been conditioned since childhood.

[GerardoG]

Originally Posted by 77T

G. Thanks for the note after I cleaned out the PM box. Some interesting stuff for sure.

Morgan Stanley analyzed the public companies and had to extrapolate the data on private companies. In a broad sense I have to agree Rolex knows their business (as in the business they choose to operate). What puzzles us is “what is their definition of their business”?

I can’t say what their strategy is. But I can say they don’t have an over-supply problem Well, at least in SS Professional lineup.

Some other competitors have had to buyback excess inventory as reported in the media. I don’t think that’ll be a Rolex issue. Maybe what we see is a product reaction by Rolex after the boardroom discussions (as in “we don’t want that to happen to us”).

But let me step away from the data analysis to touch on a couple of phenomena that will likely continue. Today, most potential Rolex buyers will start their shopping on the Rolex website. They plan to make their ultimate purchase in a store. But once they’ve been to Rolex.com, their browser or search engine provider will pepper them with ads from Chrono24, Bob’s Watches, etc. Tracking cookies will see to that. They may ultimately buy online from a grey dealer. That is a trend to watch in the future among the non-WIS (sure we know about it, but we are prolly 2% of overall demand). But smart makers will capture lost profit by embracing DRC model methinks...

(Edit to add chart).
From a 2017 Deloitte Study...







Last phenomenon is macro economic factors in the industry. It is still one of the least integrated, loosely coupled supply chain I’ve ever seen. Policies like shipping anything they wish to ADs is an outgrowth of that. The waste and lost opportunity cost whipsaws the distribution channels badly. ADs suffer, we potential buyers suffer and few can get what they want without excess prices by grey dealers.



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Thank you for sharing! It is indeed a fascinating business!

[MILGAUSS88]

Originally Posted by GerardoG

Rolex's number of SKUs is around 450, which is industry average (Omega has 800, Patek under 200). But how MUCH money do they make per SKU? Rolex's sale value per SKU is 205% LARGER than Omega, 161% LARGER than AP and 34,9% LARGER than Patek.
.

I know what a SKU is, but I do not know what the "sale value per SKU" is could you please explain what that percentage represents?

Am I the only one that doesn't know what this means?

[214270Explorer]

Originally Posted by MILGAUSS88

I know what a SKU is, but I do not know what the "sale value per SKU" is could you please explain what that percentage represents?

Am I the only one that doesn't know what this means?

Well that makes at least two of us!

[GerardoG]

Sure! Rolex has almost half SKUs than Omega, but their sales per SKU are over 200% higher...Rolex makes twice the money per SKU with almost half of them, so Rolex's inventory (and parts, and warehousing -they have a BIG facility at DFW) is way smaller.

Recap: they make a LOT more $ with LESS units. They prove that you do not need a ton of models to make big money.