"Rolex does NOT know about business"

[GerardoG]

As some of you know, I am a freelance writer for some watch magazines in different countries, something I enjoy as I can share my passion on this unique hobby.

I have just finished writing an article for one of the magazines (draft, off to editorial review and then to print), for which I gathered as much information as possible on a very interesting topic: the watch INDUSTRY. Not the products, designs, sales points; but the money, SKU, inventory side. After all, these are companies that have to make money.

After reading a lot of material, including financial reports by companies such as Morgan Stanley; I remembered a generalized comment we all made when we found that Rolex products were scarce, lead times went through the roof and customers were unhappy: Rolex does NOT know about business. They have the demand and the are not satisfying it. They could make a ton of money, people will be mad and they will loose money.

Well...some quite interesting data:

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.

...and how are they doing with the 'no availability' strategy? Yearly sales in m-CHF (as per M.S.; I know, Rolex does not publish their information; but Morgan has a very strong reputation for not making up numbers). Omega: $2,270. AP: $930. Patek: $1,265. Where does Rolex stand? $3,900

It looks like they DO know what they are doing. BIG TIME!

...just sharing...

[Etschell]

They are doing what they always do. Ignoring the noise. If you want a rolex just pay market or dont. The continual complaining is getting old and tired. If you really want a watch msrp is irrelevant. It can be above or below depending on the watch. Just ask people what the msrp is of a vintage piece and it is laughable compared to today. When daytonas were selling for steep discounts I am sure the complaints were I got hosed buying it at retail.

Rolex does not compromise because it has a monopoly. No one else can make a rolex.

[Valenciawatchrepair]

Rolex knows EXACTLY what they are doing. Maybe it's not the norm or typical, but it's who they are and it works for them. Plenty of brands have different business models as well. It's almost like they have a niche product and a niche business model. Can't deny, it has proven successful.

[BigBoy17]

I love click bait:)

[GerardoG]

Originally Posted by Etschell

They are doing what they always do. Ignoring the noise. If you want a rolex just pay market or dont. The continual complaining is getting old and tired. If you really want a watch msrp is irrelevant. It can be above or below depending on the watch. Just ask people what the msrp is of a vintage piece and it is laughable compared to today. When daytonas were selling for steep discounts I am sure the complaints were I got hosed buying it at retail.

Rolex does not compromise because it has a monopoly. No one else can make a rolex.

Spot on!

Originally Posted by Valenciawatchrepair

Rolex knows EXACTLY what they are doing. Maybe it's not the norm or typical, but it's who they are and it works for them. Plenty of brands have different business models as well. It's almost like they have a niche product and a niche business model. Can't deny, it has proven successful.

And VERY successful indeed!

Originally Posted by BigBoy17

I love click bait:)

...sorry; that phrase just stuck with me when SS models started to be scarce everywhere.

[Sprta]

It would be interesting to know how much revenue Rolex generates for the grey market vs their competitors.
Are they as good on the secondary market as they are on the regular market.

[watchmavan]

In the short term I'd agree but Rolex is not looking short term. They may not be the best watch you can buy but they are consistently the best watch for resale value. That gives some evidence to their business acumen.


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[bigrustypig]

Rolex, in fact, knows business.


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[Pw92676]

Very interesting. Thanks for sharing.

[superstarmar]

Originally Posted by bigrustypig

Rolex, in fact, knows business.


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Exactly and money aside , it's my favorite brand...
I just love the timeless designs and craftsmanship....
Oh and uh, the time keeping doesn't hurt either...

[TK-710]

These numbers are interesting but how does Rolex compare to Rolex? Were they doing poorly before the shortage? Did they just start seeing these types of numbers recently? 2.5 years ago when I was shopping for my first Rolex I went to multiple shops and, with the exception of the Daytona, could try on just about any ss model. It’s no longer that way so it does appear there was a shift in strategy but do we know if Rolex is doing better now then back than? I think it would be hard to argue that by creating an artificial shortage they’ve some how increased the prestige of the brand more than it already was. I think it’s more probable that at this point Rolex is just too big to fail. I certainly don’t see how it’s possible that if they returned to the releasing the same volume SS sports watches they did two years ago those numbers would be any different.

[ben_hong_kong]

I don't believe there is a conscious decision for them to hold back supply. Their high cost base (manufacturing infrastructure, marketing, sponsorship) will dictate they need to be doing a certain volume.

I think demand has just grown exponentially due to exposure through social media channels. There is also a growing demand for analogue, mechanical luxury objects as the world becomes increasingly digitised. Just look at the huge price growth in older manual transmission cars. The prices and demand for air cooled Porsches is through the roof.

They also benefit from not being a publicly listed company. They don't have to report quarterly earnings, answer to shareholders etc. Therefore their strategy can be much longer term if needed compared to Swatch or LVMH.

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[Boothroyd]

How different would Rolex's approach to the market be were they run purely for profit, i.e., held by a private equity firm? Vastly, I think.

[watchmavan]

Is it April already...


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[rootbeer7]

I wish I didn’t know about business!

[timedate]

Originally Posted by watchmavan

In the short term I'd agree but Rolex is not looking short term. They may not be the best watch you can buy but they are consistently the best watch for resale value. That gives some evidence to their business acumen.


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i hear this all the time, about rolex 'not being the best watch' 'but best resale value' blah blah,

but nobody wants to tell me what is the best watch?


So come on, what is either better, or the best over a rolex, because i am typing this wearing a 1987 unserviced daydate that ticks at plus 3 all day everyday, i challenge something to beat that.

[watchmavan]

Originally Posted by timedate

i hear this all the time, about rolex 'not being the best watch' 'but best resale value' blah blah,



but nobody wants to tell me what is the best watch?





So come on, what is either better, or the best over a rolex, because i am typing this wearing a 1987 unserviced daydate that ticks at plus 3 all day everyday, i challenge something to beat that.

Watches are about more than accuracy. If not then we'd all be buying quartz. In horological terms there are watches far better than Rolex. You don't me to say them here when you can research them very easily online. You may like Rolex better but that is an opinion few non Rolex fanboys would share. I think my Tudor 58 is far better than Rolex Submariner but I still recognize that the Submariner uses superior materials for some parts and the calibre is finished to a higher standard. The most expensive watch ever sold is in fact a Rolex but did it sell for that amount because it's a Rolex or because of other aspects as well?

Many Rolex prices are manufactured hense the RRP being the only true comparable and on this count, Rolex is only upper middle. All of what I've said here I would assume you have had access to well before now but somehow refuse to accept. And all of this is fine if it is an opinion that you hold. Just don't try to pass an opinion as fact.


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[timedate]

still you wont tell me, i suppose its some sort of niche watch that takes a year to make and costs 250k,

i reckon rolex is the best watch brand, because its the one everybody wants, and its very good.

A tudor is not better than a rolex, and yes i know they are closely related.

So why is your tudor 58 far better than the worlds no.1 dive watch?

[superdog]

Originally Posted by timedate

still you wont tell me, i suppose its some sort of niche watch that takes a year to make and costs 250k,

i reckon rolex is the best watch brand, because its the one everybody wants, and its very good.

A tudor is not better than a rolex, and yes i know they are closely related.

So why is your tudor 58 far better than the worlds no.1 dive watch?

Patek Philippe

[timedate]

Originally Posted by superdog

Patek Philippe

thanks,

yet nobody i know either has one or wants one.

[superdog]

Originally Posted by timedate

or wants one.

Sure they do.

[brandrea]

Thanks G. I’ve always had faith that Rolex knows a thing or two about how to run a watch company

[timedate]

Originally Posted by superdog

Sure they do.

ok, well maybe i am brand blinkered,

i mean patek is nice, but so is omega,

i know what i would choose

[superdog]

Originally Posted by timedate

ok, well maybe i am brand blinkered,

i mean patek is nice, but so is omega,

i know what i would choose

From the very little I know about you, I think you might be.

But who can fault you? It’s an incredible brand. With amazing watches. And the best marketing a business can have.

For a long time, I was an “only” Rolex guy. Now I’m wearing, by far, the least popular Patek Nautilus model and I can sell it for more than I paid for it.

I also love Omega watches. And their branding. Terrible at retaining value though.

So many wonderful watches out there. It’s a beautiful time to be a watch lover. Tough to get many watches, these days, but imho it only adds to the mystique.

And FWIW, I personally think Rolex is exceptional at business and knows exactly what it’s doing.

[tyler1980]

Originally Posted by superdog

From the very little I know about you, I think you might be.

But who can fault you? It’s an incredible brand. With amazing watches. And the best marketing a business can have.

For a long time, I was an “only” Rolex guy. Now I’m wearing, by far, the least popular Patek Nautilus model and I can sell it for more than I paid for it.

I also love Omega watches. And their branding. Terrible at retaining value though.

So many wonderful watches out there. It’s a beautiful time to be a watch lover. Tough to get many watches, these days, but imho it only adds to the mystique.

And FWIW, I personally think Rolex is exceptional at business and knows exactly what it’s doing.

thats like saying which victoria's secret model is the ugliest? Context is key here

least popular of some of the hottest watches on the planet is still a very desirable watch

[Zakalwe]

Originally Posted by timedate

ok, well maybe i am brand blinkered,

i mean patek is nice, but so is omega,

i know what i would choose

There’s no objective “best” because it depends on what characteristics you value most.

The best watch I own might well be my G-Shock because it’s accurate to a second or two perpetually, doesn’t need to be serviced, doesn’t require any setting, will take a total battering and come out unscathed and I can wear it literally anywhere and not worry about it getting lost or being nicked.

[superdog]

Originally Posted by tyler1980

thats like saying which victoria's secret model is the ugliest? Context is key here

least popular of some of the hottest watches on the planet is still a very desirable watch

I agree. That was mostly my point.

Even the least popular model has exceptional value retention.

I just read it’s going to be discontinued too. I imagine it’ll only help in that regard. But I’ll not get rid of it. I love it more everyday.

Ironically, I remember telling you once I had no interest in Patek. Then I saw one in person and started looking. Then I got a serious itch. Then I got lucky and had the opportunity to buy this one. And I’m sold...

Now my watch problem is way more expensive than it was...

[tyler1980]

Originally Posted by superdog

I agree. That was mostly my point.

Even the least popular model has exceptional value retention.

I just read it’s going to be discontinued too. I imagine it’ll only help in that regard. But I’ll not get rid of it. I love it more everyday.

Ironically, I remember telling you once I had no interest in Patek. Then I saw one in person and started looking. Then I got a serious itch. Then I got lucky and had the opportunity to buy this one. And I’m sold...

Now my watch problem is way more expensive than it was...

thats the problem, as all of a sudden you are in a totally different price range and its hard to pull back on the price creep that always happens as you feel you need to constantly upgrade.

5726 ironically was the first watch that made me interested in Patek and its pretty much the only Nautilus i have never owned. I always found that weird.

[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.

[77T]

G. - can you cite the source(s) you relied upon for Rolex SKU’s, and the Gross Revenue used to determine the $/SKU?

That data isn’t reported anywhere I’ve found - not challenging your article, just curious.




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