View: Rolex Knows

[Etschell]

Exactly what they are doing. They are changing the game.

I am a relatively new Rolex owner. I bought my first, 114060, in Summer 2015. Back then, just three and a half years ago, SS sports models were selling at a discount. I remember walking into the AD and nearly every watch was in stock. The AD was willing to offer me a slight discount but I declined and did much better through a Rolex forum member. BNIB fully stickered with a 5 year warranty. I thought why would anyone buy at an AD right now? I was right but now I am wrong.

In the 1970s Gerald Genta did something instrumental. He popularized the SS sportswatch via they Royal Oak and Nautilus. This would forever change the Swiss watch industry. Fast forward to today and those two models in SS are selling above retail, in one instance nearly double. Truly astounding or is it?

Rolex has fully recovered from the financial crisis and in so has learned. Gone are discounts. Gone is availability. ADs are thinning. Rolex is becoming less accessible. It is evident. Just look at Rolex and Tudor last year. Both did something no person in the industry saw coming; released a new GMT at the same time in harmony.

Rolex is setting up a change. The Rolex way is changing. Some say it is the economy cranking. Some say Rolex is limiting production. Some say Rolex want eliminate flippers or the 2ndary direct to consumer market. Maybe all of it is true or maybe none of it is true. From a company who is more secretive than the Willy Wonka Chocolate Factory we can really only leave it to pure imagination. But the truth is a SS Rolex sportswatch has never ever been hotter.

Now many say it won't last. That prices can't hold. That once the economy drops prices will too. That consumers and true enthusiasts will have the last laugh. There is but one problem and it is no such evidence supports the conclusion. Don't believe me? Take any era and look at Rolex MSRP. Look now. The watches are worth more with many outpacing inflation. You may argue this won't last. But before you slam someone for paying $16k for a SS BLRO ask yourself this, how do you know that it is an insane price? If history is any indication the prices may dip but over any period of time over a decade they will be higher. If Rolex is truly in the game of limiting exposure to price hits but slowing production one really can't opine as to whether nearly double MSRP is insane or not. One thing is certain. The deeper the bloodline the more likely it is not. Just take the SS Daytona Ceramic. Prices were double MSRP, dropped to only 25 to 30 percent over MSRP and now sit closer to double MSRP. Did you buy the dip?

Now I could be wrong. Things could get terrible and prices could really drop. But I will say this a SS Rolex sportswatch is one of the best bets at this point. Rolex is the master marketer. Everyone and I mean everyone knows Rolex. Patek and AP have deeper history perhaps. Ask someone what a really fancy watch is and most non WIS will say Rolex. That in and of itself is all you need to know.

So as I sit here before Basel 2019 wondering what Rolex will release some ponder why it matters. I admit I am no VIP. To me it matters because life is too short to worry if prices will drop or if paying over MSRP is horrid. If I can afford it why not? After all SS Rolex are like a bank account on your wrist. Rolex would have it no other way.

Many of us think Rolex has to be this way or that way but if history is any indicator Rolex is the way it has always been - relentless in it's own way. And that in and of itself is the Rolex way.

[Paul_I]

Originally Posted by Etschell

But before you slam someone for paying $16k for a SS BLRO ask yourself this, how do you know that it is an insane price?

Because it's purple.

[1665fan]

Mark 1 purple, Mark 2 dark blue

[Watch This]

One thing I have learned is that even the best and the brightest companies are not immune from poor decisions and poor planning. Rolex is held in high esteem here and many will simply refuse to admit the company could possibly screw up. Well, ask the WG BLRO owners how they felt when the SS BLRO was released. Ask the AD's who have become apologists for their empty showcases.

I am not buying into the notion that all is well and they have it figured out. If one bought a Submariner at retail say 15 years ago, due to price increases, their watch would have appreciated considerably. Maybe not so for a Date Just or some other models, but most of the sport line has historically done well. Now we have empty showcases, long-time AD's dropping the line or getting dropped, and grossly inflated prices.

The whole situation SUCKS and I refuse to adopt the "everything is fine, don't panic" approach, although I do appreciate your thread and your opinions.

[Paul_I]

Originally Posted by 1665fan

Mark 1 purple, Mark 2 dark blue

I would pay MSRP for the Mark 2 then. It does beg the question though, if Rolex is holy, infallible, and knows exactly what they are doing - why the Barney edition GMT?

[kauffee]

You make a lot of great points.

I do think it's good for ADs that they do not have to discount. I question whether it is good for them to have empty cases and whether Rolex is happy about this.

I don't think the high demand/low supply has made a measurable difference in the brand's reputation. Rolex was already perceived as the top watchmaker by the mass market and as being the best at what it does by watch enthusiasts. I don't think that's changed.

When I bought my first Rolex I wasn't any less excited about it just because it was available when I walked into the door of the AD. I was still buying a Rolex!

I'd argue that's the same for the vast majority of Rolex buyers. If anything, the scarcity just makes the buying experience worse for most people who want a watch and can't easily buy it.

[Paul_I]

Originally Posted by kauffee

I'd argue that's the same for the vast majority of Rolex buyers. If anything, the scarcity just makes the buying experience worse for most people who want a watch and can't easily buy it.

Hear hear.

[THC]

Just allow the ADs to make a living, is what I think is fair

[peacocknation]

I visited a Bay Area AD this weekend that in a couple months will no longer be a Rolex AD. Apparently Rolex wanted a lot more floor space and the owner didn’t agree. So...cya Rolex (bummer since I’ve bought 3 pieces there in the last year).

The business guy in me is trying to figure this one out. If Rolex didn’t want the AD at current size, why lose a distributor completely? If Rolex planned to close certain dealers to consolidate their distribution, why offer a larger floor space?

Maybe the plan was to push a few AD’s to see if they would expand, and the ones that don’t lose the ability to sell Rolex watches? Fewer AD’s would mean what? Could Rolex increase prices to the fewer AD’s and explain it away by saying your overall volume will increase?

But to the original post - the more I think about the current state of SS sport watches and Rolex in general, the more I believe demand is just there. Heck, I bought 3 in the last year without ever buying one before.

[mbdurham]

I’m some respects I disagree. I don’t think this is some mastermind plot with Rolex. I believe they are producing the same amount of product but savvy resellers are plucking them up knowing people are willing to pay double MSRP and they can make a profit. If it was only consumers who actually wanted the product to keep it then buying them wouldn’t be this supply issue. The secondary market is flooded with all models that are supposedly hard to get. If there was a reduction or shortage this would not be the case.

The reason and equivalencies behind this reasoning go to my business. I often see one buyer for numerous luxury condos in a high rise building purchase numerous units on the front end during development. Now obviously they are not going to inhabit all of these units if any but they hold on to them until the building is finished then sell them for a profit. We get others who were not as early or couldn’t get funding at that stage clamoring to get in the building once it’s finished. Obviously we like it because the building is sold out early which creates a buzz and people wanting to get in. Many eventually do but at a profit to the original buyer.

Do I care? No not a bit. All units are sold at our asking price and the building gets built. Doesn’t matter to me if someone makes a profit later on. Could we stop this? Yes absolutely. Will we? Not a chance as there is too much benefit. Same with Rolex and ADs and resellers

Now if and when the market turns will investors be so willing to plunk out a lot of money on the front end hoping for a large return on the backend or maybe waiting a long time for that return? Nope so I believe it will correct itself eventually.


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[16610v]

Rolex short sports model and make everybody crazy about rolex, which bomb the sales of non-sports model alot from ordinary consumers like your aunts.

[16610v]

Originally Posted by THC

Just allow the ADs to make a living, is what I think is fair

Ad still alive by selling a lot of non-sports model like datejust. If they cant servive you are seeing alot of them stop selling rolex or just lapse.

[Rolex addict]

The problem is that not all Rolex models have increased in value. The popularity of certain models is driving this craziness along with people who only want to buy watches and flip for profit.

[Etschell]

Originally Posted by Rolex addict

The problem is that not all Rolex models have increased in value. The popularity of certain models is driving this craziness along with people who only want to buy watches and flip for profit.

Well I guess part of the Rolex way is to use the milguass case and explorer dial with some new paint and hands. Apparently that was not a smart move and quite lazy to me (no offense to anyone that owns one as I own a fat lug subc some loathe).

In no way am I saying Rolex is perfect. They have problems of course. All I am saying is Rolex SS sportswatches taken as a whole have historically appreciated. Of course there are some that really havent all that much such as the Airking.

And I think Rolex is pairing down its availability a bit to go with a more boutique style offering. Bear in mind this is the same company that was 10 years behind on the rubber strap and somehow justified it by saying hey our rubber strap has metal in it so it really isnt a rubber strap. This is why it would not shock me that the boutique store style is their next play copying those who have implemented it successfully.

[DLRIDES]

Originally Posted by Paul_I

Because it's purple.

[Bigsoftee]

Found myself singing "pure imagination" From Willie Wonka (Original film) hahaha

[lightingball2]

Im curious, what AD is it in the bay area? I'm in Sacramento and there were 2 AD here, now just one. Grebitus and Sons just lost their AD of Rolex. They had them for over 60 years, along with a ceritified Rolex technician there. Now Devon's is it in Sacramento.......

[carlhaluss]

Well, I am neither an economist nor a speculator. I just like watches. And I love Rolex watches, just as much or more than some other brands. And, to be honest, I don't really and truly understand a lot of what is being talked about on the forums, apart from the fact that there is a shortage of Rolex stainless steel sports watches. Although, I do try to understand, and respect, all the opinions expressed here by the OP and others.

I am very fortunate to have a wonderful AD, who also sells other great brands like my H. Moser where I started my relationship with him. And he is also one of my favorite people, a wonderful and successful guy who also has the trait of being humble. He has a very successful business, and treats his employees and customers with utmost respect.

After years and years of collecting and flipping, I have ordered a Sub 114060 from my AD. I have been told it will take a while, but not as long as a Pepsi GMT or SD43. I am totally fine with that, and I know that they will do their best for me. They like me, and I like them. We both got to this point out of mutual respect and enthusiasm for watches. And we are all passionate about the Rolex brand. For me, that's all I need to keep me happy.

I really love this forum, and I wish all of you guys the same happiness.

Cheers,
Carl

[bobabreath]

Mostly it's the SS Sport models that are in high demand. Datejusts, and two-tone models still languish in the cases.

To cut production of these SS models, narrow your customer pool, reduce your points of sale, and expect this "luxury image" to float your whole business seems like risky strategy to me.

[toolr]

Originally Posted by Etschell

But before you slam someone for paying $16k for a SS BLRO ask yourself this, how do you know that it is an insane price?

The Milgauss GV comes to mind. When released, some were paying upwards of $18k, where are those values now?

[HogwldFLTR]

Rolex likely does know exactly what they're doing. No doubt. I'm not sure that pricing the grays out of the market place is really working however. Some people have more money than sense.

[mfm22]

What is better for AD
Selling let's say a Rolex Sub (ND) for full retail I think it's $7500
Profit margin 30-40% ?

Or selling 2 Subs with a 5-10% discount. Yes that's correct more money in actual dollars
But that's if supply is good.

Look at what most AD's had to work with over the busy holiday season Empty case's
Who is Rolex looking out for ??

[the_natural]

I'm still hard pressed not to see this as a bubble. And not much else scares me like a bubble.

[frankfrazetta]

Rolex wants ALL AD's out of business or no longer an AD. Rolex direct from Rolex. Rolex at firm, fixed price. That's what Rolex is aiming for. If this works for them they will fade into history. Rolex has a nearly unbeatable product and are very arrogant. Let's see if they screw it up. Rolex boutiques will display and let you fondle. You buy, you wait. It arrives at your door. No more greys with new watches exclusively and at higher prices. Nope. In this future vision greys may have watches but they will have to compete directly with a manufacturer direct model.

[EDL7]

Something is wrong at Rolex...has been for awhile now..
Not a particularly likable company at present..except for their product..which you cant procure..
Who knows what they are really up to..
They probably don't even know themselves..
They seem hazy...disillusioned..
And that's not good..

[Etschell]

Originally Posted by toolr

The Milgauss GV comes to mind. When released, some were paying upwards of $18k, where are those values now?

Much less. Where are all the other ss sportswatch model prices though now? Of course one will be a dog.

I am not encouraging anyone to pay 16k for a ss blro fwiw. But if you like a blro it has more pedigree than the milguass so maybe it wont go below a certain point or maybe it will. The Tudor GMT hasnt really even dropped so maybe it is a bubble.

[jonnyz1245]

Originally Posted by frankfrazetta

Rolex wants ALL AD's out of business or no longer an AD. Rolex direct from Rolex. Rolex at firm, fixed price. That's what Rolex is aiming for. If this works for them they will fade into history. Rolex has a nearly unbeatable product and are very arrogant. Let's see if they screw it up. Rolex boutiques will display and let you fondle. You buy, you wait. It arrives at your door. No more greys with new watches exclusively and at higher prices. Nope. In this future vision greys may have watches but they will have to compete directly with a manufacturer direct model.

Rolex doesn't even own the Rolex boutiques. They are partnership with existing ADs who run them and manage them. I don't think Rolex wants anything to do with selling watches direct and even if they did, that does nothing to the secondary market. Rolex will still only produce X number of watches per year and the total will be X-1 to keep up the scarcity. Thus the secondary market will still be filled by people who receive them direct from Rolex and sell them for any number of reasons and there are lots of reasons people sell watches.

[JR16]

Originally Posted by jonnyz1245

Rolex doesn't even own the Rolex boutiques. They are partnership with existing ADs who run them and manage them. I don't think Rolex wants anything to do with selling watches direct and even if they did, that does nothing to the secondary market. Rolex will still only produce X number of watches per year and the total will be X-1 to keep up the scarcity. Thus the secondary market will still be filled by people who receive them direct from Rolex and sell them for any number of reasons and there are lots of reasons people sell watches.

Agree. Why in the world would Rolex want to sell direct ? Makes zero business sense IMO. They sell to ADs who take all the risk, pay all the overhead etc.


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[jonnyz1245]

Originally Posted by Paul_I

Hear hear.

I second that Hear hear. The scarcity is a real problem and is not doing Rolex any favors. I know there are those here that think this is planned but I disagree. I think it is nothing more than supply and demand. The numbers have been been posted in another thread and they support this theory. A Rolex exec was quoted last year that they increased their production 5% and that was all they could do given capital planning, quality control etc. Then you have most of their major markets posting double digit increases year over year. The math is very simple.

Rolex would be much better served if they could fill their AD's cases so Joe Q Public can walk in and at least see 1 or 2 SS models.

I'm not sure if its a bubble or not but i do believe we will see a softening of prices when the next recession hits. I don't know of one asset class immune to economic cycles.

[Junior_]

Originally Posted by carlhaluss

After years and years of collecting and flipping, I have ordered a Sub 114060 from my AD. I have been told it will take a while, but not as long as a Pepsi GMT or SD43. I am totally fine with that, and I know that they will do their best for me.

Hope you get that Sub soon; it’s a great watch.