Is your Rolex a handbag?

[donq]

Short article about the economics of luxury handbags, but it describes Rolex strategy perfectly..

https://enterprise.press/stories/201...xury-handbags/

[BogdanS]

Usefull example to the wife. Thank you!


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[Fleetlord]

I completely agree with this.

It is precisely how to market luxury goods in the current market and it is extremely, extremely effective.

Brands that have production discipline and limited distribution of select products win the day.

Those that don't will struggle.

[fskywalker]

Thanks for sharing


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[jets]

Very interesting, thanks for the link!


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[Rori]

On the surface it looks like as if he’s talking about Rolex, but, a Rolex or any high end horology timepiece, with all the historic and engineering values it encapsulates can't be compared to a leather bag in my humble opinion.
Also, Rolex shortage is fiction, it is created by third party players "grey dealers" not by Rolex itself.

[Blansky]

Originally Posted by Fleetlord

I completely agree with this.

It is precisely how to market luxury goods in the current market and it is extremely, extremely effective.

Brands that have production discipline and limited distribution of select products win the day.

Those that don't will struggle.

You seem to have your finger on this, from other posts as well.

Is it your thinking that Rolex made the conscious decision to market Rolex in this manner, controlling distribution and at the same time bring out Tudor as rolex-for-the-masses, while elevating Rolex to a higher luxury standard.

It had to take a few years to re-introduce and elevate Tudor with some very good designs to enable this.

I'm guessing it wasn't by accident.

I'm thinking this was the strategy rather than the " oh, well, Rolex is all being bought up in Asia" that seems to prevail in certain circles.

[Doug5551]

Interesting article. Thanks for posting.

My SS Rolex is a 2020 Tudor Black Bay Burgundy with in-house movement that I absolutely love and does everything I need a watch to do.

[Fleetlord]

Originally Posted by Blansky

You seem to have your finger on this, from other posts as well.

Is it your thinking that Rolex made the conscious decision to market Rolex in this manner, controlling distribution and at the same time bring out Tudor as rolex-for-the-masses, while elevating Rolex to a higher luxury standard.

It had to take a few years to re-introduce and elevate Tudor with some very good designs to enable this.

I'm guessing it wasn't by accident.

I'm thinking this was the strategy rather than the " oh, well, Rolex is all being bought up in Asia" that seems to prevail in certain circles.

Thanks..


Yes, I do think that Rolex made some strategy decisions revolving around limiting distribution on certain references in order to make the brand more exclusive and thus more desirable across the board.

If you look at Rolex 5yrs ago and before, it was a bit of a mess. An unacceptable mess, especially in the grey market. Stickered NIB SS Sports watches available @ 15% off retail? That's completely unacceptable for a luxury product

Rolex tweaked some things. Closed a lot of AD's. Limited who got certain references and when. Whether they actually limited production itself is a hotly contested subject, but I will say that I don't think they have increased production any to meet the demand that they whipped up...

Now the grey market pricing issues are well fixed. Prices are high which drives FOMO and instills a sense that money is SAFE in Rolex, which is a tenet of luxury marketing today...along with exclusivity not simple limited to price barriers.

Plenty of people have $13K to drop on a SS Daytona...but that doesn't mean you can get one from and AD whenever you want. It takes more than that. Just like Hermes. They could price the Birkin @ $30K retail, but they don't. Rolex could put the SS Daytona @ $25k...but they don't. The low retail is a buffer to protect sales in case demand drops for whatever reason, but the waiting list...the sweet waiting list drives purchases of other Rolexes...etc.

Besides this, I think Rolex wants ALL ROLEXES to be wanted. No more "undesirable" references getting dumped onto the grey market. Now a TT DJ is a desirable watch and the appearance of one in the remerchandised and minimalized display case is a FOMO moment for the prospective buyer. Can't imagine that happening 5yrs ago.

As for Tudor, I do think there is some spill over into that brand as it is presented as a 'battleship" brand to fight the availability on the street against Breitling, TAG and Omega. That way Rolex can reach consumers wanting a part of the Rolex lineage but with increased accessibility. This is still a work in progress and will take time...

[RampageWatch]

^well said.


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[sgwatchguy]

Originally Posted by Fleetlord

I completely agree with this.

It is precisely how to market luxury goods in the current market and it is extremely, extremely effective.

Brands that have production discipline and limited distribution of select products win the day.

Those that don't will struggle.

Originally Posted by Fleetlord

Yes, I do think that Rolex made some strategy decisions revolving around limiting distribution on certain references in order to make the brand more exclusive and thus more desirable across the board.



If you look at Rolex 5yrs ago and before, it was a bit of a mess. An unacceptable mess, especially in the grey market. Stickered NIB SS Sports watches available @ 15% off retail? That's completely unacceptable for a luxury product



Rolex tweaked some things. Closed a lot of AD's. Limited who got certain references and when. Whether they actually limited production itself is a hotly contested subject, but I will say that I don't think they have increased production any to meet the demand that they whipped up...



Now the grey market pricing issues are well fixed. Prices are high which drives FOMO and instills a sense that money is SAFE in Rolex, which is a tenet of luxury marketing today...along with exclusivity not simple limited to price barriers.



Plenty of people have $13K to drop on a SS Daytona...but that doesn't mean you can get one from and AD whenever you want. It takes more than that. Just like Hermes. They could price the Birkin @ $30K retail, but they don't. Rolex could put the SS Daytona @ $25k...but they don't. The low retail is a buffer to protect sales in case demand drops for whatever reason, but the waiting list...the sweet waiting list drives purchases of other Rolexes...etc.



Besides this, I think Rolex wants ALL ROLEXES to be wanted. No more "undesirable" references getting dumped onto the grey market. Now a TT DJ is a desirable watch and the appearance of one in the remerchandised and minimalized display case is a FOMO moment for the prospective buyer. Can't imagine that happening 5yrs ago.

Agree and Agree.

+ More premium brands/maisons see higher spillover sales, just like Tudor and Omega do because there’s people on both ends of spectrum that will not wait and look for an alternative.

[Chester01]

For many here, sure Rolex is a handbag and gets the same pampering, and is more accessory than tool.

[Bill2]

Yes I wear my watch almost all the time, except bed time.

[teck21]

Originally Posted by sgwatchguy

Agree and Agree.

+ More premium brands/maisons see higher spillover sales, just like Tudor and Omega do because there’s people on both ends of spectrum that will not wait and look for an alternative.

Tudor is not simple spillover when people just can’t get a Rolex.

Demand often spills over to Tudor specifically because it is under the Rolex umbrella.


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[teck21]

Originally Posted by Blansky

You seem to have your finger on this, from other posts as well.

Is it your thinking that Rolex made the conscious decision to market Rolex in this manner, controlling distribution and at the same time bring out Tudor as rolex-for-the-masses, while elevating Rolex to a higher luxury standard.

It had to take a few years to re-introduce and elevate Tudor with some very good designs to enable this.

I'm guessing it wasn't by accident.

I'm thinking this was the strategy rather than the " oh, well, Rolex is all being bought up in Asia" that seems to prevail in certain circles.

The move to luxury had actually been started in the 70s when the quartz challenge presented itself.

It could only have so much success in a world where there was only so much demand for luxury.

This particular marketing and sales angle only intensified after the GFC and smart watches appeared.

Absolutely no turning back from the pivot to luxury.

But the 5 decades of luxury positioning served Rolex so well, that when the huge explosion in demand finally arrived in the last decade or so, they have reaped so handsomely.

As have ADs who have stuck with them and followed their directives.

The being bought up in Asia is in fact true.

Rolex is pure luxury in Asia. No country in Asia (maybe except Japan) has been rich long enough to ever have regarded Rolex as some sort of utilitarian tool watch. Calling it a tool watch in Asia would result in only the most incredulous reactions.

It has always been seen as luxury and nothing else. Asia really has been the primary driver of luxury demand in the last decade.

Even luxury purchased anywhere in the world before the pandemic was destined to end up in China, one way or other.

China has come from absolutely zero to being the single largest market for every single major luxury brand.

And the thing is, over the next decade or two, and other 300-400million people there are poised to make the transition from lower income to middle / upper middle class.

This does not include countries India, Indonesia, south east Asia excluding Singapore. Every single one continent scale in terms of population. Imagine them getting their act together.

Any and all luxury businesses are eyeing this prize.

To take the long view, demand for luxury in Asia has barely even begun.

And Rolex takes a very very long view.

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[teck21]

Originally Posted by Fleetlord

Besides this, I think Rolex wants ALL ROLEXES to be wanted. No more "undesirable" references getting dumped onto the grey market. Now a TT DJ is a desirable watch...

Indeed, all brands know how risky it is to be coveted for just one, or a couple of models/products.

They must be coveted for the brand as much as the product/model.

The market can change its tastes regarding the product/model it likes, but it must love the brand.

And Rolex has done that so well.

The more I think about it, the more impressed I am at how Rolex has risen to every challenge to mechanical wrist watches over time.

It would have been so easy for the company to have been dead and buried, like Nokia.


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