Should Rolex Increase Prices To Level Supply/Demand

[Rolexken]

Who would be the winners and losers in the short and longer term ?

-Grey dealers
-Flippers
-Availability in ADs

Etc

Apologies if already covered to death in other threads.

[beshannon]

Yes

The secondary markets are already taking care of this

[amh]

'Should' they? I think they will for the following reasons:
- Global inflation
- Opportunity

Of course I hope they don't but I think it's inevitable.

[Adam84]

I suppose flip this question around.

If Rolex set their prices at the current market levels, would there be the demand?

I would suggest a good part of the appeal is the asset/ investment part, if the prices are raised to that level so there is 'no margin' left in it for flippers, will demand still be there? Youve already seen it on here in recent weeks, people panicking about losing a bit of money having paid at the peak.

Also while Rolex is expensive, the pieces are currenlty at a price point that is still attainable if you save money/ work hard. if a 7k GMT suddenly becomes a 25k watch at retail you will lose a portion of buyers that simply cant afford the market value.

Personally i think if they raised prices to market value, a lot of people would be turned off and would find better places to spend 25k like with Lange, H Moser etc.

[Kevin of Larchmont]

Why would they destroy their own market and kill their momentum? Demand is high because retail prices are attainable for many even as the watches are hard to find.

[Tach24LMS]

If they raise MSRP, greys will just raise secondary value and ask more.

If the supply isn’t there from the manufacturer, it’s not going to change the demand on the secondary market. They’ll just charge higher prices, and be justified in doing so with Rolex new higher MSRP.

[dtwer]

I don't see them raising prices beyond normal inflationary adjustments.

Unlike most other corporate-held watch brands, Rolex is the classic infinite game player, they are unlikely to sacrifice they long term sustainability over short term windfall.

[padi56]

Originally Posted by Rolexken

Who would be the winners and losers in the short and longer term ?

-Grey dealers
-Flippers
-Availability in ADs

Etc

Apologies if already covered to death in other threads.

Well today Rolex stopped being watch bought to own and wear,now to many just £$€ objects and nothing more.

[Madison1]

Good question OP. I for one can't see it happening as I agree with Adam84, at market prices there are better options available from other brands. From my perspective whilst I never buy a watch expecting to sell it's nice to know with sports Rolex you won't lose your shirt. It's nice to see a paper profit but I would be happy knowing if I ever needed to liquidate I would get +/- 10%. This should hold true with the trend of Rolex price increases.

[calatravato]

I'm in the minority here, but I think the AD should be allowed to charge whatever they want. The biggest objection to this that I've heard is that customers would be upset once market prices come down and they lose money. My rebuttal is that if you're about to drop 5 figures on a watch, you're grown up enough to realize that market prices go up and down, and that you should not buy a discretionary spending item unless you can afford it.

[kieselguhr]

Just like their watches, changes will be gradual.

[brandrea]

Originally Posted by padi56

Well today Rolex stopped being watch bought to own and wear,now to many just £$€ objects and nothing more.

Afraid so Peter.

[Beto737]

Originally Posted by Kevin of Larchmont

Why would they destroy their own market and kill their momentum? Demand is high because retail prices are attainable for many even as the watches are hard to find.

This

[Mystro]

Rolex could easily raise their msrp by 30% and it wouldn’t change anything to the market. The AD list would still be overflowing with names. Rolex doesn’t work that way nor would they increase production. Rolex is in the envious place of being right where they wanna be and is always in control of their destiny in the market.

[Smy404]

The question (factual) is what is the percentage of flippers compared to genuine Rolex purchasers. I am sure this is big on the minds of Rolex. I have to think a higher percentage are by flippers. Like 15/85. Rolex knows when and if the economic downturns comes, that the high number of Rolex's in the hands of flippers will effect their AD sells. They are making the same number of watches before all this social media hype. Due to their AD contract, they will never have over-stock watches. The AD's will take them all. So they know their profit margins before this and during these hyped times. They are 100% a profitable (non-profit) business.
99% of all social media posts starts off with look at my $$$$$ purchase. So that is why I think the grey market is so high.
With free money being handed out, of course these people who are influenced and will be the first ones to buy. Hopefully they purchased from AD's so they won't be too under water.

I think Rolex will always raise prices every year. But not based on these false market times. But more on the typical price increase based on their history. Sure they will change a point here or there.

For me, if they raise prices to match grey market, I will not buy from an AD. I will wait till the economy is bad and these flippers needs a quick buck to pay off their credit cards or pay off a menacing bookie.

Rich ALWAYS get richer when the poor get poorer.

[Time Out]

Wait until new money greys and back pack flippers start dumping inventory into the markets. They are playing hot potato on the privates and prices are falling fast.

[minute_man]

They have already increased the prices up to 10% on certain models, in line with inflation. As they've always done before. They're in for the long run and therefore, almost indifferent to the noise created by chest thumping, flipped out flippers, investors, influencers, flex measurement contests and indeed the whole travesty of a market we're currently witnessing.

[AJMarcus]

Nope. Let the changing economic landscape readjust the playing field. That will happen soon enough.

[blokecollctngwatches]

Rolex will continue to manufacture around the 1m watches a year controlling their quality as a foundation/charity. I don’t they have any ambitions to increase this number by double or triple which is what the demand for these watches are like currently

[inadeje]

Originally Posted by Rolexken

Who would be the winners and losers in the short and longer term ?

-Grey dealers
-Flippers
-Availability in ADs

Etc

Apologies if already covered to death in other threads.

Again? They just did, 9-12% on all the variants considered “hot” and 2-3% on the others. First selective increase I’ve ever seen in my years of watch collecting. Shows they’re more aware of the grey prices than we give them credit for.

[Rock Strongo]

The brand equity they build up through marketing is worth way more than short term margin gains (which I'm sure is already extremely high).

[Melanotaenia]

Originally Posted by blokecollctngwatches

Rolex will continue to manufacture around the 1m watches a year controlling their quality as a foundation/charity. I don’t they have any ambitions to increase this number by double or triple which is what the demand for these watches are like currently

+1

I think a lot of people keep forgetting this part specifically when it comes to Rolex.

[Oyster Al]

I just hope they don’t poop the bed by increasing supply.

[WantBlue15202]

I'm in agreement with others, it feels like the speculation might be nearing it's end...

[buffetwarren]

Doesn’t make sense for Rolex to do this. I think history will prove the pandemic was a blip on the map. We’re heading towards an economic downturn which will blunt Rolex demand.

[francoamerican]

Originally Posted by blokecollctngwatches

Rolex will continue to manufacture around the 1m watches a year controlling their quality as a foundation/charity. I don’t they have any ambitions to increase this number by double or triple which is what the demand for these watches are like currently

Rolex want to maximize income, that’s a pretty safe assumption. They appear to be disciplined in looking long term (as many for profit, even publicly traded, companies are)

It would be interesting to know how they shuffle among models and how much they vary production.

The answer to the question I think : price hikes likely cause harm to a luxury brand if they later result in price cuts or discounting later. If they had *persistent* demand for 3 million watches and couldn’t increase production without having an effect on quality they would increase price. (Why wouldn’t they). The reason they won’t is they don’t believe demand will persist at current levels.

[SS Oyster]

In case you haven't noticed, Rolex has already raised prices twice this year alone.

[Rolexguy$]

Originally Posted by Kevin of Larchmont

Why would they destroy their own market and kill their momentum? Demand is high because retail prices are attainable for many even as the watches are hard to find.

I think so too. It's already difficult to get one as it is. Why increase price? It could have a negative toll on the demand.

[Driver8]

Aside from the OP's question of who would be winners and loser, arbitrarily raising prices to cash-in on high demand is actually quite a dangerous thing for a luxury goods company to do.

If as a manufacturer you follow the fickle whims of consumer demand in your pricing (and production), you can very easily find yourself coming to a point where demand drops and you then have to lower your RRP, or start discounting. No prestige company worth it's salt wants to do that as brand image is often the single most important piece of capital they have - and Rolex is absolutely no exception in that regard.

A good case in point for me is Panerai - a few years ago they were one of the hottest properties in the watch world. Demand was sky-high and they followed the money by increasing production and pricing accordingly. In recent years that demand has dropped considerably, so discounting is now available where once there was only waiting lists. We're also seeing them "dumb-down" their movements these days - no doubt in an attempt to keep costs lower.

Rolex does not play that game, simply because it doesn't need to. With no share-holders to satisfy, they can go their own merry way, and as it stands they sell literally everything they make for the price they want to sell it for. There's zero incentive for them to change anything.

[minute_man]

Originally Posted by Driver8

Aside from the OP's question of who would be winners and loser, arbitrarily raising prices to cash-in on high demand is actually quite a dangerous thing for a luxury goods company to do.

If as a manufacturer you follow the fickle whims of consumer demand in your pricing (and production), you can very easily find yourself coming to a point where demand drops and you then have to lower your RRP, or start discounting. No prestige company worth it's salt wants to do that as brand image is often the single most important piece of capital they have - and Rolex is absolutely no exception in that regard.

A good case in point for me is Panerai - a few years ago they were one of the hottest properties in the watch world. Demand was sky-high and they followed the money by increasing production and pricing accordingly. In recent years that demand has dropped considerably, so discounting is now available where once there was only waiting lists. We're also seeing them "dumb-down" their movements these days - no doubt in an attempt to keep costs lower.

Rolex does not play that game, simply because it doesn't need to. With no share-holders to satisfy, they can go their own merry way, and as it stands they sell literally everything they make for the price they want to sell it for. There's zero incentive for them to change anything.

Well said!

The dogs are barking but the caravan moves on...