Being A Rolex Authorized Dealer Is Not As Glamorous as It seems

[Kinnakeet]

Originally Posted by Hardtimes

With 100 to 300 percent markups on jewelry I would think the real reason for wanting Rolex is to simply bring people to the store who might buy the high markup items. Making 35% of a $30K piece of inventory is not as attractive as making 200% on a $3000 gold chain.

That’s a large part of it.

[amh]

Originally Posted by Fleetlord

If I were an AD chain in the USA I would absolutely 100% want to have ROLEX.

I would also carry

Cartier

Tag Heuer (or Longines in Asia)

and that's it for watch brands.

They are the best marketed and most known across a spectrum of consumers IMHO.

Keep it easy as possible.

Absolutely! So much more to bundle for each Rolex.

ADs have to be swimming in cash. They're hoping this artificial drought lasts forever. The CPO will create yet another artificial shortage!

[garyk]

If it were easy, everybody would be a Rolex AD...

[Harry-57]

Originally Posted by RichardBartlett

From a single source supplier who delivers you with a stock quota less than 10% of demand.

Not a great business model

What's your assessment of profit margins?

[hellofromthebay]

That's baloney. For several, I can see how the owners and their families live via Instagram. Life is very good as an AD.

[WatchEater666]

This is very common in retail. When I owned a guitar retailer, the only way to carry large brands like Gibson and Fender was to commit to a minimum amount of purchases per year and their product mix specifically.

They would literally force you to buy their undesirable and slow turning inventory.

A lot of retailers, especially small ones, like your normal AD are probably running with very high amounts of personally guaranteed SBS debt and relatively low margin.

Not a good combo for the slowing economy. :)

[szabo_martin]

Its definitely not easy. Patek demands a certain amount of space with an approved designed show area. They also look at your other brands. Rolex requires a fairly huge outlay in the showroom, private salons etc. This is not new tho. Many franchise are the same and car dealers. Lamborghini Ferrari etc all have specific designs for their showrooms

[beshannon]

Originally Posted by hellofromthebay

That's baloney. For several, I can see how the owners and their families live via Instagram. Life is very good as an AD.

[BillA]

Not easy? They have a business where people come to them. Sounds like my Dr.
Not feeling sorry for any AD, right now they are printing money.

[ArtNouveau]

I’ve known for decades that at least in the US, the Rolex dealer contract with its authorized dealers was and is written heavily in their favor. Basically the AD can be dropped at any time.
However it was also said that being a Rolex AD was a license to print money, they sold well and brought foot traffic into your store.
The “culling” mentioned above is certainly real. 30 years ago even small towns usually had a jewelry store that carried Rolex, a quick look at their US locater shows that almost all of those smaller market ones are gone. The ones in smaller markets that are left must have enough wealth in their area to be deemed necessary in the overall marketing plan.
All this said, I don’t personally know of any AD dropped by Rolex that then went out of business. A wise owner would cover their bases with other products that sell well too.

[RKunz]

The distribution network is headed towards the Apple model. The top brands will have their own stores w/o dealer assistance. Many of the true blue dealers that did everything by the book have been executed. One year contracts are pretty dicey considering the demands the brands place on the dealer. If you have worked for yourself all your life then it’s tough having brands breathing down your neck 24/7. Calling to remind you to answer EVERY social media inquiry! Dealers are losing their minds. Then after all that, ANOTHER angry customer comes in pissed because he can’t buy the latest hot watch! Then posts a scathing negative review online.

[RKunz]

Originally Posted by ArtNouveau

I’ve known for decades that at least in the US, the Rolex dealer contract with its authorized dealers was and is written heavily in their favor. Basically the AD can be dropped at any time.
However it was also said that being a Rolex AD was a license to print money, they sold well and brought foot traffic into your store.
The “culling” mentioned above is certainly real. 30 years ago even small towns usually had a jewelry store that carried Rolex, a quick look at their US locater shows that almost all of those smaller market ones are gone. The ones in smaller markets that are left must have enough wealth in their area to be deemed necessary in the overall marketing plan.
All this said, I don’t personally know of any AD dropped by Rolex that then went out of business. A wise owner would cover their bases with other products that sell well too.

Like EVERYTHING else in this world, change is happening at a break neck speed. It’s easy to say “a wise owner would cover their bases with other products” but many of the other watch brands are dead wood, they don’t sell! Then when you want your money out of the that inventory you have to sell some of it for loses. So the dealer that went out of biz probably made the smart decision and not a slow bleed to death. If you have not been in the business then you just don’t know.

[RKunz]

Originally Posted by ArtNouveau

I’ve known for decades that at least in the US, the Rolex dealer contract with its authorized dealers was and is written heavily in their favor. Basically the AD can be dropped at any time.
However it was also said that being a Rolex AD was a license to print money, they sold well and brought foot traffic into your store.
The “culling” mentioned above is certainly real. 30 years ago even small towns usually had a jewelry store that carried Rolex, a quick look at their US locater shows that almost all of those smaller market ones are gone. The ones in smaller markets that are left must have enough wealth in their area to be deemed necessary in the overall marketing plan.
All this said, I don’t personally know of any AD dropped by Rolex that then went out of business. A wise owner would cover their bases with other products that sell well too.

Originally Posted by Kinnakeet

That’s a large part of it.

most dealers are NOT operating on 200% profit margin for jewelry. Those margins are for the luxury brand names dealers that advertise in the fancy magazines and pay 10 grand for an adversiment.

[RKunz]

Rolex & Patek. Preowned yes take in trade-ins! Sorry absolutely no TH. Also, you have to know which companies are more trouble than they are worth. Takes research and networking.

[amh]

Originally Posted by RKunz

most dealers are NOT operating on 200% profit margin for jewelry. Those margins are for the luxury brand names dealers that advertise in the fancy magazines and pay 10 grand for an adversiment.

Yes and those are the very same ADs requiring tens of thousands in up front purchases prior to the coveted "allocation"

[Jack T]

Originally Posted by rolexandlange

You will need to sign a 10y lease on a retail space. 10y is a long time and you will need to make all the capital outlays. You will spend 12-24 months making tenant improvements up to Rolex standards at your cost before you see any revenue. Opening would be mid 2024 if there are no delays. The city planning department wants to have 9 hearings with general public comment and discuss the size of your parking spots and the effect on traffic to the neighbors.

By the way, 10y ago my AD had 300 Rolex watches in stock. At that time there were waiting lists for Panerai Bronzos and you had to bundle. A Rolex AD is not a perpetual license to make money. The jewelry business is very volatile.

It is not correct that the AD bears the full cost of renovations, expansion and improvements. Rolex will subsidize an agreed upon, but often substantial portion of the costs, and the AD can amortize their portion over five years. And there is a pro rated refund should Rolex terminate the franchise within a certain time frame. At least that’s how it was explained to me by my long time dealer.

The key is to qualify as an AD that the new Rolex brand management and distribution model will support. It has nothing to do with years of service, and everything to do with a set of metrics that are as transparent as anything else Rolex does.

My long time jeweler, a family owned, single store was a Rolex AD for well over 60 years, then a Rolex boutique opened last year about 12 miles away in an upscale retail center, but he saw this coming long before that.

They have since received enhanced support from two other major manufacturers, upgraded all their brand sections, taken on a niche brand, and are improving their retail layout. He even kicked out Tudor.

He confirmed that dealing with Rolex is like walking on eggshells, the returns aren’t what they were, product uncertainty is very high, and other very profitable watch markers are much more dealer friendly.

Rolex will get what they want out of all this, scarcity = exclusivity, probably higher MSRP to come. But so will those jewelers and watch dealers that planned ahead.

[RKunz]

Originally Posted by amh

Yes and those are the very same ADs requiring tens of thousands in up front purchases prior to the coveted "allocation"

Virtually every dealer “especially the big ones” are weighing their decision on who to sell by what kind of jewelry you’ve bought. So your post is inaccurate.

[RKunz]

Originally Posted by Jack T

It is not correct that the AD bears the full cost of renovations, expansion and improvements. Rolex will subsidize an agreed upon, but often substantial portion of the costs, and the AD can amortize their portion over five years. And there is a pro rated refund should Rolex terminate the franchise within a certain time frame. At least that’s how it was explained to me by my long time dealer.

The key is to qualify as an AD that the new Rolex brand management and distribution model will support. It has nothing to do with years of service, and everything to do with a set of metrics that are as transparent as anything else Rolex does.

My long time jeweler, a family owned, single store was a Rolex AD for well over 60 years, then a Rolex boutique opened last year about 12 miles away in an upscale retail center, but he saw this coming long before that.

They have since received enhanced support from two other major manufacturers, upgraded all their brand sections, taken on a niche brand, and are improving their retail layout. He even kicked out Tudor.

He confirmed that dealing with Rolex is like walking on eggshells, the returns aren’t what they were, product uncertainty is very high, and other very profitable watch markers are much more dealer friendly.

Rolex will get what they want out of all this, scarcity = exclusivity, probably higher MSRP to come. But so will those jewelers and watch dealers that planned ahead.

I personally know an AD that paid 100% out of pocket for its Rolex area of the store but when they were closed they did receive an amortized portion back.

[173rdabn]

It's a business, not a party. To be successful you work your butt off and manage the operation to maximize profit and customer satisfaction.

[NJpakman]

Originally Posted by Old Expat Beast

Just discovered something interesting. Pre-covid there were more than 60 (about 67 as I recall) Rolex ADs in Hong Kong. I just did a count on Rolex.com and could only find 36 still listed. Not surprising really, I guess, with so many retail spaces closed down in recent years.

HK was hit bad on tourism. They follow China lock down policy and blocked China tourist to enter. For a place with 700m population, 36 Rolex AD still too much, consider there are 200+ unofficial place selling pre-owned Rolex in Hong Kong

[Calatrava r]

Originally Posted by RKunz

Virtually every dealer “especially the big ones” are weighing their decision on who to sell by what kind of jewelry you’ve bought. So your post is inaccurate.

Aren't you both saying the exact same thing?

[fskywalker]

Originally Posted by brandrea

I'd be a horrible fit to own a retail business ...

Attachment 1344372

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Brian: Are we one of those 3 people ?


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[zengineer]

Originally Posted by garyk

If it were easy, everybody would be a Rolex AD...

If every one of us was an AD we would all get every Rolex watch we wanted at wholesale.

It would solve this whole shortage thing immediately. I may be missing something...I need to draw a chart or diagram or something.

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[Old Expat Beast]

Originally Posted by NJpakman

HK was hit bad on tourism. They follow China lock down policy and blocked China tourist to enter. For a place with 700m population, 36 Rolex AD still too much, consider there are 200+ unofficial place selling pre-owned Rolex in Hong Kong

I know, I haven't travelled outside Hong Kong since December 2019. Been here the whole time.

(It's roughly 7.4m population, not 700m).

[MuleDeer]

I owned and operated a Rolex AD for about thirty years. They were HOTTIBLE to deal with.

I could never have treated my customers like that and I often made up for Rolex' incredible rudeness and business shortcomings. And, believe it or not, often Rolex got the credit and I got left with the transaction costing me money.

It's still amazing to me that they are still in business.

Blessings, Steve

[brandrea]

Originally Posted by fskywalker

Brian: Are we one of those 3 people ?


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Absolutely my friend

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[RichardBartlett]

Originally Posted by Harry-57

What's your assessment of profit margins?

No point having a high or low % if you can't get the product in to sell..

[RichardBartlett]

Originally Posted by MuleDeer

I owned and operated a Rolex AD for about thirty years. They were HOTTIBLE to deal with.

I could never have treated my customers like that and I often made up for Rolex' incredible rudeness and business shortcomings. And, believe it or not, often Rolex got the credit and I got left with the transaction costing me money.

It's still amazing to me that they are still in business.

Blessings, Steve

Fair comment but if you put up with it for 30years

[NCRolexguy]

Originally Posted by WatchEater666

They would literally force you to buy their undesirable and slow turning inventory.

Not "literally" but ok, I get your point.

[Dmcnill]

Originally Posted by JSolution

Why would it be glamorous? It’s business like any other business there’s no room for friendships.