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17 December 2018, 01:39 AM | #1 |
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PP and the SS Problem
HI TRFers,
Do you see PP trying to remedy the existence of the distorted SS grey market, where models sell for modest too huge increases over MSRP, and which is a direct result of them not meeting demand and making enough SS pieces? I'm not advocating that PP suddenly gear up production and start making Aquanaut and Nautilus watches for all would be buyers. After all, keeping a desirous public hungry is no bad thing. Waiting lists of say 6-12 months is fine. Lists for longer than 18 months is frankly bloody silly, and directly results in the distorted market. I wonder how PP feels about that market? Do they care? The fact that they are centralising waiting lists (if true), conducting more due diligence to try and prevent flippers, etc, indicates some concern on their behalf. Although, if they wanted to prevent flippers, they could increase production. That's the only way to challenge grey prices and flippers. However, do they really care? After all, if you want to sell your car, house, jewelry, you can. It's yours. Why would PP care? Selling your newly acquired 5711 at MSRP for $20k over MSRP is your concern. It does not denigrate the brand, and doesn't flood the market in any way with an excess of PP. If anything, it helps the brand by increasing the desirability of the watch concerned and brand. Personally, I see PP doing nothing about it. PP is not a SS brand, but more and more buyers seem to prefer the durability of watches made of this material. PP's SS watches account for a small amount of their current inventory, but the vast majority of waiting lists. I can see why PP and ADs would use the SS shortage to get buyers into their PM range, which accounts for the bulk of their inventory. However, I think it's very poor form to encourage sales and brand loyalty by encouraging someone to drop $35k on a Calatrava, for instance, in order to get closer to a Nautilus or Aquanaut. Unless you want the Calatrava, you may as well go grey. Spending $70k to get a $30k 5711, for instance, is not going to create a loyal PP buyer and bring that buyer into the PP house because they were forced to get their watch outside of the AD. Ultimately, bringing new buyers into the brand is something PP must care about. Just some Sunday musings. Any thoughts? Regards, TA |
17 December 2018, 01:50 AM | #2 |
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The thing I don't get is: Instead of increasing production, why would PP not just increase prices (further) on the popular SS models to balance supply and demand and ensure that PP / ADs collect the extra margin up to the market clearing price instead of flippers and grey dealers collecting this? This would build brand value and not dilute the PP "not-for-everyone" exclusive image (the opposite of what an increase in production of SS models would do).
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17 December 2018, 01:52 AM | #3 |
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I don’t think PP cares how long the wait lists are for their entry level SS pieces or how much they go for on the secondary market (except for using the latter as a barometer for when and how much to raise MSRP). I think for the most part we live in a “sports watch” heavy culture and Nautilus and Aquanaut collections may be viewed as bait (not meant in a bad way) to get some to cross over to the bulk of their collection.
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17 December 2018, 01:58 AM | #4 | |
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An excellent point. My concern with that approach is there is simply so much money floating around, and all this would do is push grey prices into the next bracket, e.g., a $40k 5711/1A selling for $65k on the grey market In order to tackle the shortage and grey problem--assuming PP thinks its a problem (they may not. Rolex clearly doesn't care)--you have to increase production at some level. The trick is to increase is enough that overall demand remains strong, and buyers are going to ADs and not greys--which does nothing for PP. I love the 5164 you have in your photo. I'm strongly considering breaking my lifetime "one watch" vow, and adding that piece--and only that piece. |
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17 December 2018, 02:01 AM | #5 | |
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17 December 2018, 02:24 AM | #6 |
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17 December 2018, 02:29 AM | #7 |
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I think the grey market values are an issue to consumers but doesn’t impact PP. I wouldn’t expect anything to change.
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17 December 2018, 02:43 AM | #8 |
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I am definitely in the minority who is really glad Patek limits the production of Aquanaut and Nautilus. It appeared ‘everyone’ jumped on the bandwagon and those are all they purchase. To Patek those sports models do not represent the pedigree of their brand - they do not want to be another AP, an essentially one-product company.
Hype aside, I find the nautilus or aquanaut the least aesthetically pleasing among other Genta design watches such the RO or the original Ingeniur... Sent from my iPhone using Tapatalk |
17 December 2018, 02:50 AM | #9 |
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If new PP buyers cannot buy their watch of choice from an AD because it's not available, and even if it is, its only available to those with an AD relationship, then PP loses a buyer--and potentially long term client. This does impact them. My wife was stunned to learn that one cannot simply go and buy almost any Nautilus and Aquanaut watch, even if one waited six months. We were chatting last night to find an equivalent market, and apart from haute couture clothing, could find no modern equivalent.
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17 December 2018, 02:54 AM | #10 | |
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17 December 2018, 03:04 AM | #11 | |
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I think there are many markets where specific models aren’t available to the public. Thinking about the auto industry, I can think of a good many manufactures that have models that are unattainable at the dealer save for a select few individuals. Can’t walk in and buy a GT3RS, Ford GT, many Ferrari models etc. A number of other industries have similar dynamics as well. I’m certainly not a fan of the situation, but I don’t think the SS sports models impacts PP much. I do understand your position though. Sent from my iPhone using Tapatalk |
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17 December 2018, 04:04 AM | #12 | |
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The waitlist for a number of PM pieces is far longer. |
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17 December 2018, 04:06 AM | #13 | |
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Patek watches are exclusive for a reason and they are not catering to the larger market that Rolex caters to. If someone wants a durable SS watch, it is best to get a Rolex, as Patek SS watches will never compete with Rolex on the durable sports watch market. People get into Patek because of the brand image and the exclusivity, among others. If it was readily available, people will quickly lose interest and move on to their next popular watch. People want what they cannot have. If you look at the Birkin handbags, they keep it exclusive for a reason. |
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17 December 2018, 04:19 AM | #14 | |
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17 December 2018, 04:30 AM | #15 |
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As someone who was fortunate enough to get a 5167a and a 5711 from my AD this year. I truly believe Patek knows about the stainless steel model craziness going on and that was the reason for the 20% price hike on the nautilus last year. I think as the world becomes more business casual and less formal for most individuals the stainless steel models will just get even more popular. I would not be surprised if Patek did another price increase since they see what these models trade for on the secondary market.
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17 December 2018, 04:43 AM | #16 | |
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And I say more: PP AD make some grey money with Nautilus and Aquanaut. Think guys PP AD sell Nautilus 5711 to a grey market dealer and the dealer pay the watch use a privat person and give 5000€ cash to the seller! And with 5000€ give to the seller the grey market dealer worn 10000€ if he want to sell watch relatively quickly!! Imagine 5000€ with no papers, grey money who arrive directly in thr pocket of the seller !! What seller want then to sell the Nautilus us who are just watch lover who go and pay the retail price? I try to understand and finally I understand! PP try to controle the phenomen but is too hard I think and maybe need some radical decision like AP when closed all retailers. |
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17 December 2018, 04:58 AM | #17 | |
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17 December 2018, 05:03 AM | #18 |
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17 December 2018, 05:06 AM | #19 |
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Some really good points raised here. I think it's great that PP makes the SS pieces hard to get. It's also a wonderful feeling when you finally get that which you've longed for. Look at Omega. Great watches, but there's little about them that feels "earned," and that's an important factor in high end pieces.
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17 December 2018, 05:38 AM | #20 | |||
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They want repeat buyer...... Go gray you save money on the long run if you plan on only own 1 Patek Philippe watch..... Quote:
If they do and get caught they will be banned for life with Patek Phillipe and all the AD......
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17 December 2018, 05:42 AM | #21 |
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I think demand for SS sports watches shot up in the past years and folks haven’t quite figured out how to address the situation as their margin is lower on steel sports watches than in precious metal sports and others. I think PP cares and likes that some watches sell above list to bolster the “investment” illusion. I think they hoped folks would get bored or tired of waiting and decide to buy precious metal watches on strap with much higher margins or suddenly sports watches lost their luster. Not sure this is working so well... so now we have a 5740 in the picture but probably not addressing the issues entirely. I would think there will be more aquanauts / nautilus references released in the near future.
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17 December 2018, 05:45 AM | #22 | |
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Good points. I'm in no rush. I was just curious, hence the question. Matters are far worse if one is looking to get into Rolex. |
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17 December 2018, 06:17 AM | #23 | |
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People putting down their names with multiple ADs and flipping the watches straight away and ADs asking for jewellery/other watch purchases to get a Nautilus do happen often but not ADs directly selling Pateks to the Grey market. |
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17 December 2018, 06:28 AM | #24 |
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I think pp doesn’t really care as the steel sports are stepping stones to pc pcc models.
They are just happy harvesting demand at current times so when the markets crash the demand is there and they don’t have to lower prices like they did several years ago. I’d say it’s playing out beautifully for them. They don’t have to answer to shareholders, and playing it long term. Increasing production would only lower current values. Would you want your exclusive watch to be suddenly not exclusive anymore? It’s the reason I’m almost not wearing Rolex anymore, everyone has one... If you really want a certain model, just build a solid relationship with a reputable ad, proven over and over again by many members here... |
17 December 2018, 06:30 AM | #25 | |
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This isn’t happening in the US, or if it is it is an extreme rarity. It wouldn’t make sense for an AD to risk losing their status for a trivial amount of money. Sent from my iPhone using Tapatalk Pro |
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17 December 2018, 06:34 AM | #26 | |
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Agree... and as an aside, I find it quite humorous when forum posters seem to think they know how to run PP or Rolex better than PP or Rolex do. There’s a reason these companies have been around so long, have remained independent, and have some of the best name recognition / branding in the world. Sent from my iPhone using Tapatalk Pro |
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17 December 2018, 07:01 AM | #27 |
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If Rolex aren't changing a damn serious thing then PP who cater to a much smaller and exclusive market won't, esp when TS doesn't like the supply of SS in the line already.
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17 December 2018, 07:51 AM | #28 | |
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Respectfully, that’s a bold statement. Firstly, many forum members doubtless have a wealth of business experience to speak on such matters. Secondly, your statement assumes PP and Rolex are effectively omniscient, and will remain masters of their respective markets. Their respective histories reflect otherwise. Sent from my iPhone using Tapatalk |
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17 December 2018, 08:41 AM | #29 | |
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17 December 2018, 08:48 AM | #30 | |
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