Rolex Shortage Brilliant Marketing or Luck: How circumstances shaped strategy
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- Опубліковано 18 січ 2021
- A brief entry into the steel Rolex watch shortage and how the circumstances surrounding the Rolex brand contributed.
#rolex #rolexwaitlist #rolexshortage #rolexpepsi #rolexhulk #rolexkermit #daytona #submariner #rolexgmt #steelrolex #rolexdealer #buyrolex #newrolex #rolexbatman #rolexsubariner
Rolex SA makes more margin on gold watches than on steel, the fact that some consumers want steel is irrelevant to them because they sell lots of both steel professional and gold watches to their ADs. This is why they will not make more steel professional watches... they don’t need to, the AD takes the total burden of the fashion risk. There are lots of steel models for big spenders, and there are lots of steel models on the secondary market...even if those are overpriced vs similar offerings from other brands. This shortage problem only exists for 1) consumers with thin wallets who are desperate for the kudos they could get from wearing the same watches as the celebrities they see on TV, and 2) wanna be speculators that want to profit from the situation.
It's deliberate. They are a factory making products. If they want they could ramp up production. Imagine going into a Bentley dealership and asking to buy one of their newest cars and them saying 'oooh, well, er, maybe, maybe not, er not sure, no supply, don't know you, fuck off'.
Did you even watch the video? Lol
Agreed, the Pepsi in particular caught people’s fancy right when the watch hobby exploded with many UA-cam channels and Instagram accounts. There’s just not enough around. Here in Hong Kong, Rolex was already as sacred as gold but now the sports watches are sold by ADs with a premium (charged separately on the credit card) only to VIPs and celebs or sold in bulk with precious metal pieces to resellers. I don’t think it can get worse than that.
The demand has definitely increased and it’s interesting to see how different dealers have allocated their pieces. I actually hadn’t heard about the separate credit card transactions. Thanks for sharing!
Btw I’m in the market for an Explorer 39mm. Do you see them often? I can’t find any in the Midwest.
Thanks for the inquiry, they definitely come up, but we haven’t had one in a bit. The only Explorer we have in stock currently is a vintage Explorer from 1967 on the original Rivet Bracelet. Stay tuned though as we are getting new inventory regularly. Check out our instagram Vineyard_Time for new updates and feel free to stay in touch! Thanks.
I was told by a Rolex employee in 2016 that they were going to “wind down SSS watch production”. I reported it on a couple of web sites and got a ton of abuse. Apparently I was either a liar or posting rubbish. I was told there was. “Christmas holiday shortage” or “run out prior to a new movement”.
Well its 2021, five years later, and....... no watches in ADs. Told you so.
Why?
Rolex has a grand plan. Omega were pushing themselves as direct competition, so Rolex introduced Tudor with in house movements and priced them in the Omega range. Then they restricted supply of SSS Rolex watches. Now the “instant idiot” with a credit card cannot buy a Rolex, he has to buy an Omega.
It is a master stroke of Veblen marketing.
The solution to all of this would be if Rolex takes client orders at AD’s. A client can pay full price or put a deposit down for his her watch. If Rolex were really concerned about watch flippers and AD’s that sell under the table. This is an effective non-intrusive way to keep an eye open for unfair sales practices. This will satisfy client demand. A true client will wait for his/her watch further proving clients will not resell. Rolex can also take VIP/corporate clients via AD’s as well. They can control how many hot models get ordered. It will also help the production of Rolex references that sell in real time. Rolex can gain more control over production. Rolex & AD’s can keep a record of who buys Rolex. AD’s will still make money and comply with Rolex sales quotas. It’s a very fair and simple cost effective (maybe profitable pre-order charges at AD’s) solution. It’s a win win for Rolex, the AD, and the clients. Plus Rolex can still keep its demand and desirability. It makes Rolex more exclusive similar to how Patek Philippe sells to their clients.
Your point is well taken. The current model has definitely created extremes and the secondary market has exploded. Sadly there are many collectors unable to get the watches they desire. It will be interesting to see how the market continues to evolve both at the AD level and the secondary market.
Gray dealers wiped out all of the models in display cases and asking enormous prices, just look how many subs unworn for sale in Chrono24!? Where they did got that 2020 inventory so fast in large quantities! ?
There definitely are a lot for sale currently on the secondary market compared to direct from an AD.
Certainly frustrating for those of us who were planning to make a one off landmark purchase in 2020!
I completely understand. I hope you get your new Rolex soon! Which model were you planning to purchase?
Pepsi GMT was my first choice. I have 3 ads within 100 mile radius but only one showed any interest in helping me for a one off purchase. He suggested I contact him in February when he will have an idea of his allocation for the year. Doesn’t help that in UK retailers have been closed for much of 2020 and only open for click and collect purchases.
Good choice! I really like the new Pepsi GMT. Glad a local AD is trying to help. That’s huge! This has definitely been a difficult year.
Great video but when I see 100 new Subs on the forums at a $5K over retail I have to believe there is a better way for Rolex to do things. It's incredibly frustrating for someone that just wants to buy a nice watch. That being said, my AD has been really transparent about things with me.
I completely understand the frustration. I’m glad you have an AD that has been good to work with! Good luck in your search! I hope you get the piece you are looking for soon.
Spot on analysis.
I suspect Rolex is also thinking like Patek - the President of Patek came out and said that he doesn’t want to be known as a steel or Nautilus only company. So Rolex will continue producing whatever it wants and ignore the surging demand for steel only sports watches.
It’s an interesting point, especially because historically Patek has been known for its gentleman’s watches predominantly in Gold and Platinum. Steel variants were exceedingly rare, given that Patek did not focus on everyday watches.
First of you videos I have watched, you’re a dealer right? So before the sports crisis I could call my AD and say what have you got. When the BLRO came out he would not put me on the waiting list, so I bought a YM42 and got the BLRO, this is the new AD marketing strategy and I have no problem with that.
Thanks for watching! We do indeed have a Gallery on Martha’s Vineyard where we predominately specialize in Vintage watches.
The process for acquiring sought after steel models has definitely changed over the last couple of years. Your completely right, It’s a big change from a few years back when you could simply call an AD and steel models were readily available for purchase. Glad you got the Rolex you were looking for! Both are really nice pieces.
Please consider subscribing and check out some of our other watch videos.
@@vineyardtime5545 I have subscribed and I look forward to your next release. In fairness to my AD he showed me an OP41 which I had not registered an interest in but had to have it! I was there to buy a BB58 blue for my daughter. I’m in the uk, I have heard of your location but only know it is is the USA.
Thanks so much! Both good choices. I hope she enjoys the new BB58! We are a seasonal resort Island off the east coast of Massachusetts.
@@vineyardtime5545 I should visit once COVID is gone, so many cultural references in film and pop culture!
Definitely worth the visit to Martha’s Vineyard there is lots to see! Make sure to stop by and say hi when you come! We are located on Main Street in Vineyard Haven, one block from the ferry, at 76 Main Street. Happy to give you ideas of places to see and eat if you decide to come.
Could i buy some very expensive watches at the rolex ad to get a hulk and then return the other watches?
anyone tried this already.
Creative idea, however most AD’s look for sales over time. Additionally even a short wait for a Rolex steel piece would likely exceed the short return period for the other watches.
Lucky for the flippers who seem to be the only ones getting watches from ADs
I love Rolex but am so frustrated with them so now I bought Tag Heuer
I like Rolex sports watches, not so much as paying $2000 mark-up. I just go to spend my money on Zenith or IWC. The flippers can go to heck.
Zenith and IWC are both great makers!
No flipping justice!
It’s definitely been a unique year for watch shortages. They are easily availability on the secondary market, but not from authorized retailers.
Rolex works 10 years ahead of schedule at a snails pace. They stick to plans agreed on years ago and follow through. Rolex is not about the latest trends and technology. They improve 5-10 years at a time and they are always late on trends. We have to look at the demand demographics. 1) Millennials coming of age. Social media online savy and becoming more aware of quality products. Rolex DEFINITELY did not see this coming. Not their traditional client base. 2) We have Gen X who know Rolex (grew up with) and still see Rolex as that aspirational brand. We are at that age (40-58) where we can afford a few Rolex watches. 3) A successful Asian market. Many Asian countries went from 3rd world status, to cutting edge tech societies. There is lots of money being made in Asian tech/business industries. Adding to a global demand in luxury goods in general. 4) Perhaps Rolex is pushing Tudor to give its subsidiary a chance to grow since is was absent for decades in the North/South American market & Asian market. One thing is for sure we just do not know what happens begin Rolex HQ doors. We have a better chance of knowing what’s inside Area 51 or know who really shot JFK. Before we know what’s going on inside Rolex. I give them credit for secrecy that rivals The United States Top Secret procedures.
Very interesting thoughts!
So make more then it ain't fucking rocket science.
Half of this is right. Right because we can all Google it. The rest, less so...
I’ve been marketing & legal director in a worldwide business, (with a wealth of Primary Brand Management Experience & Franchise modelling), I’m also close to Rolex and I am personally experiencing what you describe, as I’m a valued customer. I agree with only half of what you say for divergent reasons.
First, your proposition flawed as a question - by that I mean this company will always evolve and will never cease trading. We’re simply observing a (typically on a forty year cycle) evolution of the Brand and this [relatively] short term aim is indeed to lift the Tudor Brand, and in due course, the Rolex Brand. You miss this completely.
Yes, it’s is vital to understand ALL normal company’s have only two objectives. 1) Provide a return on equity and 2) protect & enhance the Brand. Nothing else. In your video you just mirror my comments of 8 weeks ago. I should have copywrited them.
Rolex is a charity, operated from within a country independent from world wars, and even nuclear wars; the Directors’ mindset is fundamentally unique in this respect; it’s also fundamentally unique because PROFIT (return on equity) is not required.
Let’s take a step back to understand what is truly driving the recent changes - the higher prices, the reduced supply of steels, the new hub & spoke distribution model, enhanced advertising spend, more Tudor models (mostly sporty), extensive legally based protectionist activity and so on.
The overall aim is to grow the Rolex brand, NOTHING else. It’s akin to Amazon’s Jeff Bezos in the 1990s - massive investment in infrastructure and the Brand enhancement, with $ profits coming 10-15 years later. And boy was he right! The Rolex board manage the business on these timescales too. So, short term profits are not required, almost irrelevant (remember, they have tens of $ billions in Swiss Bank Accounts already, and no shareholders to please, they merely distribute excess profits to charities at their own discretion, with no one to please).
More interesting still, perhaps it helps us in this thinking to appreciate what is actually driving the requirement for change at all? Why change, given their finances?
Principally there are only two factors: 1. Better Competition in their marketplace (which is not “the watch business”, to quote their own chairman, it is “the luxury business)”. 2. A more connected, transparent marketplace, across the globe - primarily driven by the internet and freedom to travel. Without these two new major international, powerful factors, no change at Rolex would be required.
Thus they must, to achieve the main objective of enhancing their Primary Brand, drive the Rolex Brand upmarket. That means
- eliminate non-supporting/compliant franchisees
- Uplift / modernise / standardise all Rolex outlets around the world
- Introduce new trading terms
- Track & trace brand metrics
- Monitor all remaining franchisees e.g. new contract terms, mystery shopping
- Encourage wealthy Brand advocates (not flippers)
- Enhance the Tudor brand: make semi-in-demand sports watches, trial new designs, trial celebrity endorsements (e.g. David Beckham) etc.
- Trial potential franchises with access to only the Tudor brand initially (VW did this across Eastern Europe i.e. 5 years after doing a good job for Skoda, you earn the VW franchise, 10 years after that, the much converted Audi franchise. It worked well). So, shops get Tudor first - but they need something decent to sell!
- Restrict the number of low cost, less common items, the steels sports.
COVID has helped them somewhat, by accident, but nothing more.
So, my view is many people are looking at this entire situation the wrong way around. Rolex don’t want to make too many £7k sports watches because they don’t need to. Those people can go to Tudor. Their high grey market price is in truth an unavoidable side effect of the Primary brand strategy, it’s not their primary aim, sadly it is just unavoidable. They can mitigate it with advocates, but it cannot be stopped.
20 years ago it didn’t matter, who even knew this much about watches, how did you sell them privately (through you Paul! )? Today with the internet, PayPal protection, eBay, etc everyone knows about these lovely pieces, everyone wants one, can buy one safety ... and as you rightly say, anyone can be a watch dealer via eBay / Chrono 24. All prices are real time too. Even currency differences are accounted for.
In this modern-world environment, to enhance the Brand you need desirable, expensive pieces, better marketing and you must produce 30% less than your actual demand - and enjoy a consistent, upmarket retail client experience.
In conclusion. The real endgame is to enhance Tudor, as a means to greatly enhance Rolex. It will take 10-20 years, but we’re 4 years into it now, and all the classic marketing signs are there. Advertising, franchisee facilities, contracts, sub brands, price hikes, fewer low cost items etc. This year Rolex aren’t spending on any of their usual events (Wimbledon, Golf etc .... all off). So no demand pull there.
Finally, the clincher regarding the “Steels situation” (IMHO) .... if they allow valued customers who don’t flip, to buy say the new steel 41 mm Sub Date at £7,300, they know it may be worn by him for 4 or 5 years but then STILL sold at profit, that upwardly mobile high spender will surely come back now and buy that Platinum Daytona, with high confidence, rather than the Patek Phillippe (because he feels special at Rolex, there’s a relationship, he will not lose money on his Rolex, he’s now loyal to the brand). Rolex want a few steels out there commanding premiums, for this point alone. Build confidence in the brand with selected individuals who will spend more. It’s self fulfilling too - as these guys won’t flip. I certainly won’t (so I’ve been offered 3 steels, indeed I’m collecting the new Date Sub on 1st December).
More proof? I’ve been offered the GMT, DAYTONA and SUB all in steel, and I’ve never been on a wait list. There’s are reason for that, and it’s all described above.
The correct aim (of Rolex) is the DELIBERATE Brand uplift of their primary Brand ... but IMHO, it’s for very different reasons than you discuss here , (what’s driving the change is not profit but the world today), and the situation with steels actually makes great sense to me from a Primary Brand Management perspective, a way to reward loyal customers. It works for me ...
Stay safe.
wut?
@@andrewfranklin798 TL:DR for sure.
So economic growth and expanding middle class in China has nothing to do with it? You could throw India in here as well.
Or a pandemic that has shut down production in Switzerland?
Or rappers, actors, athletes influencing the masses worldwide?
I'm just a healthcare worker in a hospital, not a neurosurgeon. Hahaha
might just settle for a louis vuitton handbag
Too much conspiracy on the timepiece front. Learn some economics, the market is just that big now and only increasing. People are holding Rolex like they hold gold now. If I was Rolex, I would further tamp down on supply.
It’s a big world and the demand also includes a younger demographic (generation). Rolex clients historically are people over 40 years of age. Rolex is no longer the first choice of the Rock/Rap stars, pro athletes, famous celebrities. Even though many own Rolex. Most of those people buy Patek AP and high Horology brands. Rolex is in demand by younger demographic. People under the age of 40. Many young professionals that can afford a Rolex. Add to that, a very successful Asian market.
I agree that the demographics have continued to evolve. And it’s interesting to see a younger market interested in many of the sportier models. The demand and overall interest has definitely increased. Your point about Patek and AP is true as well, the demographics of Both brands has changed significantly over the last 10-20 years.
Rolex spends $1billion in marketing annually and has been doing so for decades. Marketing that increases consumer demand. Those resources could be allocated to increase production to meet market demand, but Rolex chooses not to.
@@michaelriera6277 They market and make a presence in high end retail areas/prime real-estate locations. Where wealthy people shop or or live. It's not cheap to place an ad in Rodeo Dr, or Park Avenue. You won't see a Rolex advertisement next to a gas station or next to a Dollar Store. They also sponsor spectator sports like tennis, PGA tournaments, or Formula One racing. The type of sports wealthy people are drawn to. It seems as if they put more money in sporting events than advertisement. You can't forget Rolex is all over Hollywood movies for over 50 years. In most movies you will see at least one character wearing a Rolex. Even if a character is auto mechanic, a villain, or a suburban father. A Rolex will be on someone's wrist.
Zzzz