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Discussion Starter #1
Making money, apparently:
Rolex sales surge to $1.5 billion in the United States, says NPD - WatchPro USA

Although this doesnt seem right to me:
"Patek Philippe is also enjoying record sales in the United States this year. Combined with Rolex, the two brands account for 70% of all watches sold above a price of $5000"

70% seems a bit high. And if that number is off, so are their estimates of Rolex's earnings.

But for sure, Rolex is using its brand to move upmarket.
 
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According to a Tim Mosso stream I recently watched, apparently there's a massive demand relative to supply of Omega's Silver Snoopy II, with grey market pricing ranging above $20K. Does that mean we should shake our fists at Omega and demand they produce more Snoopy watches?

I get the frustration, but as Vkalia pointed out, Patek is experiencing the same issue with the Nautilus and (to a slightly lesser extent) the Aquanaut. But no one's hurling vitriol at Patek, even though the premiums being paid are upwards of $10-30K over MSRP. No...it seems people think only Rolex is being deceitful|lazy|greedy|opportunistic|etc|etc|etc, as if Rolex can just snap its fingers and make thousands of more watches a day. And while they're at it, apparently they should also slash their prices, because this same mob proclaims they "aren't worth what Rolex is charging."

Hilarious.


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Alysandir
 

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I get the frustration, but as Vkalia pointed out, Patek is experiencing the same issue with the Nautilus and (to a slightly lesser extent) the Aquanaut. But no one's hurling vitriol at Patek, even though the premiums being paid are upwards of $10-30K over MSRP. No...it seems people think only Rolex is being deceitful|lazy|greedy|opportunistic|etc|etc|etc, as if Rolex can just snap its fingers and make thousands of more watches a day. And while they're at it, apparently they should also slash their prices, because this same mob proclaims they "aren't worth what Rolex is charging."
Hehe, i am, in my head. And at myself. A couple of years ago, I balked at paying a $7k premium for a 5711.

Yeah.
 
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Discussion Starter #6
Supply management to keep prices at current level or higher.
Yeah, but when you reduce supply, you also reduce the total number of units sold - which affects revenue. Also, keep in mind that most of this extra premium for the steep sports watches is not going to Rolex - it is going to the ADs and grey market dealers.

So there must have been a tremendous jump in overall demand for Rolex, if their revenues shot up so much.

Mark my words - Rolex is moving into the high-end turf. You heard it here first.
 

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It must be worth doing, look at the GT2 RS. Most are selling for $150,000 - $200,000 over MSRP. So its not just Rolex or watch companies, they all must find a value in the practice.
 

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How much would this kind of this sustained "buzz" about Rolex cost them from a marketing standpoint? Probably the equivalent of whatever they're forfeiting by lowering production, perhaps?
 

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Yeah, but when you reduce supply, you also reduce the total number of units sold - which affects revenue. Also, keep in mind that most of this extra premium for the steep sports watches is not going to Rolex - it is going to the ADs and grey market dealers.

So there must have been a tremendous jump in overall demand for Rolex, if their revenues shot up so much.

Mark my words - Rolex is moving into the high-end turf. You heard it here first.
https://www.ablogtowatch.com/rolex-prices-past-60-years-revealing-analysis/
https://www.ablogtowatch.com/why-some-watches-rolex-patek-philippe-impossible-retail/

"This limits short-term profits because a company is selling less than they know they can sell, but can actually increase long-term profits because limiting supply keeps fans both engaged and in emotional demand for a limited set of goods, which now carry known exclusivity value. Also, the brands we are talking about choose particular halo products which have limited supply, while supplying other watches much more easily (but often at more expensive retail prices). This means brands typically don’t restrict all the products they make, just some of them in order to galvanize collector interest and zeal."

When let say Chrysler was selling so in demand Viper in 90s it used to be like this: Dealer. i want to have Dodge Viper. Chrysler so you have to buy XXX "crap car" from us too. So this exclusiveness yes brings bonus system for dealers and increases overall sales.
Rolex hardly loosing money at all. They sell millions of watches while keeping halo of exclusive product. About 1-1.2 million watches per year! You need to find home for tremendous amount of very expensive watches every year. It's not an easy task.
Whole game is to keep desirability high.
 

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^^^ Yeah, the concept itself is fairly straightforward (based on the quote above - I refuse to read Ariel Adams and his junior high attempts at business analysis!). That isnt the hard part - the hard part is pulling it off successfully.

Not everyone has the capability to do this - else everyone would. You need to have a brand and/or specific models that are in seriously non-elastic demand, you need to predict the effect on your customers (and that is NOT easy - not for a global product). And even when you do, you always run implementation risks (which always get glossed over by the strategy guys).

Rolex has played it masterfully - not only do they gain the long-term they ARENT taking a short-term hit in profits, if the sales numbers above are anything to go by (their sales numbers have "surged", despite the shortage of select materials).
 
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Supply and demand. The demand is high, Rolex purposely slows production.....and is able to sell at a higher mark up.
I think we all get this but the question asked by the OP is how does revenue increase so much in the face of presumed cutbacks in the supply of a sports models .

There could be a number of explanations from an increased demand in China creating a relative lack of stock for the western world to more steel models entering the grey market. In both scenarios no actual production cutbacks occur, rather there is a supply restriction to their usual dealers and boutiques. There does not seem to have been a jump in the MRSP and I have not heard of a change in the Pre retail price but again we don’t really know..

Who knows what the explanations are, but there is certainly a lack of stock entering the ADs and Boutiques .


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Hehe, i am, in my head. And at myself. A couple of years ago, I balked at paying a $7k premium for a 5711.

Yeah.
Well, now you have me thinking....I have an opportunity to buy an Aquanaut at $5K over MSRP and so far, I've resisted the temptation. Now I'm wondering if I shouldn't get it while I can.

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Alysandir
 

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Supply and demand. The demand is high, Rolex purposely slows production.....and is able to sell at a higher mark up.
Orrrr...the demand has skyrocketed beyond Rolex' wildest dreams of avarice. Which could happen if a densely-populated country like - oh, I don't know...China, maybe? - suddenly saw their economy going gangbusters and Rolex now has literally millions of "new money" customers all clamoring for their product (and Patek's).

The problem is that I do not see the "bubble" popping anytime soon. China's economy continues to grow and I have serious doubts that Rolex is going to adjust their production capacity to match it, for fear of A) overextending themselves with investments in infrastructure, or B) hurting their perceived value by pumping out even more watches than the near-million a year they already do. A good problem for them to have, but still a problem.

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Alysandir
 

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I think we all get this but the question asked by the OP is how does revenue increase so much in the face of presumed cutbacks in the supply of a sports models .

There could be a number of explanations from an increased demand in China creating a relative lack of stock for the western world to more steel models entering the grey market. In both scenarios no actual production cutbacks occur, rather there is a supply restriction to their usual dealers and boutiques. There does not seem to have been a jump in the MRSP and I have not heard of a change in the Pre retail price but again we don’t really know..

Who knows what the explanations are, but there is certainly a lack of stock entering the ADs and Boutiques .


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Because you assume Rolex's most popular models in terms of units sold are their sports models.
 

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Rolex doesn't mark up any watch. They're not making the money off the mark up the grey market is.
Supply and demand. The demand is high, Rolex purposely slows production.....and is able to sell at a higher mark up.
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