You're crossing two different aspects there.

You may think it's semantics but there's a difference between a company limiting supply or not increasing supply in reaction to a (temporary?) increase in demand. The former would make Rolex complicit in the lack of sports models at ADs and the rise of grey market prices. The latter does not.

I'm sure it's not a case of simply flicking a switch to create more supply. If their manufacturing is optimised it's reasonable to assume an increase in supply would require significant capital investment in manufacturing. If you're Rolex would you do this? I can see why they haven't. They're selling almost all their watches before they hit the showroom floor, demand and brand prestige is through the roof and they haven't had to spend significantly to achieve this.
They're not beholden to shareholders and why take the risk of spending a load of money to increase production to meet what is likely a temporary surge in demand. If they did this and demand returns to normal levels, they'll have spent a fortune to likely end up with a sub optimal manufacturing process and a loss of brand prestige.

My two penneth but I can completely see how we've ended up here by Rolex deciding not to have a knee jerk reaction to increased demand rather than them thinking "we'll cut back on supply to make watches even more desireable" which by the way would cost them money.

 

Davidt, I take your point, limiting supply and not increasing production aren’t the same thing. And we are all just guessing here as to why Rolex do what they do, I don’t blame them for any choice they make, they are a privately owned business that is clearly successful, my opinion does mount to anything, but to say they aren’t limiting supply of the more desirable models just doesn’t ring true. Assuming the same production lines are used for all watches (I have no idea but imagine they are), why can I buy a women’s watch at an AD but have to be on a waitlist of years for a Submariner. If they chose too, they could use some of the production time of the less popular models to make more of the popular ones. I can only assume they choose not to.

 

"but with cheap credit and the ability to borrow money very easily, the only way to maintain exclusivity is to limit supply."
so well said !!!!!

 

I agree they have no incentive to increase supply, because they are selling most of what they make. I don’t think Rolex has decreased supply overall, but I do believe they have decreased supply of the SS sport models. Although people may say this loses them money, the fact that they are able to sell every dog model they have now, when they used to sit on the shelves, tells me that they aren’t losing money doing this. They have gotten the crazies to buy up stuff in order to get the coveted model they want.

It’s really manipulating the product mix that is the key, not making fewer watches overall.

 

Why buy a massproduced sportswatch in steel when you can buy a much rarer precious metal sportswatch for less money

 

Nice collection, I do like the white gold pieces, but I guess they cost a bit more than the retail price I paid at the AD for my Submariner.

 

It's the same watch, just two different dials. Yes thats right but now days the difference from Sub retailprice is not that big, an even smaller from a pre owned Sub.
You can get a nice white gold DD for under 15.000EUR

 

That may well be happening, I've no real thoughts either way, aside from it certainly doesn't seem to help with platinum/gold Daytona availability.

It would make sense though as it ties in with the theory that Rolex wants to elevate themselves up towards High End brand (without the high end finishing?) in the medium term.

Well, turns out I do have a thought on it.

 

Answering to OP, here is some tangible explanation "what we are missing".

A core of a lawsuit is into labour law, but a plaintiff was former employee of Rolex AD, hence in the body there is a good reading about AD, grey market resellers and 'the Scheme'.

Case 121-cv-00775


https://www.scribd.com/document/494310160/Rolex-AD-Complaint

I guess most of us already had own thoughts about BNIB watches popping up on the grey market, so this 'scheme' is not so surprising, but this here is probably the first time when we see it taken at legal level(?).

 

Wow. Have heard speculation on various fora that these sorts of practices have been happening. Wonder what the outcome of the trial will be and if Rolex will apply greater scrutiny to their AD network.

 

Well, the AD in questions is still a Rolex AD...

C.D.Peacock - Chicago Jeweler Since 1837 - Official Rolex Dealer

That tells you a lot I think...

 

It's an interesting insight into how Rolex works, more than anything.

Based on this, Rolex in fact does limit supply, and to get a "limited supply" model, you simply can't walk in off the street, or simply put your name on a waiting list. You have to have a verified history of buying certain products. So if an AD has taken your name down on a list, and you don't have that history, you won't be getting the watch...

 

Yes, and one has to fill his purchase history with dog watches first in order to later enjoy a place on a waitlist for the hyped watches, so this model is excellent for everyone except the final customer.

If the customer agrees on "the Scheme" then he pays;
- Rolex margin on the hyped watch,
- AD's margin on retail,
- AD's additional revenue paid him by a Grey market dealer,
- Grey market dealer's margin.

If the customer does not agree on "the Scheme" then he pays;
- Rolex margin on the dog watch,
- AD's margin on retail (dog watch),
- Rolex margin on the hyped watch,
- AD's margin on retail (hyped watch).

There are maybe 10 steel Professional models which are hot and hyped, quitting the "Limited supply" model is against the Rolex business because this is how they are moving those Cellinis, Datejusts, Airkings, bicolours etc.

 

Just to let you know that you can get a sought after Rolex without jumping through any hoops, I picked my Submariner 41 up 23 days after the watch was announced, I don't have a huge spend at my AD, I am certainly a long way from being a big spender at the store, so was pleasantly surprised when the call came. The store I use is Mappin and Webb in Bluewater, part of the Watches of Switzerland group, great staff and a great attitude towards customers, cannot praise them highly enough.

 

I suppose it depends on how “sought after” corresponds to Rolex’s definition of “limited supply”.

I’m guessing these a different things in your example...

 

At an AD, put my name down for the new no-date Sub and a few months later got the call. I had previously purchased a necklace for my wife, but nothing else.

Seems hard to extrapolate from/differentiate an ADs practices to/from the practices of “Rolex”?

 

I can't belive that Rolex hasn't stripped this dealer of the right to sell their watches. If this sort of crap continues the damage to the Rolex brand in the long term would be enormous. But I guess Rolex doesn't care as long as their watches continue to sell. On a separate thread, I see that Omega's behaviour with regards to the new Snoopy couldn't be more different. No playing games etc, just first come first served as long as you can pay for it. I do like Rolex's GMT and I'd love to get one sometime in the future, but the actions of their sales network is really putting me off the brand.

 

Again, I think the fact that people are getting what used to be very common watches without a purchase history, shows those are not the "limited availability" watches that Rolex restricts.

As for extrapolating the details of who's policy this is...

 

I don’t really follow, sorry. This appears to be the AD’s policies, no?

The plaintiff’s brief, to me, doesn’t make clear how much it’s summarizing CDP’s policies (or CDP’s interpretation of Rolex’s policies), versus summarizing actual Rolex policies. Particularly hard to tell bc this pleading file doesn’t include the scheduled exhibits referenced. But, the title of the section you’re quoting is “CDP’s Rolex policies.”

So it seems like this is a plaintiff’s lawyer using the AD’s policies to try and extrapolate Rolex’s policies, which effort is obviously bent toward a plaintiff’s preferred interpretation -> is that what you’re also saying?

Admit I’ve not had my coffee yet so ...

 

“CDP’s Rolex policy makes clear that Rolex does not allow sales of limited availability models to unknown clients.”