one of the theory is that Rolex want to limit the supply of ss steel, and people have no choice but to buy demi and full gold watches from them. well maybe a joke but recent craze is just getting out of hand, every Rolex sport getting swooped up quite fast not only daytona, gmt, sub..
2) My hunch on the SS market is that they constrain production bc when people go in for one and only find precious metal or DJ’s (date justs) they’ll opt for those instead of waiting for a SS. This bolsters the revenue from their more available models and creates a revenue foundation.
I find this immensely hard to believe.
Would anyone here do this? We have testimonies from prospective buyers of Submariners who bought Seamasters instead and I would suggest that other brands have experienced the same. This means fewer sales net to Rolex - this is a documented consequence of the low supply.
One the other hand, if the tactic really is to goad buyers into purchasing precious metal Rolexes instead, then you would have to look at the profit margens of precious metal watches as opposed to steel models. Are they higher? I would suggest so, but are they high enough to cover the lost provenue of the lost customers who may or may not return at some point? Seems like a major gamble.
Then comes the question of how the Rolex value chain is managed (excuse me if some marketing terms are incorrect, it's been some time since I studied). AFAIK, the stock at the various ADs is bought from Rolex and the cost of stocking them is therefore at the dealer's expense. That means that
unless the dealer is actively restocking those precious metal Rolexes he now - supposedly - sells more of, Rolex themselves have no increased revenue from these sales. Rolex doesn't make more money from customers buying up the stock at the dealerships, the only effects are:
1) the dealerships can present a smaller stock of watches from either lack of supply (steel watches) or from increased demand (precious metal/non-sports). This is either good or bad from a dealer perspective, but Rolex themselves do not benefit from it. See
@Foo2rama's comment on this.
2) the dealerships will lose customers to other sellers who can supply what the customer wants, which is either a steel sports watch (other brand) or a steel Rolex sports watch (grey market).
In addition, limitation creates hype and we can see the fruits of that labor right here in this thread.
It also creates frustration and lessens brand loyalty with both dealers and buyers.
@jason10mm
Every rep at every Rolex store is pissed. They are making way less commission then they used to as there is nothing to sell but DJ’s.
Watches are not going out the back door.
The whole Rolex Boutique staff at a major jeweler quit as they where no longer making commission and could not sell other brands inside the same attached jeweler. The Staff at the main Rolex boutique in my area has all left to the other watch brands located in the same mall. Never the same people in it high turnover.
As a part of the equation of deciding whether or not this is a smart move by Rolex is hidden (we have no way of knowing what profit margens, etc. Rolex operates with), the above is the only marker we have of measuring the direct effect. Fewer sales, less commission. And I'd be surprised if the commissions for the sports watches are lower than for the other pieces.
Having worked at various places in sales related positions, I can guarantee that no matter if you are talking watches, automobiles, commercial vehicles, jewelry or otherwise, the vast majority of sales guys are in it for the sale, not for the love of the brand or the business. Working for a brand they love will not be enough; they need to make the deals to be happy. And in some countries where the commissions make up a major part of the pay check, they
really need to make the deals...
