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I don't understand the recent Rolex SS craze/shortage. What am I missing?

DoctorEvil
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So this confirms that Rolex is artificially constricting supply in order to inflate the perceived value of their brand. Essentially they are trying to emulate Patek and AP, whose watches have enormous secondary multipliers are famously hard to obtain. The Rolex rep even pointed to those brands as successful examples of what they're doing. And honestly, if that's what they're trying to do, it seems to be working.

I've heard this mentioned a few times on this and other fora. It seems that Rolex management is trying to reposition the brand to occupy the same retail space as AP and Patek, with their subsidiary brand Tudor competing with Omega, Tag Heuer etc.
 
scott784
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The idea that Rolex is constricting supply on the retail market in order to drive up the perceived value of their watches is easy to believe! For example, an AD dealer in my state in a large metro said he has only received 2 OPs since the refresh in the Fall of 2020. So what does that say? Now this is the entry level Rolex model; and it's not even making it to the authorized dealer. As awesome as Rolex watches are, this apparent marketing behavior is REALLY off putting to a lot of potential customers! On top of that, many "would be" buyers feel like they have to be "interviewed" to even get on the waitlist. At least this is the case with some authorized dealers. This type of behavior (interviewing prospective Rolex customers for a waitlist) does NOT exactly make the consumer feel that their business is appreciated in any way. And, I for one, refuse to buy a Rolex on the grey market where the prices are absolutely ridiculous. I also find it easy to believe that Rolex is trying to position Tudor as the competitor of Omega. But in my view, Omega watches are superior (brand wise) to Tudor; and most reviews I've looked at support that view as well. It's a sad state of affairs with Rolex; and I've about reached the point where I don't even want to own one of their watches anymore. Truly too much baggage with the whole image of Rolex now days.
 
A
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Quite interesting how Rolex is going about regarding supply. They have been at the game a long time but doesn't mean they aren't infallible. Would love to see it on more hands but I do understand the veblen good concept.
 
marcn
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scott784 scott784
The idea that Rolex is constricting supply on the retail market in order to drive up the perceived value of their watches is easy to believe! For example, an AD dealer in my state in a large metro said he has only received 2 OPs since the refresh in the Fall of 2020. So what does that say?

Keep in mind that not all ADs are treated equally. Determination of what model orders will be fulfilled in each AD's allocation is subjective and capricious, decided by the AD's regional Rolex rep, informed by the AD's ability to move allocated inventory. They place watches where watches have sold. And here "watches" ultimately means whatever the Rolex rep decides it to be, model-wise, in any given allocation.

scott784 scott784
I also find it easy to believe that Rolex is trying to position Tudor as the competitor of Omega. But in my view, Omega watches are superior (brand wise) to Tudor [...]

I think Tudor has recently made very interesting moves, but they have a long, long way to catch Omega. Omega is vastly superior technically, and constantly moving in ways Tudor can currently only dream to emulate one day.
 
cvalue13
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Keep in mind that not all ADs are treated equally. Determination of what model orders will be fulfilled in each AD's allocation is subjective and capricious, decided by the AD's regional Rolex rep, informed by the AD's ability to move allocated inventory. They place watches where watches have sold. And here "watches" ultimately means whatever the Rolex rep decides it to be, model-wise, in any given allocation.

Yes, these stories of this-AD-or-that no longer receiving as many watches seem like they have to be reconciled with the industry data showing Rolex has a 25% market share (compared to Omega's 8%), and in 2020 sold 800K watches (compared to Omega's 500k).

The only way I can square those two: Rolex is selling a sh*tton of watches, and recruiting/rerouting supply in some jurisdictions toward others?

Seems it should otherwise be uncontroversial at this point that Rolex errors towards producing barely enough stock (and so they are hard to find) in order to both (1) increase hype, and (2) avoid an inversion of MSRP in the secondary market, while still simultaneously having overall demand so high that they're still selling inordinate numbers of watches - just maybe not at "that one AD in Scranton"?
 
Archer
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Yes, these stories of this-AD-or-that no longer receiving as many watches seem like they have to be reconciled with the industry data showing Rolex has a 25% market share (compared to Omega's 8%), and in 2020 sold 800K watches (compared to Omega's 500k).

The only way I can square those two: Rolex is selling a sh*tton of watches, and recruiting/rerouting supply in some jurisdictions toward others?

Seems it should otherwise be uncontroversial at this point that Rolex errors towards producing barely enough stock (and so they are hard to find) in order to both (1) increase hype, and (2) avoid an inversion of MSRP in the secondary market, while still simultaneously having overall demand so high that they're still selling inordinate numbers of watches - just maybe not at "that one AD in Scranton"?

Can I ask why you state the Rolex numbers as a comparison to Omega's when you make this point? Omega has nothing to do with it as far as I can figure out, but you have done this a couple of times. Not sure what relative sales prove about restricting supplies...
 
mzinski
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If Rolex has the goal to be an exclusive brand, why go through all of the machinations of scarcity, value, and wait lists at their current price point? It seems to me if Rolex wanted to be Patek or AP, they could simple increase their prices to match, no? Hand wringing based on the current situation, hand wringing over a large price increase. In either case, the end result seems pretty similar - exclusivity and strong market value.
 
sgrenald
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cvalue13 cvalue13
Yes, these stories of this-AD-or-that no longer receiving as many watches seem like they have to be reconciled with the industry data showing Rolex has a 25% market share (compared to Omega's 8%), and in 2020 sold 800K watches (compared to Omega's 500k).

Just to be clear, that 25% is sales, not market share. Apple, Seiko, Citizen, Tag, etc, each manufacture over a million watches per year.
 
cvalue13
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Archer Archer
Can I ask why you state the Rolex numbers as a comparison to Omega's when you make this point? Omega has nothing to do with it as far as I can figure out, but you have done this a couple of times. Not sure what relative sales prove about restricting supplies...

Because Omega is the #2 behind Rolex in terms of both units and market share. Only through some comparison can it be scoped just how many watches Rolex is supposedly selling.

Meanwhile and at the same time, on this forum in particular, what gets often “noticed” is that “there are plenty of Omega watches to buy when I go into any AD/OB”

So, it seems to me relevant (esp here) in a discussion about the availability of Rolex to be outwardly astounded that despite all experiences to the contrary Rolex (who “never has watches available”) sells 1.6 watches compared for every 1 sold by the next largest seller (Omega - who “always has watches available).
 
Archer
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Because Omega is the #2 behind Rolex in terms of both units and market share. Only through some comparison can it be scoped just how many watches Rolex is supposedly selling.

Meanwhile and at the same time, on this forum in particular, what gets often “noticed” is that “there are plenty of Omega watches to buy when I go into any AD/OB”

So, it seems to me relevant (esp here) in a discussion about the availability of Rolex to be outwardly astounded that despite all experiences to the contrary Rolex (who “never has watches available”) sells 1.6 watches compared for every 1 sold by the next largest seller (Omega - who “always has watches available).

Please define what "sold" means to you thanks...
 
cvalue13
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Archer Archer
Please define what "sold" means to you thanks...

please define “define”

you have the same analyst reports I’m referencing: Morgan Stanley backs into an estimate of Rolex exchanging money for ownership of a watch over 810k times in 2020 - and they believe this is investment grade information

they could be wrong

but it does seem they may have put more elbow grease into it than the contrary anecdotes found here that suggest Rolex doesn’t even make watches anymore
 
Archer
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you have the same analyst reports I’m referencing: Morgan Stanley backs into an estimate of Rolex exchanging money for ownership of a watch over 810k times in 2020 - and they believe this is investment grade information

Rolex doesn't sell watches to end consumers. The Morgan Stanley data is based in large part on exports data - exports aren't sales to end consumers, which is really at the heart of this question.

All I'm saying is that from an overall investment standpoint this information is useful, but I'm not sure it provides the type of granular evidence you attribute to it.
 
cvalue13
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Archer Archer
Rolex doesn't sell watches to end consumers. The Morgan Stanley data is based in large part on exports data - exports aren't sales to end consumers, which is really at the heart of this question.

All I'm saying is that from an overall investment standpoint this information is useful, but I'm not sure it provides the type of granular evidence you attribute to it.

and all I was saying was that even with those limitations, it’s more granular than the anecdotal info traded on so heavily here to arrive at the opposite point (that Rolex doesn’t even sell watches anymore) - and that these two sources of info don’t square to me

———

On Rolex itself:

The MS report is not based entirely on exports: for one example cited in the report’s methodologies, several country’s laws require the public reporting of counter sales and proceeds, and MS uses this data in those jurisdictions combined with per-region exports data to back into reasonable assumptions about how export info relates to sales info in other jurisdictions. This, and a few other methodologies cited in the reports, combine to suggest the MS sales/market share data has its strengths and weaknesses both - but more so, again, that it’s far more than the “I never see Rolex watches at my AD in Jonesboro, Arkansas, so that proves Rolex doesn’t even make watches anymore.”

———

On comparing Rolex and Omega’s data:

Meanwhile, I’ve looked at Omega’s public filings don’t appear to give unit sales data either. So MS must be using similar methodologies to back into Omega’s unit sales estimates.

The result is that, if MS is applying relatively similar methodologies to all the companies on the “market share” wheel, then even if the per-company estimates are off it doesn’t mean the relative information between companies is equally off.

———

In any event, my original point:

cvalue13 cvalue13
Yes, these stories of this-AD-or-that no longer receiving as many watches seem like they have to be reconciled with the industry data showing Rolex has a 25% market share (compared to Omega's 8%), and in 2020 sold 800K watches (compared to Omega's 500k).

The only way I can square those two: Rolex is selling a sh*tton of watches, and recruiting/rerouting supply in some jurisdictions toward others?

If you thought here I was exalting the industry data as flawless that’s an uncharitable read; instead I’m saying I continue to be confused by anecdotal assertions to the effect that Rolex watches are barely being sold, against various forms of market data (not just the MS report) suggesting Rolex makes more money - by far - than any other Swiss watchmaker; admitting that without more I tend to better trust the still fallible professional analysts’ views than so much of the armchairing here
 
Archer
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cvalue13 cvalue13
and all I was saying was that even with those limitations, it’s more granular than the anecdotal info traded on so heavily here to arrive at the opposite point (that Rolex doesn’t even sell watches anymore) - and that these two sources of info don’t square to me

Of course comparing it to an absurd proposition (that Rolex doesn't sell watches at all) makes it look very good. If that's where we're at here, I don't know what else to say...
 
cvalue13
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Archer Archer
Of course comparing it to an absurd proposition (that Rolex doesn't sell watches at all) makes it look very good. If that's where we're at here, I don't know what else to say...

obviously not being literal; if acting like I was being literal is where we’re at here,*I* don’t know what to say - seems like a last retreat response to the topic actually being discussed

“AD cases are always empty so there must not be many watches for sale; Rolex is making fewer and fewer watches to create the appearance of demand; why won’t Rolex just make more watches so they can make more money; my AD says they used to get hundreds of watches a year now they only get 3 a year; Rolex should be more like Omega, and make enough watches; Rolex is evil and lying to customers that demand is high” ...

... are all less tongue-in-cheek versions the types of things actually repeated here ad nauseum.

Very little of it squares with the professional analysts’ views of the industry; or, pieces can be squared if one takes a broader view of the data (e.g., maybe your AD gets fewer watches because they’re selling like hot cakes elsewhere, or?)

That makes me, for one, arrive at “WTF is going on” ... rather than “I know what’s going on, and it involves the Illuminati” *TONGUE-IN-CHEEK DISCLAIMER*
 
Archer
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That makes me, for one, arrive at “WTF is going on” ... rather than “I know what’s going on, and it involves the Illuminati”

The problem is when you revert to this hyperbole, it's difficult to really have a straight up conversation. By stating these absurd things, it feels like you are trying to make any other position than yours seem like some extreme conspiracy theory.

This is why I tried to ask a simple, direct question above to establish a base of understanding, which didn't seem to go well.
 
Andrew C
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I'm going macro on this.

Easy money for the last 10 years has made anyone with any form of assets (excluding primary residence here) richer. The so-called "middle class" and above. Trying to stimulate growth, but instead just stimulating financial assets causing a massive wealth effect...

The trickle-down effect into "collectibles" is palpable. You've moved people out of treasuries into credit. Out of credit into equities. Out of equities into Steel Rollies.

The brand leader gets the benefit of this (see the price of Jeff Koons, or Bitcoin, or vintage Ferrari, or primo condos in NYC - it's all the same damned trade). Plus Rolex is exceptionally smart. Being a charity with no dividend and active investors trying to force year-to-year gains. They can think of the long term. They see the threat of Apple Watches. They are trying to imprint hype on the current generation of newly-minted 25 to 40-year-olds who have high disposable income to turn them into customers for 30 years.

"Are you even successful if you don't have a Rollie???". That's what they want you to believe. Even if you can't afford it now, the hype is imprinted on you - you're a future customer.

Omega has shareholders. Omega has to focus on 2021 profits. That's how the world works - you are only as good as next quarter's earnings. So it supplies enough to cover demand...

Rolex do not care about maximizing 2021 profits. They care about maximizing the net present value of their future income.
Edited:
 
cvalue13
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Archer Archer
This is why I tried to ask a simple, direct question above to establish a base of understanding, which didn't seem to go well.

Didn’t go well?

This response from you extends your own pattern.

I answered directly, and concluded with a moment of levity. Your responses ignore the direct answers, and instead misdirect and cherry pick a moment of levity (misplaced as it may be) in order to not really say anything at all to the direct response.

Let’s take it back: you ask why I have sometimes framed my questions/observations about Rolex’s sales alongside comparisons with Omega’s sales. I’ve answered.
 
cvalue13
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Andrew C Andrew C
Omega has shareholders. Omega has to focus on 2021 profits. That's how the world works - you are only as good as next quarter's earnings. So it supplies enough to cover demand...

This goes a little too far I think, although I sympathize with the point. But the discussions above about analyst views of these companies show that shareholders can and should be concerned with the correct balance of supply/demand. As I read it, the analysts say (in short) there’s a death spiral created by the following feedback loop: (A) over produce a watch, then (B) 2ndary market prices fall below MSRP, then (C) further over production occurs, then (D) further 2ndary market fall...

If analysts like MS get it, I assume the companies can and should be responsive: they need either (I) and exact 1-to-1 of supply to demand, or (ii) supply just below demand ... the latter being the realistic option but not easy to achieve
 
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