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Should Omega invest heavily to improve their product residual value and OB value proposition ?

Riviera Paradise
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I am starting this thread on the Modern Omega section to keep the discussion focused on their modern collection. I had posted the text below on the vintage and new moonphase thread, but as @Ctarant weighed in, this could actually be a good topic for discussion on its own...

So I will start the ball rolling with the comments below:

At the retail price point they are proposing for these gorgeous new moonphase METAS certified watches, Omega urgently need to have a strategy in place so that these do not end up in the grey market at 60% of the pricelist cost.

I naively thought that with the METAS thing they would start having more effective control over the grey market, but when you see recently launched Globemasters being offered at 37% discount on Jomashop, its seems that very little has changed. With the current slump in watch industry sales I would not be willing to bet 1$ on their capability to revert the current grey market discount levels.

If you add up all the new METAS moonphase offers as part of the package: anti-magnetic, moonphase complication, column wheel chronograph, exhibition case back, dial design/industrial finish etc...it really could compete with any other chronograph at its proposed SS price point. The issue is that I think many potential buyers will try out the watch in the OB and then patiently wait for them to turn up on the grey market online stores at 40% discount.

IMO Omega should be investing significant resources in improving the long term value of their watches and OB perceived value, some ideas below:

Some sort of METAS VIP loyalty scheme for OB purchases, offering accumulative, controlled discounts based on the volume purchased in OBs over a given time period.

If an AD does not sell a METAS watch during a 12 month period, they should buy it back at the original discount price and not allow the AD to sell it off to the grey market. Initially sales performance would drop significantly, but retained watch value would go up over time. This should be communicated as long term investment strategy to the Swatch group shareholders. This would be a specific strategy with METAS watches, strengthening the METAS brand to mean something more than just a technological "gimmick".

Why not develop a separate brand for Omega pre-owned and vintage watches, that have been certified by Swatch group technicians? Perhaps offer a guaranteed 20-30% value repurchase for good condition, based on the METAS VIP point status of the client at time of repurchase. Why not beat the online pre-owned market at its own game, i.e. offering the same watches at a higher price point, but with all the certified advantages of buying from the original manufacturer?

Just throwing some ideas out there...those of you that have a better understanding as to how Omega operate can probably provide better insight than me...
Edited:
 
M'Bob
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This is an interesting thread to which I have little insight. However, it seems clear that if one wants something bad enough, and it will eventually appear at a lower price elsewhere, they may wait. If it can't be bought more cheaply, they either pony up the price asked, or find something else to buy.
Edited:
 
Canuck
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A number of years ago, I was at an auction at which many NOS examples of a prestige watch line (not Omega) were on offer. Among the bidders was an agent from the retail dealership that carried these watches, and who was offering them for sale. When the watches didn't bring a price from the general public that the agent was comfortable with, he bid on them, paid the auctioneers %, and took the watches back to the store! The pressure these manufacturers put on retailers to maintain volume without discounting, is enormous! What an item offered for sale brings depends on how eager the seller is to sell, or the buyer is to buy. I doubt Omega has much input into maintaining prices in the after market.
 
U
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First, I don't like the idea of an Omega Certified Vintage Watch. They ruin value to the collector, and cater to the "ooooo, shiny and pretty!" crowd.

Second, there will ALWAYS be enough retailers and customers to support the grey market no matter what a manufacturer does to try to stop it.

Lastly, Omega can raise their prices to whatever heights they want if the control their product in a brand-owned boutique environment (meaning no outside retailers / ADs carry the brand). If Omega doubles their prices and loses half their customers, they actually make more money because of less overhead.
 
Foo2rama
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Omega in efforts to reduce grey market and discounts purged AD's about 6-7 years ago. Your never going to get Rolex levels of resale value. While arguable the same niche totally different buyers.
 
gatorcpa
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U ulackfocus
First, I don't like the idea of an Omega Certified Vintage Watch. They ruin value to the collector, and cater to the "ooooo, shiny and pretty!" crowd.
There is such a thing, at least in the UK.

http://www.somlo.com/omega-vintage-boutique/

The watch sold here were given the full treatment at Omega Bienne and are warranted.

However they've also been redialled (as needed), hands replaced, etc. etc. etc., to the point where there is little to no originality left.

But these would be considered as close to a Certified Vintage Watch as you can get.
gatorcpa
 
wsfarrell
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gatorcpa gatorcpa
There is such a thing, at least in the UK.

http://www.somlo.com/omega-vintage-boutique/

The watch sold here were given the full treatment at Omega Bienne and are warranted.

However they've also been redialled (as needed), hands replaced, etc. etc. etc., to the point where there is little to no originality left.

But these would be considered as close to a Certified Vintage Watch as you can get.
gatorcpa
I hadn't heard of Somlo, and I find it extremely appealing. After years of reading this forum with all the questions on fakes, frankens, redials, etc., it's quite refreshing to see a beautiful vintage watch that has been restored by the folks who produced it, so to speak. I would quibble with "little to no originality left." I suspect in most instances the case and movement are original. Dial? Maybe not, but it will have been made by Omega or a contractor, not a shop in India or Korea.

People on this forum have already applauded this concept by jumping on the Watchco Seamaster 300 bandwagon. Original movement, new case/dial/hands etc., all by Omega---a beautiful vintage-looking watch that glows in the dark and is ready to go underwater again.

I find Somlo's "Enquire for Pricing" policy obnoxious, but I think the model---vintage watches restored and warranted by the factory---could find some traction.
 
dennisthemenace
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Riviera Paradise Riviera Paradise
strengthening the METAS brand to mean something more than just a technological "gimmick".
99.9% of the watch buying public wouldn't have a clue about METAS.
The 0.1% that do, know that it is just a sales "gimmick"
 
hkrauss
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I was also immediately thinking of Somlo. Was covered recently on Hodinkee with a nice video.
 
Longbow
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After a very quick and unscientific check of official vs Chrono24 prices I see that limited editions such as the Apollo 11 45th are up 20% to 30% and all regular models can be obtained gray or condition 1 used with 25% to 30% discount (at least). Lop off 5% for an OB discount and their prices are still 20%+ too high.

So the value proposition for none limited editions from the Boutique is weak to say the least. They would have to serve a lot more free coffee to offset the delta. Speaking of Delta (reminds me of @Mad Dog and all those not-so-subliminal DD adds) I recon an OB would need to provide me with 2000 large coffees if I was looking to buy a Tresor in White Gold. On plus side I guess I would be pretty excited though.
 
Riviera Paradise
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dennisthemenace dennisthemenace
99.9% of the watch buying public wouldn't have a clue about METAS.
The 0.1% that do, know that it is just a sales "gimmick"
I agree. The suggestion was to make METAS a stronger brand associated with other benefits and not just the tech gimmick part.
 
Riviera Paradise
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U ulackfocus
First, I don't like the idea of an Omega Certified Vintage Watch. They ruin value to the collector, and cater to the "ooooo, shiny and pretty!" crowd.

Second, there will ALWAYS be enough retailers and customers to support the grey market no matter what a manufacturer does to try to stop it.

Lastly, Omega can raise their prices to whatever heights they want if the control their product in a brand-owned boutique environment (meaning no outside retailers / ADs carry the brand). If Omega doubles their prices and loses half their customers, they actually make more money because of less overhead.
Good points.
Perhaps the only realistic option is indeed restraining initial POS to OBs and investing to control volume over time...the trickle effect that Rolex seems to do so well to keep the end user anxious for a given watch. I do think that Omega was spot on in raising mean prices to new levels after they introduced the co axial movement...I do not think their recent pricing for the PO deep black models and PM models such as the Globemaster are coherent with the brand's perceived value. If they want to "Hublot" their brand (i.e. focus on a bling seeking staus symbol obsesed clientele)...it will take a a long time to reposition the brand...and as we have discussed in other threads younger customers are being influenced by the smartwatch and older customers already have a perceived brand image.
Ref. the certified vintage watch I was thinking along the lines of what Hodinkee are doing and not in any way restoring the watch. Upon reflection though I would maintain my suggestion only for pre owned modern watches... the vintage market is a completely different niche market.
 
Riviera Paradise
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Longbow Longbow
After a very quick and unscientific check of official vs Chrono24 prices I see that limited editions such as the Apollo 11 45th are up 20% to 30% and all regular models can be obtained gray or condition 1 used with 25% to 30% discount (at least). Lop off 5% for an OB discount and their prices are still 20%+ too high.

So the value proposition for none limited editions from the Boutique is weak to say the least. They would have to serve a lot more free coffee to offset the delta. Speaking of Delta (reminds me of @Mad Dog and all those not-so-subliminal DD adds) I recon an OB would need to provide me with 2000 large coffees if I was looking to buy a Tresor in White Gold. On plus side I guess I would be pretty excited though.
LOL that is an awful lot of coffee...but do you think some sort of VIP loyalty offering up to say 15% discounts based on 2yr aquisition history at OBs would influence you in any way? I have been extremely pampered by my local OB in Rio (offer to carry the olympic torch, olympic football final tickets, omega house invites to meet buzz aldrin etc...)...but would I prefer a more clear cut objective reward offer for repeat purchases? I don't know...how about you @Longbow?
 
Longbow
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Riviera Paradise Riviera Paradise
...some sort of VIP loyalty offering up to say 15% discounts based on 2yr aquisition history at OBs would influence you in any way? I have been extremely pampered by my local OB in Rio (offer to carry the olympic torch, olympic football final tickets, omega house invites to meet buzz aldrin etc...)...but would I prefer a more clear cut objective reward offer for repeat purchases? I don't know...how about you @Longbow?

While I own a few Omegas I don't think my limited purchasing history is likely to trigger much interest at my local OB, so I guess the benefits I receive are commensurate with my level of spending there. I like the idea of the 15% discount (who wouldn't?) and maybe that's close enough to the current gray market, i.e. real value, to keep me loyal and risk free. But when I see the prices that OF members such as @demollo offer I might well be inclined to spend my hard-earned within the OF community.

Actually I would just like to be able to influence the products that they produce, rather than being told "not available, not offered". Everything has become so much larger in diameter and thicker that I find most of the current offerings comical. The Omega designs from the '50s to early '70s are sublime. I can't imagine Dennis liking anything currently on offer (Speedie jokes aside).
Edited:
 
tyrantlizardrex
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Important question: what's the business benefit to Omega of doing this?

They're in the business of selling new watches... residuals don't tend to affect volume of new sales in luxury goods markets...

And you know what they sell more of than anything else?

Constellations. Tons of them. To people who buy them as seasonal accessories... and you can bet your METAS certification that they're not interested in residual value.
 
Riviera Paradise
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tyrantlizardrex tyrantlizardrex
Important question: what's the business benefit to Omega of doing this?

They're in the business of selling new watches... residuals don't tend to affect volume of new sales in luxury goods markets...

And you know what they sell more of than anything else?

Constellations. Tons of them. To people who buy them as seasonal accessories... and you can bet your METAS certification that they're not interested in residual value.
The business value would be to strenghten the product perceived value over time...which could lead to increased sales for repeat customers? However if their typical client is a "one night stand" this might not make sense . About your constellation ref. - I had heard this was true for the Chinese and HK asian market...and as you know the HK market has taken a massive hit this year...do you think that might influence that Constellation bias?
It does seem odd that the same brand offering +15k USD PM super sophisticated watches such as the new speedy metas moonphase...is also seen as offering a festive gift at the entry level. I suppose with their global reach they do have to tailor their messaging at the regional level.
 
tyrantlizardrex
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Stick to the bread and butter business.

Ask car people what vehicles BMW sell and you'll here M3, i8 etc... but they sell more entry level 1/2/3 series than anything else... by a long way.

The halo effect is true for all luxury goods.

You have to remember that we're the outliers here owning multiple watches, and people who buy multiple new watches, even more so.

Get talking to London omega boutique staff, they sell a ton of stuff as one off gifts... or "the watch I've been saving up for"... the £15k watches? Those are for a very small section of the customer base.

It's been a while since I did any hard economics, but I don't think the typical value proposition comes into play when you're buying something as "excessive" as a luxury watch. 😉
 
Riviera Paradise
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tyrantlizardrex tyrantlizardrex
It's been a while since I did any hard economics, but I don't think the typical value proposition comes into play when you're buying something as "excessive" as a luxury watch. 😉
tyrantlizardrex tyrantlizardrex
They're in the business of selling new watches... residuals don't tend to affect volume of new sales in luxury goods markets...

But surely there are many punters that choose new Rolexes influenced by their perceived residuals, i.e. a general public awareness that Rolex is cash-on-your-wrist. Or is this something that only Rolex has been able to achieve over time and it would be pointless for Omega to invest any effort in that direction?

Are we really saying that for all eternity only suckers will buy new Omegas from OBs in locations where there is an active grey market? Was Archie Luxury right all this time?😁
Edited:
 
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