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

tyrantlizardrex · Dec 26, 2016

Riviera Paradise
Even for a BLNR or new ceramic SS Daytona?

I think the same bubble effect as the Snoopy works with those models.

And again they account for a roportionally very small slice of Rolex's million units a year.

Smoke. And indeed mirrors. 😉

Archer · Dec 26, 2016

Interesting topic. Lots of different things being talked about all in one thread, so just a few things that strike me touching on a number of different points raised...

I personally have no interest in being pampered at a boutique when buying a watch. I'm not after tickets to a game, or coffee, etc. - if I want those things I'll just buy them myself. All I want is the watch, and I want to buy it for the least money possible. Although I think the whole boutique model works well in some cultures, I'm not so sure it does everywhere. I've recently read of 2 boutiques in the US (Oakbrook and Natick) being closed as of the 31st of the month. Lots of reason this could be, so bad location, etc., but generally speaking I think most people aren't going to pay more than they need to, and to many that's all a boutique is - a place where you will be sure to pay top dollar.

There is a Canadian watch forum where a lot of sales happen between collectors, and they go on and on about Rolex mainly, and the fact it has "great resale value" so this is definitely a big draw to many modern watch collectors. I'm not so sure the general public has such awareness or interest in resale values. I think brands like Rolex are very good marketers, but I just don't get the feeling that resale plays the part with the guy who is buying that "crown for his achievement" as it does with a guy who has bought and flipped 30 watches in a year. Resale value has little to do with my purchases to be honest, because I rarely sell, and I think this is how most non-collectors think. If a watch goes up in value for me that's fine. If it goes down, as long as I don't sell it, it doesn't matter. I bought it because I intend to keep it, not flip it later. Maybe not how most here look at things, but likely more representative of the non-collector world.

I honestly don't think most modern Omegas are worth the prices being asked. It wasn't that long ago that you could get a modern Seamaster with an 1120 inside for a couple of grand new (maybe less than that) so when I look at what the current crop of watches cost, it seems insane to me. Yes they are "improved" in many ways, but it seems to me that although brands like Rolex have raised their prices steadily (and are also far too much for what you get) that Omega's prices have risen more sharply/quickly.

Eliminating the grey market - Omega and others rely on the grey market. They would never admit this, but keep in mind they don't count the watch as being sold when you buy it at your local AD. It's already long sold in their eyes when it is sitting in your AD's case still brand new.

Cheers, Al

al128 · Dec 26, 2016

Riviera Paradise
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 in locations where there is an active grey market? Was Archie Luxury right all this time?😁

Rolex is not cash on your wrist - its PRESTIGE on your wrist (as in "the only better watch brand everybody will know").

and that is the result of 50+ years of constant, very well marketing trickle ...

just like Nescafé and now (still building) Nespresso. Its not so much about quality its about "the name / name recognition / brand perception".

al128 · Dec 26, 2016

Riviera Paradise
IMO Omega should be investing significant resources on 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".

Rivera, I dont know if you have work-experience in a multinational brand driven commercial environment ... (quite possibly - so put that in perspective what you see around you mo-fri ;-)

THAT IS JUST NOT GOING TO HAPPEN. The whole "shareholder value" (quarter numbers, meet the "ambituous" targets, etc...) spoiled that FOREVER. You don't manage to make the numbers for the next couple of months? Dont bother about what will happen in 5 or 10 years to the brand, because you will be sacked by january!!!

That is the main reason that so many companies do all this stupid stuff, they (management) just want to survive this year ... all companies worldwide behave like drug addicts ... living from hit to hit (month or quarter to quarter) ... no long term planning, b/c in the long term you will not work there any more.

Just look at the average tenure of CEOs / top management in the watch industry in the 50ies, 60ies .... to the 2010s ... that's why it is all LOUDNESS (Bigger watches, bolder designs, crazier materials) - everybody is trying to out-yell the others

(post possibly a bit exaggerated to get the message across)

Dogmann · Dec 26, 2016

Hi all,

Very interesting discussion and points of view in this thread and no one is 100% right or wrong as there are just so many variables to this question to be able to come to a firm conclusion IMHO.

But as for the idea of an Omega certified and approved Vintage sales channel as already pointed out by some what Omega would do to such a watch before resale may not be to most vintage collectors taste or what they would want or buy whilst some may indeed consider it perfect for them. What ever they would do they would never be able to please all of the people all of time. (and yes corny pun intended)

While @wsfarrell says:

"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."

As I have said above their are two sides to this argument and no wrong or right answer/view but believe me there is a good reason for their "Enquire for Pricing" as you need to be prepared as in sitting down and smelling salts at hand before they hit you with IMO they're totally insane prices.

I visited their showroom back in early November and whilst they do display some truly stunning watches the shop was like walking into a deep freezer IMO it was cold and unwelcoming and far less exciting then I had envisaged. I could buy multiples of many of the watches they offered for the prices they ask and would need to either have so much money it didn't matter anymore and or be the laziest person in the world to think buying one of their examples made any kind of sense.

But in their defense they are far from being alone with their "Enquire about Pricing" model as in fact virtually every shop in Burlington Arcade where they are located is the same and it is the exception to this model if prices are shown in the shop windows. Also there are many online dealers throughout the world that also operate the same policy and I also find it very annoying but it must work for them or they would no longer do it.

In fact if my memory serves me well there was only one Rolex dealer that showed any prices and then only for some of the models not all of them and their prices were insane to IMO but then I suppose the cost of having a shop in Burlington Arcade adds significantly to the overheads and needs to be recouped somehow to stay in business and they must be selling at these prices or would no longer be there and trading.

Marc

oddboy · Dec 26, 2016

What's the difference between Solmo and STS?

From what I know, I'd take STS any day of the week.

corn18 · Dec 26, 2016

al128
Rivera, I dont know if you have work-experience in a multinational brand driven commercial environment ... (quite possibly - so put that in perspective what you see around you mo-fri ;-)

THAT IS JUST NOT GOING TO HAPPEN. The whole "shareholder value" (quarter numbers, meet the "ambituous" targets, etc...) spoiled that FOREVER. You don't manage to make the numbers for the next couple of months? Dont bother about what will happen in 5 or 10 years to the brand, because you will be sacked by january!!!

That is the main reason that so many companies do all this stupid stuff, they (management) just want to survive this year ... all companies worldwide behave like drug addicts ... living from hit to hit (month or quarter to quarter) ... no long term planning, b/c in the long term you will not work there any more.

Just look at the average tenure of CEOs / top management in the watch industry in the 50ies, 60ies .... to the 2010s ... that's why it is all LOUDNESS (Bigger watches, bolder designs, crazier materials) - everybody is trying to out-yell the others

(post possibly a bit exaggerated to get the message across)

Very insightful post. I live this every day. I think Amazon and Google are exceptions to this and they are changing the world.

tyrantlizardrex · Dec 26, 2016

oddboy
What's the difference between Solmo and STS?

From what I know, I'd take STS any day of the week.

STS are an Omega approved service centre.

Somlo are an independent retailer of vintage watches in the Burlington Arcade (Mayfair, London) - they're listed as a vintage Omega store on Omega's website.

Their prices are very, very high (£12k for a ploprof 600).

As far as I understand it, they no longer send their watches to Bienne, but work on them in house, and they no longer come with the Omega international warranty.

To echo @Dogmann comments - it's a very cold experience going in there... they know, that if you know what you're talking about, that you won't buy from them... and behave as if you're wasting their time... which to be fair... 😉

Riviera Paradise · Dec 26, 2016

al128
Rivera, I dont know if you have work-experience in a multinational brand driven commercial environment ... (quite possibly - so put that in perspective what you see around you mo-fri ;-)

THAT IS JUST NOT GOING TO HAPPEN. The whole "shareholder value" (quarter numbers, meet the "ambituous" targets, etc...) spoiled that FOREVER. You don't manage to make the numbers for the next couple of months? Dont bother about what will happen in 5 or 10 years to the brand, because you will be sacked by january!!!

That is the main reason that so many companies do all this stupid stuff, they (management) just want to survive this year ... all companies worldwide behave like drug addicts ... living from hit to hit (month or quarter to quarter) ... no long term planning, b/c in the long term you will not work there any more.

Just look at the average tenure of CEOs / top management in the watch industry in the 50ies, 60ies .... to the 2010s ... that's why it is all LOUDNESS (Bigger watches, bolder designs, crazier materials) - everybody is trying to out-yell the others

(post possibly a bit exaggerated to get the message across)

I don't work for large multinationals but do have them as my clients and yes, I completely agree that the quarter results deadline for analyst / shareholder reporting often drives very poor short term business practice / decision making, especially when a company faces headwinds.

The whole point with the Swatch group though, from my understanding, is that it is essentially family driven (don't know how much the Hayeks still own) and so I would imagine they might be able to undertake a longer term strategy...they have at least resisted the "panic driven" temptation to cut down their core technical workforce during the current downturn.

Rolex certainly has that capability: they can plan long term and don't have to report externally in the short term.

Riviera Paradise · Dec 26, 2016

al128
Rolex is not cash on your wrist - its PRESTIGE on your wrist (as in "the only better watch brand everybody will know").

and that is the result of 50+ years of constant, very well marketing trickle ...

just like Nescafé and now (still building) Nespresso. Its not so much about quality its about "the name / name recognition / brand perception".

I am really enjoying the exchange of comments on this thread and it is certainly proving an education to me learning from the older forum members😀

@Archer did a great post above and I will just touch one aspect he discusses: OB "pampering"

I purchased watches from my local Rio OB because Omega kept prices low between 2013-2016 (10% cheaper compared to US pricing) until the Rio Olympics in order to build up a local sales presence/brand. Of course I enjoyed being pampered by my local OB (who doesn't?) and their local sales staff are very professional and welcoming. Would I value the "pampering" more than just getting the best price on a new watch: NO. Hence my suggestion of some sort of VIP discounting based on overall volume of purchases by a given client during a two year period.

Now that the Rio prices have gone significantly up on the new flashier models at the +10K level, I have been increasingly tempted to look elsewhere: Rolex, JLC, Glashutte Original (unfortunately GO don't have strong representation in my location). If I lived in the US or another location with easy access to the grey market and online resellers at the OF, for example, I might probably never buy a watch from an OB again, excluding perhaps certain LEs, certainly not any of the newer METAS certified and ceramic models. As I have mentioned in other posts: IMO a DSOTM is a good buy US$8K (if you like the design, size etc.) at US$13K it is not.

@al128 I completely agree that the prestige factor would probable rank clearly as the No. 1 motivation factor as to why someone would buy a Rolex, but I do feel (with no statistical evidence to back my hunch) that there might be a sizeable group of newbie clients who would gain comfort from the (smoke and mirrors) perception of being able to trade in that luxury "crowning" achievement purchase into cash in the future, as well as modern watch collector flippers who obviously look at residuals as part of their purchasing decision (as @Archer mentioned).

M'Bob · Dec 26, 2016

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

In general, you are correct: much of the luxury watch market uses gimmickry to attract customers.

That being said, there is a long and distinguished history of the major Swiss brands entering timing competitions. And while I would be the first to admit that achieving very accurate time-keeping in mechanical watches isn't the labor-intensive quest it was years ago, due to technological advances, I still believe METAS is a worthwhile, relevant, and interesting milestone.

al128 · Dec 26, 2016

Riviera Paradise
.

Rolex certainly has that capability: they can plan long term and don't have to report externally in the short term.

That is the reason why they are what they are.

According to a close friend (25+ years in Rolex mother ship working) , Rolex could stop selling watches today and keep EVERYONE on the payroll for 7 more years and still be solvent ...

That's a good base to take strategic decisions

Longbow · Dec 26, 2016

al128
That is the reason why they are what they are.

According to a close friend (25+ years in Rolex mother ship working) , Rolex could stop selling watches today and keep EVERYONE on the payroll for 7 more years and still be solvent ...

That's a good base to take strategic decisions

It's also a risk to become complacent (Kodak, Olivetti, Nokia....) if you have poor management.

micampe · Dec 26, 2016

Riviera Paradise
general public awareness that Rolex is cash-on-your-wrist

I never understand how this myth survives, especially in WIS circles, when, with few exceptions, you can just go and find dozens of just about any model of second hand Rolex on sale on multiple outlets.

al128 · Dec 26, 2016

micampe
I never understand how this myth survives, especially in WIS circles, when, with few exceptions, you can just go and find dozens of just about any model of second hand Rolex on sale on multiple outlets.

Not a myth: the fact that there are quite a lot means you have an established "market price" for a e.g. a Sub in decent condition ... Now go 20% below that and chances are you sell within 1 week.

In watchlandia that's about as good as it gets

dennisthemenace · Dec 26, 2016

Riviera Paradise
I agree. The suggestion was to make METAS a stronger brand associated with other benefits and not just the tech gimmick part.

I think you're missing the point.
Omega decided that the COSC certification wasn't sufficient enough to market their new antimagnetic movements so they did a deal with METAS to call the movements master chronometers.
In the 50 years that I have been wearing watches I have never had one that got magnetised.
It's all marketing bullshit.

bill5959 · Dec 26, 2016

I predict you will see some surprising announcements by the big O regarding their retail business in the New Year.

Riviera Paradise · Dec 26, 2016

dennisthemenace
I think you're missing the point.
Omega decided that the COSC certification wasn't sufficient enough to market their new antimagnetic movements so they did a deal with METAS to call the movements master chronometers.
In the 50 years that I have been wearing watches I have never had one that got magnetised.
It's all marketing bullshit.

You are preaching to the choir mate...I have posted several times on other threads that METAS is more marketing than a significant differential in terms of calibre performance...in my post on this thread I was just suggestimg that Omega might extend their marketing initiative with the METAS certification to include some fringe benefits for customers who have purchased certified watches direct from the OB.

Nobel Prize · Dec 26, 2016

I think what they need to do is LESS. Less variants, less phases and colours and iterations.

Find what is iconic and stick to it and then have the glitter models evolve around that. With the excpetion of the professional moonwatch there have been too many changes, models and variations to the point that its hard to tell where Omega's heart is. What is a PO anymore? What is a seamaster, where is the line between the professional watches and the dress ones?

Like swatch, their parent company, within their variation lies their devaluation.

And yes, the GM and other models are great, but you have to know that before you buy them.

With other brands the core is unchanged for the most part. There is less thinking and sorting from the costumers perspective

listy · Dec 30, 2016

I am amazed at speedmaster professional pricing of watches that are 5 years old. It seems better value to purchase new than used.

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

tyrantlizardrex

Archer

al128

al128

Dogmann

oddboy

corn18

tyrantlizardrex

Riviera Paradise

Riviera Paradise

M'Bob

al128

Longbow

micampe

al128

dennisthemenace

bill5959

Riviera Paradise

Nobel Prize

listy

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