I am aware. But even organizations without shareholders still need to make good business decisions.
What "higher profit per unit"? That is all being lost out to the secondary market.
"Higher brand segment"? Rolex has always been at the top of the food chain.
Rolex and Patek are still very different companies. Rolex mass produces fairly highly quality, but basic movements. Patek, generally speaking, makes much more complicated movements and on a much smaller production scale. Rolex has significantly more production capacity.
Also, I did say in post that the price gap between retail and secondary has widened so much so that I think at a certain point, the strategy just becomes foolish.
I disagree with you. VC is a niche brand. AP is okay, but aside from Royal Oak, what are they really doing?
Rolex has not increased prices much over the last few years. And while most of their complications are basic, they still invest heavily in R&D and make . And Rolex has been fairly vertically integrated for some time now... ? So should be no changes on that front.
Many goods - non-luxury, non-premium items included, have increased in price significantly more than inflation. And even more so than Rolex.
This has nothing to do with their silly strategy to let secondary prices reach 2 to 3x retail prices, thus losing out on a huge amount of potential revenue.
My point is that I think their brand value has always been solid, watches have always traded very close to retail values, so I really see no purpose in this marketing exercise.
I am fairly certain that if they doubled production of stainless steel models, they would be much better off [financially] - even long term.
Many goods - non-luxury, non-premium items included, have increased in price significantly more than inflation. And even more so than Rolex.
This has nothing to do with their silly strategy to let secondary prices reach 2 to 3x retail prices, thus losing out on a huge amount of potential revenue.
My point is that I think their brand value has always been solid, watches have always traded very close to retail values, so I really see no purpose in this marketing exercise.
I am fairly certain that if they doubled production of stainless steel models, they would be much better off [financially] - even long term.
The part I'm not getting is - YES demand is higher than supply... but still we're talking about a company that typically churns out 1 million units per year. All of them. So - where do these one million watches go, really?
Facts:
RB are empty.
AD's are empty. I walk past the main Bucherer store in Geneva on a weekly basis or so, there is NOTHING in there.
Only Grey market has them, in scarce enough supply that prices are inflated.
So there can only be three hypothesis:
1- those 3K (give or take) pieces delivered daily around the world are INSTANTLY snagged by (i) highest bidders or (ii) waitlisters, who either keep them or flip them to GM dealers. The issue is, I only know of one (ONE) WIS in my close circle who was able to get a steel sports rolex the past 6 month or so. All the others are getting nothing.
2- Those of the 3K that get delivered to AD's are instantly sold to GM dealers. While the RB ones sell normally... but then again - I have yet to hear my friends getting one via the RB channel...
3- Rolex has just not able to deliver on the usual-one-million-pieces-per-year rate... Either intentionnally, but this sounds silly for all kinds of reasons, or incidentally. I know first-hand for instance of production issue in the ceramic pepsi bezel (reject rate is 80%...) from a friend of mine who works in the factory - but still.
Can someone tell me where my logic is flawed, or shed some light on what can be happening?
Thanks,
Paul
