What happens to all these watches?

https://timeandtidewatches.com/swatch-group-have-millions-of-watches-sitting-in-warehouses/

 

They wait for AD's to sell them at full retail?

 

They make far too many. They should cut back production.

 

Maybe follow the Richemont precedent from last year and destroy them - depends how badly they want to keep too many from reaching the grey market.

 

Cut back production as a whole and stop producing the watches that are in excess completely until stock is low enough in OB/AD's and the reserve watch stock has been exhausted.

Any that don't sell just disassemble them for parts. If Swatch/Omega were to sell the rest at huge discounts it would flood the market and devalue everyone else's timepieces.

It's a spectacular waste of resources which looks bad to investors and to us. If Swatch/Omega were to stop producing so many of the timepieces that don't sell and instead devote that production to the limited editions then maybe they could actually be delivered on time.

 

Do a Speedy contest. Give away some watches.

 

Sell them eventually.

 

Destroying part of the inventory would be consistent with the premium / luxury / higher prices strategy pursued by Omega. Short-term pain for (hopefully) long-term gains.

 

How do we know they are really there?

Take out the value of that inventory from the accounts and they have a loss.

After all Switzerland must have the straightest looking bent accountants.

 

Assuming that this inventory number is finished goods inventory would be a mistake without more details...

 

Why would you not ramp up production to hold in stock if you wanted a buffer to get new production lines up to speed?

They just recently moved and expanded their tooling and finishing facility. They have pumped out new movements so therefore I wouldn’t be surprised if they are currently trying to ramp up production of new movements which I’m sure always have a 6 month inefficiency period whilst they get technicians up to speed and iron out any parts issues.

Maybe quite a smart move to hold stock during this possible transition as well as clamping down on greys.

I see omega positioning themselves slightly higher up the food chain where the AOV may jump 30% in the coming years.

Rolex is already on that escalator with Tudor.

 

It may simply be that Swatch has determined it's cheaper to replace parts than service them during service intervals. That is, the raw materials and automated assembly are cheaper than complete disassembly of various components or component subgroups. Tudor, for example, replaces movements during service, as do various companies within other large watch conglomerates. This decision could account for a significant portion of the inventory.

 

Tudor replaces the movement in the local service center, as does Omega in many places with the modular chronograph movements for example, but those movements are eventually serviced. They are just done in a central location in a sequential manner, much like an assembly line...

 

It breaks my heart knowing that, throughout time, so many good watches have been destroyed...

Not to mention the waste of resources (even if some materials get recycled...).

 

That’s not how the grey market gets its watches.

 

It also depends when the inventory was taken it could be that some of this is accounted for by major sales drives eg 50th anniversary etc. Or it could just be poor management

 

I didn't offer any suggested mechanism by which the grey market gets its watches. Regardless of how the grey market gets new watches (i.e. not previously owned), they get them because there is a surplus that manufacturers cant't sell via their legitimate retail or online outlets. The article cited by the OP clearly states the opinion that this increased surplus is probably due to efforts to dry up supply to the grey market.

 

Nope still wrong.

The grey market does not get watches from Omega.

They get them from AD’s selling unsold watches or slow selling watches from their allotment that they have to sell.

 

Again, I didn't offer any mechanism by which the grey market gets their watches, and I most certainly didn't say they get them from Omega. But I do agree with the mechanism you offer.

You misinterpreted my posts.

 

No, I did not. You said it is because the manufacturer has a surplus... The grey market does not exist because there is a surplus, it exists because of a lack of MAP pricing, as well as forcing authorized dealers to take and sell stock. An AD has to sell through its stock or risk sitting on items that are not selling or losing their AD status. Grey Market exists on Omega due to how they interact and force stock on AD's.

There is a reason why you only see weird variants like Seamaster Chrono's or LE's that no one has heard of (looks at the ETNZ models) at the big box stores. These do not sell well at the MSRP or lower and the AD's are stuck with them, so they unload them into the grey market as they cannot return the watches to Omega.

Maybe this is what you are saying... but I read your comments as something else. (Note: most of the ETNZ watches are undiscovered gems!)