The Watch Appreciation Thread - Part two (Rolex, Patek Philippe, Audemars Piguet, Jaeger LeCoultre,

[bespoken pa]

Like it or not Rolex has engaged in the most successful branding and marketing campaign ever. There is a brand out there that it is discussed nearly as frequently as Rolex. When is Rolex going to do this or that, seriously the masses market rolex for rolex at this point.

 

[Dino944]

I have never understood the idea that people buying for over MSRP can’t be enthusiasts.

I didn't say that they can't be enthusiasts. If your friends are happy doing that, well good for them.

However, if the market dropped back to normal, I doubt we would see a what seems like a limitless supply of hard to get steel Rolex watches at gray dealers, and ADs with empty cases. More people could actually buy the watches at ADs. Personally, for me it goes beyond the price - when I buy a new watch, I want it to be from an AD (no question of newness or authenticity), with my name associated with the paperwork/warranty card etc. I want all the paperwork, correct accessories, and no questions about the watch possibly being worn even for a few days, etc, but that is just me. I have seen a few watches sold by grays claiming the pieces were brand new and never worn...and that simply was not true. Now there are some gray dealers that are honest and reputable, but I just don't want to deal with that stuff.

 

[Dino944]

I’m sure some economics professor can cite a game theory equation that holds an answer.

My own thinking is as follows:
- Rolex makes many different models of watches.
- Not all of those watches are big sellers or sought after. The competition at those price points is pretty stiff.
- For some reason, some models have become even more desirable. This could be a combination of aesthetic appeal and cache
- Knowing this, Rolex holds back those models from AD’s unless and until they sell some predetermined volume of other models.
- AD’s know this and hence the hoarding of said models for their premium customers.

If Rolex were to produce more of these models, then they wouldn’t be so sought after. Let’s face it, a big part of the appeal is the exclusivity. Their would likely be a surge initially and then it would die out. They’d become as common as the DJ.

I will just add, that I knew the son of a former Rolex AD. They were a fairly large operation and had 4 shops. He said, if they met certain goals, Rolex would reward them by sending additional easy to sell models (steel Subs, GMTs, Daytonas). If they were not doing well, they would essentially get punished and be sent a more of the tougher to sell items like watches with gems, the quartz Cellinis, or some bronze GMTs (the old Rootbeer models, which were not very popular when new).

 

[Ambulance Chaser]

I also want to buy from an AD if I'm going to get a Rolex. I'm spooked by the Horology House scandal and I wouldn't trust buying from a gray, even a highly regarded one, to be foolproof. Back in the day, the joke was that you could tell a fake Rolex by the ticking second hand. Go watch the YouTube videos--the fakes have gotten really good, down to the movement behind the closed case back.

 

[WSW]

Does anybody know how the situation got out of control in the first place? Some people say that Rolex is artificially limiting supply of popular models. I would have thought that Rolex's goal is to sell as many watches as possible at MSRP, so they would try to produce enough watches to meet demand. It's not like Rolex is getting a cut of the amount their watches are selling above MSRP.

Beyond what has already been said, additional factors include the rise of Instagram/social media + Blogs like Hodinkee which created a fervor and glamour for watches beyond the enthusiasts community. The popular models became fetishized and thus even more popular. Responding to the rising prices, flippers and speculators, both amateur and professional, started buying up as many pieces as they could.

Also, we have had a global boom and easy credit since the 2008 crisis, including an ascendant China, which brought a huge wave of potential new consumers to the scene. Watch companies increased production, but it was not close enough to meet the surging demand. Of course, now we'll see a painful correction on many levels.

 

[mak1277]

I didn't say that they can't be enthusiasts. If your friends are happy doing that, well good for them.

However, if the market dropped back to normal, I doubt we would see a what seems like a limitless supply of hard to get steel Rolex watches at gray dealers, and ADs with empty cases. More people could actually buy the watches at ADs. Personally, for me it goes beyond the price - when I buy a new watch, I want it to be from an AD (no question of newness or authenticity), with my name associated with the paperwork/warranty card etc. I want all the paperwork, correct accessories, and no questions about the watch possibly being worn even for a few days, etc, but that is just me. I have seen a few watches sold by grays claiming the pieces were brand new and never worn...and that simply was not true. Now there are some gray dealers that are honest and reputable, but I just don't want to deal with that stuff.

I also prefer going with AD over GM. That being said, if I really wanted a Daytona I would rather pay $20k for one than wait 2+ years to maybe get one at retail.

 

[Ambulance Chaser]

Does anybody think that maybe the ADs have been getting kickbacks from gray market dealers? Instead of selling a Daytona at MSRP ($13,150) to an individual consumer, the AD sells it to a gray for $12,000, who flips it for $20,000, and gives the AD $3,000 of the $8,000 profit. Shady practice that would explain why the ADs are short on stock while grays have plenty.

 

[Ebitdaddy]

I will just add, that I knew the son of a former Rolex AD. They were a fairly large operation and had 4 shops. He said, if they met certain goals, Rolex would reward them by sending additional easy to sell models (steel Subs, GMTs, Daytonas). If they were not doing well, they would essentially get punished and be sent a more of the tougher to sell items like watches with gems, the quartz Cellinis, or some bronze GMTs (the old Rootbeer models, which were not very popular when new).

This is how a lot of retail seems to work. I really don't get it. When I was running more traditional retail ops it really didn't make me feel like the brands supported their dealers much...

 

[Phileas Fogg]

This is how a lot of retail seems to work. I really don't get it. When I was running more traditional retail ops it really didn't make me feel like the brands supported their dealers much...

who needs whom more?

 

[Texasmade]

Does anybody think that maybe the ADs have been getting kickbacks from gray market dealers? Instead of selling a Daytona at MSRP ($13,150) to an individual consumer, the AD sells it to a gray for $12,000, who flips it for $20,000, and gives the AD $3,000 of the $8,000 profit. Shady practice that would explain why the ADs are short on stock while grays have plenty.

Or the grey dealer bought a bunch of slow movers from the AD at a discount and got the Daytona at MSRP so the AD can have some cash flow for the next batch of shipments.

 

[Neville Southall]

Or the grey dealer bought a bunch of slow movers from the AD at a discount and got the Daytona at MSRP so the AD can have some cash flow for the next batch of shipments.

This is what happens.

 

[giuseppe]

You start to see nervousness after 23 days at home, the worst thing is that nobody knows what will happen when we go out.
In the beginning, there was talk of help to go back to where we were, it seems that this help was only words, if there are no credits, I think there will be a new meal, barbecue sauce watches.

 

[earthdragon]

Does anybody think that maybe the ADs have been getting kickbacks from gray market dealers? Instead of selling a Daytona at MSRP ($13,150) to an individual consumer, the AD sells it to a gray for $12,000, who flips it for $20,000, and gives the AD $3,000 of the $8,000 profit. Shady practice that would explain why the ADs are short on stock while grays have plenty.

This sort of behavior likely goes on with some of the less than scrupulous AD's. I have only ever purchased from AD's at MSRP (and i work with two). One has helped me with four pieces and one with 3. The former are an absolute pleasure to deal with and I have waited no longer than 5 months for requested pieces. The latter are super high pressure when they call text and expect a purchase within the hour...
I am struggling to understand all of the vitriol directed towards the GM market on some of the watch forums presently. While not relevant to me, if someone is prepared to pay +50% or +100% for a hard to get watch are they not filling a void?

 

[Ebitdaddy]

Yeah, I suspect there are a lot of people out there who make a good living but are financially overextended due to a desire to keep up with the Joneses. Buying a McMansion with an ARM, leasing a fancy car, buying designer clothing and nice watches on credit, etc.

Yup! I have so many friends that live like this. I don't know how they do it, I would find it really stressful.

 

[Phileas Fogg]

I am struggling to understand all of the vitriol directed towards the GM market on some of the watch forums presently. While not relevant to me, if someone is prepared to pay +50% or +100% for a hard to get watch are they not filling a void?

yup! It’s the demand that creates a market. I don’t blame them a bit for taking advantage of people’s vanity and giving them what they want.

It’s odd that the same watch made with precious metals and stones will cost less than its stainless steel counterpart. It’s not a statement of wealth, it’s something deeper and needier.