An 18k gold and diamond Rolex watch that once belonged to musician Elvis Presley. Picture Alliance / DPA | Andi Ren
The Swiss company Rolex is an established name in the luxury watch industry. In fact, the watchmaker does everything right – with one exception.
Completely inflated prices are sought for used Rolex watches, sometimes twice as much as for new goods. The demand is much higher than the supply. This is where the company should act.
Because for a few months it has been observed that potential customers are switching from the brand to another brand.
Let’s call her Mia Tanner. 32-year-old young man just starting his career. He was recently promoted to Head of Digital for a medium-sized company. Tanner wanted to reward himself for professional milestones. With the ultimate symbol of success: a Rolex. Tanner really has nothing to do with watches, he’s not even an industry expert or a fan. But she wants to show those around her that she’s made it. And buy a submarine. She can easily afford around 8,500 euros for a steel version without a date. So she goes to her trusted Rolex dealer.
And she is disappointed: because she can try the Submariner on at the dealer but cannot buy it. They kindly explain to her that her name is definitely on the waiting list and that they will be contacted as soon as their model is back in stock. And Tanner gives a thoughtful tip for longer waits: if you buy other watches or jewelry instead of the Rolex you want, you can almost certainly increase your chances of getting the Rolex you want. . However, you have to be a good customer; It should be a high five-digit sum.
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Double the price of pre-owned Rolex watches
Tanner is confused. Of course, she knows that the demand for some luxury products far exceeds the supply. She knows that niche brands target supply and demand to maintain brand reputation. But she doesn’t want to wait years for the watch of her dreams and buy the expected reward with products she doesn’t even want. And a look at the commercials on various used watch portals finally satisfied his longing for his Submarine; You don’t want to pay almost twice as much for a used product as you would for a new watch. A SeaQ from Glashütte Original is now stuck to Tanner’s wrist.
Episode Shows: Rolex is and remains the measure of all things in the field of luxury watches. Over the decades, the brand has carved out a unique market position – Rolex has a market share of around 30 percent – and has become synonymous with luxury. Whether in the favelas of So Paulo or the posh districts of London or with the typical Sydney family man.
But Tanner’s story also points to the downside of success. The demand for Rolex watches has outstripped supply so much over the years that Rolex really should start capturing the demand. The good news: Rolex does. Bad news: Rolex is not taking any decisive action.
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Rolex should only be active on the used watch market
The good news: Rumors have been circulating for weeks that Rolex wants to start trading in pre-owned watches in cooperation with authorized dealers; It is said that these days the relevant decisions must be made in the Secret Geneva Group. Perhaps they have already fallen.
If Rolex takes this step, it is a step in the right direction. The brand could potentially better control and channel the thriving business into the watches it sells — and align the prices it receives there with its pricing strategy.
Bad news: Rolex is not taking any decisive action. At least nothing has been made public in this regard, not even a rumor. Rolex requires a worldwide waiting list for models and references. An implementation would be technically possible without further ado.
Additional Demand: Global Rolex Waitlist Benefits
A global waiting list would have many advantages. First, it will eliminate arbitrariness from the system. Second, potential duplicate entries will be removed from the system by individual customers sitting in multiple Rolex waiting rooms at the same time, expecting to get their train faster. Third, the long wait reduces customer frustration when all potential customers can rest assured that sooner or later they will get their chance. And fourth, Rolex shows that partnerships with retailers are really taken seriously. Today, the brand simply entrusts the problems related to excessive demand to its resellers.
Rolex has only commented on the scarcity problem once in the past few years. In the fall of 2021, the company said, “The scarcity of our products is not a strategy on our part,” adding, “Our current production cannot fully meet the current demand, at least the quality of our watches.” Not without less – we reject that, because no compromises can be made when it comes to the quality of our products.” And finally: “All Rolex watches are developed and manufactured at our four locations in Switzerland. They are hand assembled with the utmost care to meet the brand’s unique and premium standards of quality, performance and aesthetics. This obviously limits our production capacity, which we expand as much as possible and always in accordance with our quality standards.”
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Rolex: around eight billion euros in sales in 2021
Of course, trying to advise a company like Rolex is pointless. It’s clear that the brand really knows what it’s doing. Around eight billion euros in sales in 2021 and a market share of around 30 percent speak for themselves. Only Apple sells more worldwide with the Apple Watch.
In addition, of course, every watch fan – like fans of national soccer teams – knows what Rolex is doing wrong or should be doing better. In the past, Rolex was advised to use quartz models, later for watches with complications, and later to switch to direct sales via the Internet. But Rolex hasn’t changed, at least not essentially. After all, you are not just a denomination, but the Catholic Church, an institution.
Falling Rolex prices in the second-hand market: time for change
And yet it may be time. Because for a few months it has been observed that potential customers are switching from the brand to another brand. This is already clearly visible on the used market – in the form of a drop in prices. Yes, luxury brands need to strike a balance between exclusivity and availability. But: The persistent non-satisfaction of the existing demand will reduce this in the medium term.
By the way: Mia Tanner has a lot of fun with her CQ. Despite everything, he has not given up on his submarine dream.
This article was first published in the Handelszeitung. You can find the link here.