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Thread: Rolex stainless steel shortage reasons?

  1. #1

    Rolex stainless steel shortage reasons?

    Does anyone have a plausible reason for what Rolex are at with the sports models?
    Why should a paying customer feel honoured for the privilege of being considered eligible for parting with a significant amount of their hard earned cash on a wrist watch?
    Don't get me wrong, I am a Rolex fan and have purchased an Explorer 1 two years ago which I love.
    I just don't fully understand the current strategy with the shortage on the stainless steel sports watches.

    Are they trying to create an artificial shortage?
    If yes, why? Surely they could sell as many of these watches as they produce for the UK market, so whats the point in withholding them?
    Is it down to the currency issues after the Brexit vote?
    Are they trying to keep the second hand values high?
    Are they going to stop making stainless steel sports models?
    Is it a symptom of the dying throes of a soon to be obsolete Swiss watch industry?

    Does anyone know what Rolex are at?
    Thanks
    John

  2. #2
    Master
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    Does anyone know what Rolex are at?
    Scarcity marketing

  3. #3
    Grand Master number2's Avatar
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    They (Rolex) make x watches every year, you maybe surprised to hear that we're not their only market.
    "Once is happenstance. Twice is coincidence. The third time it's enemy action."

    'Populism, the last refuge of a Tory scoundrel'.

  4. #4
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    Maybe they are about to release a new case, hopefully they are finished with the maxi case and they genuinely haven't got many left as they are selling off the old ones to be replaced with new... wishful thinking.

  5. #5
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    Quote Originally Posted by smalltime View Post
    Maybe they are about to release a new case, hopefully they are finished with the maxi case and they genuinely haven't got many left as they are selling off the old ones to be replaced with new... wishful thinking.
    Wishful thinking would involve them melting down the maxis, and putting the movements in something more attractive.
    "Once is happenstance. Twice is coincidence. The third time it's enemy action."

    'Populism, the last refuge of a Tory scoundrel'.

  6. #6
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    It does seem to be a slightly strange business model - they have many people with the means and want to buy but cannot buy due to limited production of non limited edition watches.

    I guess there is a risk that the desirability decreases if production increases but at the same time there is money to be made. I don’t think they care about second hand values - this doesn’t affect their sales really although again it could be said that the strong residuals increases desirability

  7. #7
    Maybe they are having genuine issues with their production? And are simply unable to keep up with global demand and therefore they are rationing the supply.

    It can happen to any business - see KFC recently, let down by what should be one of the best logistics companies in the world.


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  8. #8
    Quote Originally Posted by J J Carter View Post
    Scarcity marketing
    It's hard to really know but I would put my money on this.

    An attempted repositioning of their brand further up the scale after a couple of decades of dilution.

  9. #9
    Grand Master JasonM's Avatar
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    Quote Originally Posted by Complex View Post
    It's hard to really know but I would put my money on this.

    An attempted repositioning of their brand further up the scale after a couple of decades of dilution.
    That would make more sense if they applied the strategy to their whole range, but they don’t.
    Cheers..
    Jase

  10. #10
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    Easy, restrict supply to drive the hype

  11. #11
    Master
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    In the end, like all companies, they have a finite production capacity - and they are probably not into outsourcing.

    If so, there is a limit to how many watches (or components) they can produce and to increase the capacity may mean significant investment, which Rolex don't believe is necessary - especially if they don't forecast this level of demand to last too long.

    I'm nor sure the professional series is such a massive part of the overall output - and maybe there's more profit in some of the other ranges?

  12. #12
    Craftsman
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    I love Rolex but find these shortages,lists,closed lists tiresome.

  13. #13
    Grand Master ryanb741's Avatar
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    Exactly the same as Hermes and Chanel do with their more desirable handbags. Scarcity drives demand

  14. #14
    Master
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    Why do people struggle with this?

    Name me a luxury brand that improved its position by ramping up availability?

    For many it is the scarcity/exclusivity that make them desire the brand.

  15. #15
    Craftsman
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    Don’t Ferrari shutdown production for a month in the summer? Doesn’t do them any harm.

  16. #16
    One reason could be that they have held back production to use the newer 3235 movement in the sports watches and announce that at Basel.

  17. #17
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    Lower the volumes and the price goes up due to pent up demand. They get an even more brand loyalty from existing Rolex owners who see the value of their watches going up. It's a win - win situation. They are obviously trying to snap at the heels of PP and good luck to them.

  18. #18
    Quote Originally Posted by Mick P View Post
    Lower the volumes and the price goes up due to pent up demand. They get an even more brand loyalty from existing Rolex owners who see the value of their watches going up. It's a win - win situation. They are obviously trying to snap at the heels of PP and good luck to them.

    I just don't get why the strategy is focused on the stainless steel sports model range only. Surely these are the models that younger customers are drawn to.
    How many of these are going to accept the waiting list treatment? Are they not more likely to go and purchase an Omega or an apple watch instead?
    I get the principles of scarcity marketing, but I can't help feeling it is the wrong strategy to employ for Rolex, if indeed it is their strategy.
    Perhaps they feel the market won't take another price rise on these models anytime soon and this is their next best option.

  19. #19
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    Quote Originally Posted by EmilA View Post
    Don’t Ferrari shutdown production for a month in the summer? Doesn’t do them any harm.
    Almost all car manufacturers shut down for at least two weeks to do maintainence that cannot be completed while operating.

    Alongside this it’s also fine during the schools holidays which gives the whole workforce an opportunity to spend time with the family. It also means the business can plan when people will be on holiday which means it’s essier and cheaper for them as well

  20. #20
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    They make over a million watches a year. It’s not like they aren’t out there.

    Demand > supply, and they don’t want to optimize capacity for the current market, which is a pretty unusual market historically. It’s not some nefarious plan.

  21. #21
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    Quote Originally Posted by johnthemull View Post
    I just don't get why the strategy is focused on the stainless steel sports model range only. Surely these are the models that younger customers are drawn to.
    How many of these are going to accept the waiting list treatment? Are they not more likely to go and purchase an Omega or an apple watch instead?
    I get the principles of scarcity marketing, but I can't help feeling it is the wrong strategy to employ for Rolex, if indeed it is their strategy.
    Perhaps they feel the market won't take another price rise on these models anytime soon and this is their next best option.
    Yes I agree, I have often wondered why they pump the market full of PM models that plummet in value like a Skoda Rapid. In a way the PM and TT models belittle the SS ones. The obvious answer is to cut back production and then there will be no need to discount.

  22. #22

    Rolex stainless steel shortage reasons?

    The thing with Rolex is that they are not a regular business. I see them more as an institution, like an old school.

    They don’t need to make a profit this year, though I’m sure they will - without trying (‘operating profit’, they are a charity, after all). They don’t need to please aggressive share holders or board members. They don’t need to ‘get their name out there.’ They don’t need to pay off any debt.

    As a result, they have the luxury of not needing to think 6 months ahead, or a year or two ahead. They will be thinking about how to keep Rolex a relevant and powerful organisation for the next few *decades*.

    If they oversupply, and then a financial shock occurs, or if/when smartwatches become de rigeur, then the solid residuals which make up a considerable part of the image will fade.

    They don’t want £6,000 from you. They want you to be desperate to give them £6,000. Along the way, you might spend many thousands on the wife’s watch.

    Think of them as you would an attractive, wealthy woman or man. They don’t need you. They might want you, but it will be on their terms. If they ‘had’ everyone, then far fewer would want them. Much of the appeal in both things and people is the apparently unattainable aspect of them.

  23. #23
    Craftsman
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    Well i mean, they do still want to maximize profits, they simply balance supply and demand and to be fair, its not like there is a very limited supply, i think supply is really only slightly below demand.

  24. #24
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    Quote Originally Posted by JP Chestnut View Post
    They make over a million watches a year. It’s not like they aren’t out there.

    Demand > supply, and they don’t want to optimize capacity for the current market, which is a pretty unusual market historically. It’s not some nefarious plan.
    Not quite, it's 700K - 800k

  25. #25
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    Quote Originally Posted by downer View Post
    In the end, like all companies, they have a finite production capacity - and they are probably not into outsourcing.

    If so, there is a limit to how many watches (or components) they can produce and to increase the capacity may mean significant investment, which Rolex don't believe is necessary - especially if they don't forecast this level of demand to last too long.

    I'm nor sure the professional series is such a massive part of the overall output - and maybe there's more profit in some of the other ranges?
    Yes, their best selling range is the DateJust

  26. #26
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    Quote Originally Posted by nunya View Post
    Yes, their best selling range is the DateJust
    Surprised by that. What's the source of this, out of interest? Thought they were quite tight-lipped.

  27. #27
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    Don’t forget that visitors from other countries have been buying up all the UK watches due to the pound being low since the referendum. And this is on top of the standard economics of low supply meaning higher profit margins for desirable products. Sometimes it seems they could sell a few more without them losing their aura of exclusivity, but they’ve been playing this game for a while now, producing a huge volume of watches, and yet achieving famously high used values. They probably know what they’re doing!

  28. #28
    Quote Originally Posted by gcleminson View Post
    Surprised by that. What's the source of this, out of interest? Thought they were quite tight-lipped.
    Think one of the reasons for that is that the Datejust will be what the vast Majority of female buyers go for.

  29. #29
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    Remember that a high proportion of Rolex watches are for women....who overwhelmingly go for Datejust. You can get an idea of the power of the Datejust by the sheer variety of options, about 400 variations at the last count. This is where Rolex makes its money.

  30. #30
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    Quote Originally Posted by johnthemull View Post
    I just don't get why the strategy is focused on the stainless steel sports model range only. Surely these are the models that younger customers are drawn to.
    Because their margin on precious metal watches is probably greater (yes I know dealers discount them more, but that doesn't affect Rolex's bottom line). Restricting steel sports maximises sales of other models and the they still sell whatever steel models they decide to produce.

  31. #31
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    I think they just do it for a laugh ...

  32. #32
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    Id heard that they were cutting general production by 40% and professional by 70%. Dont know how true that is.
    Wonder if theyre cutting back because theyre going to be using a new movement post basel.

  33. #33
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    Quote Originally Posted by gcleminson View Post
    Surprised by that. What's the source of this, out of interest? Thought they were quite tight-lipped.
    It [Datejust being the best-selling range] has been the case for several decades and is proven in the UK by detailed sales reporting carried out across many main agents. This same reporting proved a couple of years ago that the top 20 best selling watches in the UK over £5,000 were without exception from Rolex.

    Haywood

  34. #34
    Quote Originally Posted by Haywood_Milton View Post
    [...]the top 20 best selling watches in the UK over £5,000 were without exception from Rolex.

    Haywood
    That's because experience has taught most of us the following law of wristwatches:

    Cheaper than Rolex = Less good
    More expensive than Rolex = Waste of money


  35. #35
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    Quote Originally Posted by Belligero View Post
    That's because experience has taught most of us the following law of wristwatches:

    Cheaper than Rolex = Less good
    More expensive than Rolex = Waste of money

    A rare gem of wisedom, I like it.

  36. #36
    Master
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    Quote Originally Posted by nunya View Post
    Not quite, it's 700K - 800k
    You're correct, at least in the 2000-2015 timeframe:
    https://www.hodinkee.com/articles/wh...data-editorial

  37. #37
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    Quote Originally Posted by Montello View Post
    Why do people struggle with this?

    Name me a luxury brand that improved its position by ramping up availability?
    BMW, Mercedes Benz, to name two.


    Quote Originally Posted by EmilA View Post
    Don’t Ferrari shutdown production for a month in the summer? Doesn’t do them any harm.
    The whole of Italy goes for a siesta in August!
    Swiss watchmaking also reduces considerably over 6 weeks from mid-July, whilst nearly everyone takes their annual holidays.

  38. #38
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    The shame is that there are plenty of fine watches, which aren't Rolex. All of the big brands make watches which can last a lifetime. Rolex is, I think, the best overall manufacturer, but not by a big enough margin to justify such over-whelming dominance.
    Come to think of it, the only Rolex I have at the moment is indeed....a Datejust. I can well understand why they sell so well.

  39. #39
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    Always think it equates to De beers and diamonds. Make people think diamonds are rare, restrict supply and keep the price/allure/prestige/hype up. everyone wins!

  40. #40
    Quote Originally Posted by PJ S View Post
    BMW, Mercedes Benz, to name two.
    Mercedes' quality and reliability went down the drain when they switched to lower-cost, higher-volume production in the mid-'90s, and it's never recovered. Instead of introducing one perfected car every ten years, they crank out a bunch of disposable ones on a schedule that's dictated by fashion and marketing rather than making the best product possible. The fact that they're now seen as a competitor to the likes of BMW, among many others, shows how far their position has slipped.

    Rolex is a unique company in that they're the long-undisputed leader in their industry, they enjoy an unblemished reputation for quality, and they don't have any grabastic shareholders pressuring them to squeeze every short-term gain out of the name by outsourcing, corner-cutting and greed. What they're doing works, and it would be a shame if they went the way of every other consumer product manufacturer by letting their values and integrity erode.
    Last edited by Belligero; 19th March 2018 at 15:25.

  41. #41
    Master
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    There are no reasons, there is only a reason; as said above its marketing.

  42. #42
    Quote Originally Posted by MrBanks View Post
    There are no reasons, there is only a reason; as said above its marketing.
    Right, because they obviously have magic unlimited production capacity, and it's not like demand suddenly exploded in the UK after the pound took a dive or anything. :P

  43. #43
    Master
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    That's a contributory factor but not a reason.

  44. #44
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    Was in a Rolex AD in Aberdeen on Thursday last week and they only had a Yachtmaster in, asked if they had a waiting list for Black and Blue GMT Master, 3 years they told me and for a standard GMT Master in Black 1 and a half years.

  45. #45
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    Quote Originally Posted by Chukas View Post
    Was in a Rolex AD in Aberdeen on Thursday last week and they only had a Yachtmaster in, asked if they had a waiting list for Black and Blue GMT Master, 3 years they told me and for a standard GMT Master in Black 1 and a half years.
    That's how you protect a brand image and good luck to them.

  46. #46
    Quote Originally Posted by MrBanks View Post
    There are no reasons, there is only a reason; as said above its marketing.
    If it's marketing it makes no sense. The watches that are in short supply, in the UK, are some of the best selling entry-level models. Why restrict those, they've been top sellers for decades.
    Why not restrict Rose Gold Yachtmasters or Platinum Daytona's –*that's where the big profits are.

    Rolex UK's profits have also risen 41%, coinciding with a weaker pound, and a lack of popular professional models in shop windows. So there's really no restriction of supply according to the balance sheets. Rolex UK are shifting the units.

    http://www.watchpro.com/breaking-new...-rocket-41-uk/

  47. #47
    Quote Originally Posted by JP Chestnut View Post
    You're correct, at least in the 2000-2015 timeframe:
    https://www.hodinkee.com/articles/wh...data-editorial
    No, you were right.

    They cracked a million units for 2017 while running at absolute maximum capacity. Why anyone thinks they'd annoy potential customers by intentionally restricting production is beyond me.

  48. #48
    Craftsman Steelgecko's Avatar
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    The whole scarcity thing is watch forum hype. It only applies to their SS divers and even then I was only on the wait list for three months in a Greater London store for a black sub date before the call came in. If you can't wait that long then I'd question your patience not Rolex's apparently insidious marketing strategy.

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  49. #49
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    Quote Originally Posted by paskinner View Post
    The shame is that there are plenty of fine watches, which aren't Rolex. All of the big brands make watches which can last a lifetime. Rolex is, I think, the best overall manufacturer, but not by a big enough margin to justify such over-whelming dominance.
    Come to think of it, the only Rolex I have at the moment is indeed....a Datejust. I can well understand why they sell so well.
    But not many rival rolex in the total ownership. Rolex and Patek for example excel not just at supply restrictions and image but also after service and care. Richemont and LVMH certainly lack in this area and have many horror stories.


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  50. #50
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    Quote Originally Posted by Steelgecko View Post
    The whole scarcity thing is watch forum hype. It only applies to their SS divers and even then I was only on the wait list for three months in a Greater London store for a black sub date before the call came in. If you can't wait that long then I'd question your patience not Rolex's apparently insidious marketing strategy.

    Sent from my [device_name] using TZ-UK mobile app
    How long do you think it would take someone with no previous purchase history to get a stainless Daytona or Sky Dweller at list price from an AD if they went in to enquire today then?

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