Whistleblower lawsuit involving major Chicago AD

Discussion of Rolex Watches.
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BacoNoir
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Re: Whistleblower lawsuit involving major Chicago AD

Post by BacoNoir » Tue Feb 16, 2021 5:41 pm

JP Chestnut wrote:
BacoNoir wrote:
Tue Feb 16, 2021 3:29 pm
It's a mess of Rolex's own making. They limited supply, drove up demand, which changed the grey market from discounters to profiteers. With all the demands they make of their ADs to spend 100's of thousands of $$ to remodel and then give them limited supply of watches to sell to the public, the grey market makes more sense.
I haven’t seen anything about rolex cutting production outside of covid disruptions.
Maybe I should rephrase - they can’t / won’t produce to meet demand.
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gwells
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Re: Whistleblower lawsuit involving major Chicago AD

Post by gwells » Tue Feb 16, 2021 5:49 pm

and yet they can overproduce the stuff they can't easily sell and force those on ADs instead.

yeah, i'm not buying that they can't meet demand. they either won't or aren't smart enough to produce the right volume of different models. you decide which sounds more logical.

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streetracer101
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Re: Whistleblower lawsuit involving major Chicago AD

Post by streetracer101 » Tue Feb 16, 2021 6:17 pm

gwells wrote:
Tue Feb 16, 2021 5:49 pm
and yet they can overproduce the stuff they can't easily sell and force those on ADs instead.

yeah, i'm not buying that they can't meet demand. they either won't or aren't smart enough to produce the right volume of different models. you decide which sounds more logical.
They own their own smelt. I am pretty sure they can supply demand, but doing so would mean they'd have to start discounting watches again, which seems to be against of the business model of most lux watch manufacturers.

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gwells
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Re: Whistleblower lawsuit involving major Chicago AD

Post by gwells » Tue Feb 16, 2021 7:16 pm

scarcity is part of the business model. even if it's forced.

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JP Chestnut
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Re: Whistleblower lawsuit involving major Chicago AD

Post by JP Chestnut » Tue Feb 16, 2021 7:58 pm

They were supposedly expanding production but covid derailed it. With that said, it still won't meet capacity.

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Ryeguy
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Re: Whistleblower lawsuit involving major Chicago AD

Post by Ryeguy » Wed Feb 17, 2021 3:24 am

The more I think about it, the more I think Rolex will have to investigate this further and put additional protections in place to prevent this type of thing from reoccurring. Their entire marketing and stock distribution plan is currently based upon false data.

Without knowing the actual situation, Rolex would logically conclude the market for their products in Chicago was blazing hot when in actuality it could be only much less active.

The scheme is actually a self-perpetuating as Rolex would like direct stock to these “hot” locations and diminish distribution to ethical AD’s who turn inventory less frequently.

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gwells
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Re: Whistleblower lawsuit involving major Chicago AD

Post by gwells » Wed Feb 17, 2021 5:28 am

that presumes this is a surprise to rolex. i mean... if that's true, wouldn't they already have done this? it's not like they didn't already know this was happening. shit, we knew it was happening, so you know they knew.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by Ryeguy » Wed Feb 17, 2021 6:24 am

I'm just guessing here, but I'm thinking there may have been some semi-intentional "ignorance is bliss" going on at Rolex corporate, especially during this pandemic where in store purchases were globally weak. Sales are maxed out, so why worry?

That said, just think about all the internal systems at Rolex this "underground distribution network" is effecting. Traditionally, companies use sales results to influence marketing spend, distribution allocations, etc. - all by region. Assuming Rolex uses these metrics, they are all completely incorrect as the watch reported to have been sold in an AD in Chicago, was actually delivered to a customer in Miami through a grey market reseller. The market metrics are all incorrect.

The grey market essentially moves Rolex from an AD distribution process to a web store distribution process which has a completely different customer experience (not in alignment with the Rolex corporate image).

My guess (based upon the corporate imposed requirements on AD's) is Rolex does not desire their customers to make their purchases via a web experience. This ultimately damages their brand image which is why they will act.
Last edited by Ryeguy on Wed Feb 17, 2021 6:58 am, edited 1 time in total.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by dnslater » Wed Feb 17, 2021 6:31 am

Always remember that Rolex is owned by a "non profit" foundation and has no shareholders to answer to. They are vertically integrated and I'm sure have a healthy markup on their products. There is no real motivation to fluctuate production to meet the demand from emerging markets for brief periods. They are playing the long game and have been under essentially the same ownership for a century. They could expand their production facilities to respond to a 5-10 year demand surge, but that my hurt them in the end if they have to lay off/downsize production when things slow down.
Last edited by dnslater on Wed Feb 17, 2021 6:32 am, edited 1 time in total.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by Seppia » Wed Feb 17, 2021 6:32 am

Companies are perfectly aware of what's going on in the field. They know in detail who is selling what, to who (I'm talking to the volume movers, DavidSW etc).
I have 18 years experience in sales for FMCG companies that have a fraction of the control that Rolex can exert on their distribution, and trust me when I tell you that every sales person (and their boss, and their boss' boss, up to the big ass VP of Sales) know exactly what's going on in the shadiest areas of the network.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by JBZ » Wed Feb 17, 2021 6:48 am

I'm sure Rolex knows this is going on. On a macro/bottomline level, they may not care. The watches they're shipping to AD's are getting sold. The watches are so desirable that people are willing to pay heavily inflated prices by purchasing through the gray market. On a business morality level, they may care, because they don't want to alienate their customer base and because they may want to be viewed as a good corporate citizen (albeit a privately held one).

But they don't have much incentive to act unless their product stops moving. Sure, they should try to prevent this sort of thing since it's the right thing to do, but will they? Rolex is a unique brand - like it or not they're the Coca-Cola or McDonald's of luxury watches. They can get away with things that other brands can't because they're the best known luxury watch company in the world and their products remain incredibly desirable. If there were suddenly a shortage of Blancpains, IWC's, or JLC''s, most consumers would just go and buy something else. Not so with Rolex - people who want a Daytona or a Submariner most often will not accept a substitute.

Patek is in a similar situation, though they have a much smaller client base due to price.
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JP Chestnut
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Re: Whistleblower lawsuit involving major Chicago AD

Post by JP Chestnut » Wed Feb 17, 2021 7:35 am

There's a difference between "knowing" and having actionable proof that consumers are aware of. While both can be ignored by a firm, most typically choose to act in the latter case.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by hoppyjr » Wed Feb 17, 2021 8:28 am

This is like a bunch of women in a crafting club. :lol:

It doesn’t matter if Rolex knew, what matters is what they do with this AD and how they address the larger issue with other AD’s who do the same.


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Re: Whistleblower lawsuit involving major Chicago AD

Post by Ryeguy » Wed Feb 17, 2021 9:28 am

Yeah, I know it is just idle, meaningless, chatter, but it is an interesting topic nonetheless.

I agree with Jacob, maybe suspicions can be ignored, but specific evidence is hard to sweep under the rug.

I also can't help but think about the massive expense Rolex spent to modify and cultivate this relatively new image of being "the world's best known luxury brand". Rolex invested wisely to transform themselves from being "a good quality, reliable, timepiece" to being a "statement" purchase. As someone once said, "Rolex offers the best $3,000 watch $10,000 can buy". You don't do that without creating and maintaining an "image" and "buying experience".

Sales leadership (broadly speaking) is focused on short term, immediate future vision. Rolex senior leadership, as stated above, is playing the long game. I suspect they will conclude an internet buying experience that is outside their highly controlled and cultivated AD network is ultimately damaging to their brand, even if it results in a somewhat decreased sales volume in the immediate future.

If nothing else, I'm curious to see how everything shakes out.

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Re: Whistleblower lawsuit involving major Chicago AD

Post by gwells » Wed Feb 17, 2021 3:22 pm

i just agree with andrea. you're being incredibly generous with Rolex to call it "suspicions." it's hard to believe they haven't known exactly what's going on for a very long time. and while the system is broken for watch buyers, it doesn't seem to have hurt rolex's bottom line and thus they haven't done much about it.

honestly, i doubt this will change much (unless lawsuits like this start happening all over the place and they're forced to confront it). the only people who see this and care from the owners perspectives likely already know it's been going on for years. it's not new, it's just a chance for a few of us to say, "good, maybe someone's getting some comeuppance here for a change." but the average watch buyer probably won't even know there was a single lawsuit in one city with one dealer, won't realize it's part of a much larger thing that's been going on for the better part of a decade (maybe longer?), and probably won't get worked up about it. so business as usual for rolex, maybe with a new AD in chicagoland.

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toxicavenger
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Re: Whistleblower lawsuit involving major Chicago AD

Post by toxicavenger » Wed Feb 17, 2021 5:48 pm

rolex is just a bunch of dickweeds

drster
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Re: Whistleblower lawsuit involving major Chicago AD

Post by drster » Sun Feb 28, 2021 12:49 pm

This is interesting. I bought some watches from CD Peacock, Rolex and Patek. They found out I flipped them and told me they would not sell to me anymore. I even bought my wife a watch which she still owns and I bought some jewelry there. This was at the Oakbrook store. Funny thing is whenever I talked to the salesman he would tell me how much the different models were selling for on the gray market. This was before they banned me.

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JP Chestnut
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Re: Whistleblower lawsuit involving major Chicago AD

Post by JP Chestnut » Sun Feb 28, 2021 12:53 pm

drster wrote:
Sun Feb 28, 2021 12:49 pm
This is interesting. I bought some watches from CD Peacock, Rolex and Patek. They found out I flipped them and told me they would not sell to me anymore. I even bought my wife a watch which she still owns and I bought some jewelry there. This was at the Oakbrook store. Funny thing is whenever I talked to the salesman he would tell me how much the different models were selling for on the gray market. This was before they banned me.
I guess they were pissed that you enjoyed the extra margin off the flip.

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gwells
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Re: Whistleblower lawsuit involving major Chicago AD

Post by gwells » Sun Feb 28, 2021 1:56 pm

You obviously weren’t kicking back the cash they expected.

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