Interesting thread on TRF - Rolex IS watching

[demer03]

construction budgets are nuts. and it's nearly impossible to bid accurately with the unstable market.

Yep. School project I was working had an 85M budget and bids came in at 89 and change in January. CM was ready to proceed but district decided to wait because prices would “come down”. County over had one that was budgeted at 89M and bids came in at 112 two weeks ago. They are going to proceed as there is real concern it will only get worse.

Strange days.

Get ready for nation-wide local and state agencies to come in wildly over budget on fuel costs this year. I think every agency with a fleet of vehicles to be effected.

Even if you over-estimated fuel costs back in October when you submitted your budget, I don’t think anyone buffered enough to anticipate this.

There is a comic named Justin McKinney who was a former Deputy Sheriff in Maine. He tells a joke about how his county was so poor, they had to have internal debates about pursuing criminals based upon how much gas the cruiser had in the tank.

It’ll be interesting (not in a good way) to see how our taxes will be effected next year, or what budget items / services will be cut.

Yes! We’ve already blown the years budget on natural gas (not only heating but mainly our paint line).

[JP Chestnut]

construction budgets are nuts. and it's nearly impossible to bid accurately with the unstable market.

Yep. School project I was working had an 85M budget and bids came in at 89 and change in January. CM was ready to proceed but district decided to wait because prices would “come down”. County over had one that was budgeted at 89M and bids came in at 112 two weeks ago. They are going to proceed as there is real concern it will only get worse.

Strange days.

There is a comic named Justin McKinney who was a former Deputy Sheriff in Maine. He tells a joke about how his county was so poor, they had to have internal debates about pursuing criminals based upon how much gas the cruiser had in the tank.

That’s not a joke — it’s reality: https://www.thedrive.com/news/michigan- ... d-to-calls

[Bob1035]

construction budgets are nuts. and it's nearly impossible to bid accurately with the unstable market.

quoted for truth. PM for a mid size GC here. Its literally the wild west right now, its bizarre. We're trying to release/buy everything we can RIGHT F'NG NOW! and figuring out ways to store on our sites.

I'm hoping the tempo of the business will at some point make the Rolex/Tudor market actually relevant to me

[demer03]

construction budgets are nuts. and it's nearly impossible to bid accurately with the unstable market.

quoted for truth. PM for a mid size GC here. Its literally the wild west right now, its bizarre. We're trying to release/buy everything we can RIGHT F'NG NOW! and figuring out ways to store on our sites.

I'm hoping the tempo of the business will at some point make the Rolex/Tudor market actually relevant to me

Well, hello Bob. 12345 and 11610 supplier here. Let me know if I can help

[Ryeguy]

construction budgets are nuts. and it's nearly impossible to bid accurately with the unstable market.

Yep. School project I was working had an 85M budget and bids came in at 89 and change in January. CM was ready to proceed but district decided to wait because prices would “come down”. County over had one that was budgeted at 89M and bids came in at 112 two weeks ago. They are going to proceed as there is real concern it will only get worse.

Strange days.

There is a comic named Justin McKinney who was a former Deputy Sheriff in Maine. He tells a joke about how his county was so poor, they had to have internal debates about pursuing criminals based upon how much gas the cruiser had in the tank.

That’s not a joke — it’s reality: https://www.thedrive.com/news/michigan- ... d-to-calls

Wow - what once was humor is now reality.

I strongly suspect this strategy will be copied by departments across the country. They are all in the same boat and this seems like the only way to try to keep close to your budget.

[DON]

Rolex created the problem- go look at the OP 41’s in orange, pink, Turqoise all retail for $6000 and selling for 3-5 times msrp… I wonder how these grey mkt dealers are getting brand new watches— my guess.. from the ADs… if Rolex increased production they would squash the grey mkt or at least reduce the crazy mark up. Again, Rolex created the problem..

Absolutely. I’m sure many AD’s are getting a kickback from grey dealers, so selling inventory to them. Rolex could absolutely end this with increased production.

Are they getting a kickback? If someone offered to take slow sellers or dead stock off my hands. Cost would suit me fine. I would think that gray market dealers are buying the better watches from customers. Can't see why AD's would be flipping them to GM sellers when they could sell them them selves all day long. You want the better sellers in stock to bring the buyers in

Increasing production wouldn't help. Just foist more the same dead stock on AD's except in higher quantities. Those watches have to go somewhere and if there's too many. Gray can't absorb, AD's can't sell and it hurts cash flow for other brands.

A lot of companies are going boutique anyways in order to maximize their profits and push the AD's off to the side

DON

[Ryeguy]

Rolex created the problem- go look at the OP 41’s in orange, pink, Turqoise all retail for $6000 and selling for 3-5 times msrp… I wonder how these grey mkt dealers are getting brand new watches— my guess.. from the ADs… if Rolex increased production they would squash the grey mkt or at least reduce the crazy mark up. Again, Rolex created the problem..

Absolutely. I’m sure many AD’s are getting a kickback from grey dealers, so selling inventory to them. Rolex could absolutely end this with increased production.

Are they getting a kickback? If someone offered to take slow sellers or dead stock off my hands. Cost would suit me fine. I would think that gray market dealers are buying the better watches from customers. Can't see why AD's would be flipping them to GM sellers when they could sell them them selves all day long. You want the better sellers in stock to bring the buyers in

Increasing production wouldn't help. Just foist more the same dead stock on AD's except in higher quantities. Those watches have to go somewhere and if there's too many. Gray can't absorb, AD's can't sell and it hurts cash flow for other brands.

A lot of companies are going boutique anyways in order to maximize their profits and push the AD's off to the side

DON

Hi Don -
I think your perspective makes sense if you perceive the Rolex stock to be "dead". I think the challenge is just the opposite. Market demand was so high, people were willing to pay well over MSRP for a Rolex.

My suspicion is that Rolex AD's know they can't sell watches over MSRP due to contractual agreements with the manufacturer. If a customer complained that AD "XYZ Jewelers" tried to sell a Sub for $20K, Rolex would probably come down on them pretty quickly. This is why we hear some stories about the only way to get a Rolex at a jeweler is if you also bought a bunch of other jewelry at inflated prices. Yes, you paid $10K for the Sub, but you also paid $15K for a $5K tennis bracelet. They got their bonus somewhere.

Alternatively, a grey market buyer might meet with that same XYZ Jeweler and say "I'll buy your entire Rolex stock for $2K over MSRP per watch and Rolex will never know." The jeweler makes some extra cash and the only way Rolex would find out is if they traced serial numbers from watches returned for service. Probably not for years down the road.

As for dead stock at AD's, I think luxury brands have a couple ways of dealing with it. Richemont famously bought back a bunch of watches from AD's and destroyed them so they wouldn't go to the grey market and devalue the brand in the eyes of the consumer.

I suspect Doxa has a similar requirement with their AD's, that unsold stock must be returned to Doxa for refund. This is why the recent Jomashop sale on Doxa's crashed.

Other brands probably have no contractual obligation for the AD to return unsold stock, so that is where the JomaShops and Ashfords of the watch world come in.

[JP Chestnut]

Rolex created the problem- go look at the OP 41’s in orange, pink, Turqoise all retail for $6000 and selling for 3-5 times msrp… I wonder how these grey mkt dealers are getting brand new watches— my guess.. from the ADs… if Rolex increased production they would squash the grey mkt or at least reduce the crazy mark up. Again, Rolex created the problem..

Absolutely. I’m sure many AD’s are getting a kickback from grey dealers, so selling inventory to them. Rolex could absolutely end this with increased production.

Are they getting a kickback? If someone offered to take slow sellers or dead stock off my hands. Cost would suit me fine. I would think that gray market dealers are buying the better watches from customers. Can't see why AD's would be flipping them to GM sellers when they could sell them them selves all day long. You want the better sellers in stock to bring the buyers in

Increasing production wouldn't help. Just foist more the same dead stock on AD's except in higher quantities. Those watches have to go somewhere and if there's too many. Gray can't absorb, AD's can't sell and it hurts cash flow for other brands.

A lot of companies are going boutique anyways in order to maximize their profits and push the AD's off to the side

DON

Hi Don -
I think your perspective makes sense if you perceive the Rolex stock to be "dead". I think the challenge is just the opposite. Market demand was so high, people were willing to pay well over MSRP for a Rolex.

My suspicion is that Rolex AD's know they can't sell watches over MSRP due to contractual agreements with the manufacturer. If a customer complained that AD "XYZ Jewelers" tried to sell a Sub for $20K, Rolex would probably come down on them pretty quickly. This is why we hear some stories about the only way to get a Rolex at a jeweler is if you also bought a bunch of other jewelry at inflated prices. Yes, you paid $10K for the Sub, but you also paid $15K for a $5K tennis bracelet. They got their bonus somewhere.

Alternatively, a grey market buyer might meet with that same XYZ Jeweler and say "I'll buy your entire Rolex stock for $2K over MSRP per watch and Rolex will never know." The jeweler makes some extra cash and the only way Rolex would find out is if they traced serial numbers from watches returned for service. Probably not for years down the road.

As for dead stock at AD's, I think luxury brands have a couple ways of dealing with it. Richemont famously bought back a bunch of watches from AD's and destroyed them so they wouldn't go to the grey market and devalue the brand in the eyes of the consumer.

I suspect Doxa has a similar requirement with their AD's, that unsold stock must be returned to Doxa for refund. This is why the recent Jomashop sale on Doxa's crashed.

Other brands probably have no contractual obligation for the AD to return unsold stock, so that is where the JomaShops and Ashfords of the watch world come in.

Honestly, I think both things happen. There are TONS of young guys who don't seem to know anything about watches on the Moda group with a random selection of high demand Rolex watches. I assume that most of those guys aren't buying constantly and in volume from ADs since they definitely can't float $200k per month in inventory costs. People like DavidSW or the huge Asian grays who have multiples of everything at all times are definitely not buying piecemeal from random dudes. They're cutting ADs in on their action without a doubt. Via what mechanism? Who knows, but you don't get 10 or 20 white Daytonas without some serious infrastructure.