It’s been almost a year since the release of the Rolex GMT Master II ‘Pepsi’ ref. 126710BLRO in stainless steel and we can’t wait any longer to see what Rolex will be unveiling at the end of the month during Baselworld 2019 from where we will be reporting live with all the novelties. Even though we are excited about all the Rolex novelties coming out this year, the most we are intrigued about is not necessarily that. While it is very likely that Rolex will release a new Milgauss or maybe a new GMT Master II ‘Coke’ and perhaps downsize the Explorer II to 40mm, what we can’t stop thinking about is how much longer the price bubble will hold before it bursts. Will it be Rolex the one opening the flood gates and burst the bubble, harming in its way all the grey dealers and those that paid way above retail for watches they couldn’t get at the authorized dealers?
While the Rolex GMT Master II 'Pepsi' ref. 126710BLRO has a retail price of only USD 9,250, most buyers of this watch have been willing to pay a premium through the grey market dealers with prices commanding as high as USD 22,500 and at an average around USD 19,500.
Considering that this is a stainless steel Rolex watch, it is almost unfathomable that someone would be willing to pay as much as the price for an Audemars Piguet Royal Oak ref. 15400 for this particular piece. The truth is that thanks to the grey dealers, those that can’t get a GMT Master ‘Pepsi’ through an authorized dealer, can still enjoy what it’s still one of the hottest watches out there. Nowadays, seems like “you gotta pay if you wanna play.”
Under the current pricing bubble, most tend to believe that the watch brands are limiting the supply of specific models and creating an artificially inflated demand. However, more than anything this is caused by some arrogant and cocky authorized dealers that won’t sell the watches kept in their vaults unless it’s to someone that they know or a regular customer of theirs —despite that he/she might end up selling the timepiece for a profit. Are some authorized dealers so cocky that acquiring new clients is no longer appealing? Is it worth it saying “no'“ to buyers that could become loyal customers with a high potential for big future purchases?
While the Baselworld novelties to be unveiled might lower the demand of the current models that are keeping the bubble afloat, it is just a matter of time before people realize that is not worth overpaying for watches that should be worth their retail price. Isn’t that the real reason why watch brands have priced them a certain way? Why would someone be willing to pay double for something that is not worth it? Is it about bragging rights among other watch collectors? Instagram pretentiousness? Or is it merely because they want what they can't have no matter what? Regardless of the reasons why, this needs to stop before customers continue to get alienated and discouraged from buying certain brands involved in this type of practices mostly from some authorized dealers that are the ones really limiting the inventory.
In sixteen days, we’ll get to see which timepieces take the new spots as far as watch frenzy goes or if the bubble will finally burst. Will the new releases cause the secondary market prices for the Rolex GMT Master II ‘Pepsi’ or the black cerachrom bezel Daytonas amongst other references to finally drop? Well, it all depends on what gets released, if Rolex decides to increase allocation to authorized dealers and if ADs finally decide to sell you what they prefer in the back for their ‘so-called’ VIPs.
Are there any specific Rolex models that if discontinued, will maintain the bubble afloat and allow for it to get even bigger? If the GMT Master II ‘Batman’ and the Submariner ‘Hulk’ get officially discontinued, will we see another big price spike in the secondary market where these two watches are already commanding fifty percent or more above their retail prices?
Whether the bubble bursts or not, the only thing that we can hope for is for brands to refine their distribution model and product allocation strategy. Furthermore, brands should pressure the authorized dealers to sell their watches to any customer that walks through their doors without alienating and turning them away as if their money wasn’t worth anything.
Allocating the right amount of product by AD is also crucial if brands want to continue to build brand loyalty, recognition, and love for their product. However, if the AD is the one plugging things up, the allocation issue might not help either. When someone is ready to buy a watch at full price, the AD shouldn’t turn that buyer away by implying that they could be a grey dealer. In my opinion, making that assessment is not rocket science for authorized dealers, and they can read customers quite well.
Additionally, practices like the removal of protective plastics by the authorized dealers —at the time of purchase— are not the solution either. Removing the plastics is something that watch collectors should still be able to enjoy doing at home while sipping on a glass of wine or scotch. Imagine walking into an Hermès boutique and having the sales associate remove all protective plastics, tags, dust bag and pre-formed foam that comes with a USD 20,000 Birkin bag. It should still be the buyer’s decision when and how that gets done to safeguard their purchase.
The real issue behind this bubble about to burst lies within the authorized dealers that are cherry picking whom they’re selling to and for allowing for some of their unscrupulous sales associates/managers get rewarded by end customers to get the product allocated to them. It’s merely surreal that you can’t find a stainless steel Rolex sports model anywhere even when Rolex produces close to one million watches a year.
Thank God for the grey dealers that can still put a smile on the face of watch collectors as some cocky ADs can’t do that anymore lately. Hopefully after Baselworld 2019 things will change for good.
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