Rolex, the star of the watch industry, has always been a hard currency in the hearts of watch fans. Even after many years, Rolex's classic models are still highly sought after and timeless, and some special models or celebrity watches continue to set global auction records at sky-high prices. New Year's price increases are the norm for many luxury brands, and Rolex is no exception. As consumer demand continues to be strong, just after New Year's Day 2023, Rolex made its first round of price increases of the year.
Precious metal models have increased significantly
Rolex usually adjusts prices globally in January every year. However, since 2022, the annual price adjustment seems to have become more frequent. In response to global inflation and currency depreciation, in January 2022, Rolex raised retail prices in most markets around the world, with an average increase of 3.5%. Later, in September and November 2022, Rolex adjusted the prices of submariners and Daytona in the UK and Eurozone markets respectively, with an average increase of 5%. Just four months later, the price increase was finalized again.
In the 2023 New Year's price increase, whether it is the popular watch Submariner series, Daytona series, Greenwich series, or classic series watches represented by the log, oyster perpetual, day calendar, etc., are among the price adjustments this time. From the price point of view, Rolex's popular watches have increased by about 2%-5%, gold watches have increased by about 6%-8%, and precious metal watches have increased significantly more than steel watches.
Image source: Visual China
The 21st Century Business Herald reporter checked the official website of domestic Rolex and found that taking the Submariner series as an example, many people's "dream memes" - commonly known as Rolex's "green water ghost" Submariner series date green disk watch, the previous official price was 82800 yuan, after the price increase was 84400 yuan, an increase of 1600 yuan, an increase of about 2%. The official retail price of rose gold green roditona in 2022 was 314,600 yuan, and after this round of price adjustment, it rose to 324,400 yuan, an increase of 9,800 yuan, an increase of 3.1%.
The original retail price of the Oyster Perpetual Cosmometer Daytona Steel White Dial Watch (also known as "White Steel Di") was 113,000 yuan, and after the price adjustment, it was 115,500 yuan, an increase of 2,500 yuan, or 2.2%. The price of Rolex M116503-0004 Kinditona increased by 9,000 yuan from the original 140,100 yuan to 149,100 yuan, an increase of 6.4%.
According to Barclays analysts, not only in the Chinese market, but also in the US and UK markets, the price of Rolex has increased by about 2.5% on average. According to analysis, in this year's wave of New Year price increases, the price of the most popular Rolex watches in the United Kingdom and the United States has increased by 1% to slightly more than 3%. The price of a Rolex rose by an average of about 2.6% in the UK market and 2.2% in the US. Although Rolex did not respond to the reasons for this round of price increases, some industry insiders pointed out that Rolex's price increase can be regarded as a way to protect the brand's own profits in the event of inflation.
Barclays analysts Richard Taylor and Pallav Mittal noted in a client memorandum note: "Investors are accustomed to 'price increases' as a key feature of attractive sectors and it is encouraging to see such sustained price increases given that we do not believe price increases will have a noticeable impact on trading volume." Barclays also said that Rolex's price increase is also beneficial to retailers such as Watches of Switzerland Group Plc. Watches of Switzerland is the UK's largest Rolex distributor, deriving about half of its revenue from Rolex.
The "value preservation artifact" of the gold of the racing house
It is worth noting that this round of price increases has brought the official suggested retail price of some Rolex watches (mainly steel sports models) closer to their secondary market prices.
Luxury watches have always been a good investment option, and Rolex watches have performed particularly well in the secondary market. According to luxury watch e-commerce Chrono24, about 25% of searches on their website are related to Rolex; In addition, Rolex watches account for about 14% of the watches sold on their platform, of which four-fifths are second-hand Rolex watches.
In recent years, the price of second-hand Rolex has been much higher than its original retail price, and it is still rising rapidly, the main reason behind it is that demand exceeds supply. It is reported that Rolex produces about 800,000 to 1 million watches per year, accounting for 24.9% of the luxury watch market (followed by Omega, accounting for 8.8%). With a market share of almost a quarter, Rolex occupies an absolute dominant position in the watch market. And Rolex's "fire" also allows people who want it to far exceed the supply of new watches. Since each Rolex watch is made in Switzerland, assembled by hand and subjected to strict quality inspections, it takes about 12 months before and after making a Rolex. The long scarcity and waiting have created the sky-high price and "hot" price of Rolex watches in the secondary market.
But popularity is one thing, and whether you are "good" enough in the test of the market is another. Paul Altieri, founder and CEO of Bob's Watches, a well-known second-hand luxury watch e-commerce platform and one of the world's top Rolex experts, said that since the price of many Rolex models continued to rise to the peak in March and April 2022, the transaction price has been slowing down since then. According to the statistics of the Bob's Watches platform, the average transaction price of Rolex watches began from $12,900 in May last year and gradually fell to about $11,000 at the end of the year.
Data from WatchCharts, a watch market consulting firm, also confirms this price trend: in the case of the second-hand Rolex Daytona watch, the price of the watch once reached a peak of $48,500 in March last year. However, after "reaching the top", its price began to gradually weaken, and the current price on the secondary market has dropped to about $30,000.
Although the price of used Rolex watches in 2022 has experienced "mountain and trough" fluctuations, experts say that in the long run, the return on investment of Rolex watches will still stand the test of time.
According to a market research report released by Bob's Watches earlier, when the time span is extended to 2011 to 2021, the average price fluctuation trend of Rolex roughly follows the average performance of global stock market indexes, and from 2017 it showed a clear upward trend, followed by a larger surge in 2020. As of February 2022, the average price of a Rolex is over $13,000, almost three times the $5,000 in 2011. Paul Altieri said that in the decade from 2011 to 2021, Rolex's return on investment has outperformed the gold, real estate and stock markets.
"Eye" the secondary market
According to a previous report released by McKinsey, the total value of the second-hand luxury watch market is currently estimated at $20 billion and is expected to rise to $29 billion by 2025. In the past, Rolex brand dealers could only make a one-time profit in each watch transaction; On the contrary, buyers in the secondary market can continue to profit through multiple transactions, and for some popular watches, second-hand sellers profit even more than the primary market.
As one of the world's most recognized durable and high-quality Swiss watch brands, Rolex faces the demand for most models of watches in short supply, and the price of some of the brand's watches continues to be high in the second-hand market, and testing the waters to participate in the second-hand market seems to have become an inevitable choice.
In early December 2022, Rolex officially launched a Rolex Certified Pre-Owned programme. In its official press release, Rolex said: "Because Rolex watches are durable, they are often 'lived' more than once. The Rolex Pre-owned Watch Certification Program will officially authorize the brand's official dealers to sell authentic certified Rolex pre-owned watches. ”
In the press release, Rolex particularly emphasized that second-hand watches that are allowed to be recycled and certified need to be "produced for at least three years", that is, only watches that have been produced for more than three years can obtain their second-hand certification, which can undoubtedly play a good role in restricting the hype of new watches.
Specifically, each watch that enters the certification program will be certified, refurbished and repaired by Rolex's dedicated service department. A certified watch will be accompanied by an exclusive seal for a second-hand watch certified by Rolex, which proves that the Rolex watch is officially certified as genuine, has the quality standards inherent in all Rolex products, guarantees its normal operation, and will also come with a new two-year international warranty card.
These certified pre-owned watches will then be available in Bucherer boutiques in six countries (Switzerland, Austria, Germany, France, Denmark and the United Kingdom) starting in December 2022. Other official Rolex partner retailers who have chosen to join the program will be able to sell these certified II watches from spring 2023.
Industry insiders pointed out that watch brands continue to invest in and layout their own second-hand watch trading platforms, which will help maintain the future growth of the second-hand watch market. Eugene Tutunikov, CEO of SwissWatchExpo, said that although the price of used Rolex certified watches will be higher, because it will be a time-consuming and costly process to ship the watch back to the official Rolex service center for certification and repair, he is still very optimistic about Rolex's second-hand program, believing that the second-hand certification program is likely to push up the demand for second-hand Rolex watches.
"[After the launch of the program], there will be more consumers willing to buy used Rolex watches because they know that there are now more places to change hands, which is good news for everyone involved." Eugene Tutunikov also pointed out: "Because even cooperative dealers can now become Rolex buyers, the additional demand in the market has increased, and the price of Rolex may become more stable and may even appreciate." ”
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