As a consumer of watches, I have become increasingly concerned with the state of “free market pricing” that I have observed all around me. In the past few days alone, I have had at least five conversations with people who have expressed something between fear and frustration at seeing a price tag for a popular watch well above the MSRP (in some cases the double the retail price). None of these people seemed particularly excited about this and there isn’t much enthusiasm expressed about buying these otherwise desirable watches at this price point. This isn’t the first time I’ve written about this issue, and this post is intended as a direct call to other consumers on what I think is the wisest thing to do about it – don’t buy any watches above retail price. .
For those of you who are interested in the background to this issue and why some modern watches (including totally new ones) are listed at retail prices above, please read my article on Watch Speculators and Scalpers. Here I tackle the complicated question of explaining, from a watch market perspective, why all of this is happening. However, the solution to the problem of overpriced new watches will not come from industry. Even though frustrated customers who cannot buy a new Rolex are not a good thing for Rolex, it is difficult for them not to secretly take advantage of their still strong “it girl” status. Additionally, Rolex has a good point in its defense when asked the question “Why can’t you just make more watches out of steel?” “
Rolex could, but they don’t. First of all, in order for Rolex, or any other company, to do that, the decision would have to be made a few years in advance. Watch productions are expensive and do not happen on a whim. Rolex, like other watch brands, is committed to minimizing risk and often funds watch production based on orders from retailers. It doesn’t matter whether a company like Rolex can more or less dictate what retailers buy, they have to predict new years of production in advance. Rolex maintains that if they make the internal decision to increase production of steel watches now, who can say that the current trend of high demand for a few all-steel models will remain strong? Keep in mind that if Rolex produces too many steel watches and the market has too many, the selling price will drop. Rolex can authentically state that overpriced Rolex watches (those listed at retail above) no longer make any money for the brand, as their profit ended when they sold the watch at a wholesale price at retailer. What happens to the watch after that does not put money directly into Rolex’s coffers.
So while watch brands like Rolex and Patek Philippe aren’t to blame for the scarcity of steel watches, they aren’t doing too much to end it either. Until relatively recently, this increase in demand was limited to a few key watch models. Lately I’ve started to see it spreading. And it is not spreading in my opinion due to market demand. On the contrary, I think the practice of price surveillance above the retail price is starting to become the result of dealer price speculation. In other words, people who sell watches all of a sudden claim that they are in high demand and charge more than retail. How is it possible? This is possible because there is a perception that consumers of luxury watches are now accustomed to the practice of overpricing. No one really controls the prices of watches. Other than MSRP values, there is no bible for pricing watches. This allows someone who sells a watch to select whatever price they want. As long as they put that price online and keep a calm voice when talking to a potential buyer, they can get away with some form of fraud.
This is not capitalism at its best. Other watch enthusiasts have pointed out to me that as long as people are willing to pay particular prices, dealers will get away with charging those prices. So, in a sense, it is the consumer’s fault for allowing the market to get away with deceptive pricing practices. Having a rule to avoid spending more than retail on a watch would technically solve the problem, as consumers simply wouldn’t break the rule. Is that a good rule? Let’s examine the implications of following it.
Many of the watches retailed for above are desirable watches. So if you have to spend more but you really want the watch, that’s okay, right? Not necessarily. I start with the premise that there are many great watches that can be purchased at or below retail price (like the watch you see above). In other words, there is no real vacuum in the market for high quality watches at retail prices. Of course, it might not be a particular Rolex or some other brand’s setup, but if you want a really nice watch that will give you a crisp look and serve you well for years to come, then there are many options, my friends. What I mean is that there is no real shortage in the market that could theoretically justify overspending for a consumer. If you want a beautiful watch of the kind that is not too expensive, there are currently no shortage of options.
So, if you avoid overspending, you still have a great assortment of watches, but you are missing out on a good “investment?” Now comes the delicate concept upon which lies the heart of my argument. The people who really feel comfortable spending more money than the retail price on a wristwatch are mostly those who just want to resell it themselves (at an even higher price). I would have much more sympathy for the practice of spending more than the retail price on watches if it were done by people who want to wear and enjoy them for years to come. This is not what happens most often. For the most part, the practice of overvaluing watches is carried out by people who first buy them at retail and, given the perceived desirability of the market, resell the watch for more than the retail price. Keep in mind that in many cases, if they sell the watch at retail, they are not making any money. So these forms of watch speculators have to sell above retail if they are to make any money. I imagine these people as types of stock markets feeling uneasy about the global economy and eager to find some type of alternative investment vehicle. More than one of them realized that men with more than enough disposable income love watches and decided that they are the best things to trade. Who wins? Not the people who wear and collect watches, for the most part.
I hope I have explained that the winners in the practice of overvaluation are not traditional watch consumers, watch brands or watch retailers. On the contrary, the most sordid underworlds in the watch retail world, as well as the unenthusiastic investors, are those who indulge in an already expensive hobby. Think about it: today’s collectors already have to come to terms with the fact that traditional timepieces are expensive. For the most part, they must be because they are produced in such small quantities. You cannot expect a retail price comparable to a mechanical watch in 1970, as mechanical watches are not produced nearly as much as they were in the 1970s. good timepieces are here to stay. Would you as a consumer like to incur even higher costs for the same items? I did not mean it.
If you want a good watch right now, you don’t have to spend more money than retailing to get one. No major city or Internet surfing session is devoid of fine watch retail offers at retail prices or below. I simply reject the idea that ‘must-have’ watches are important for some reason other than the fact that they bear the name of a hot brand that trendy guys can’t help but be associated with or that sharpens. the lips of speculators.
As long as real watch consumers (not just other speculators) buy new watches for more than the retail price, the dealers will speculate and charge above the retail price. The only way to end the practice is to dry up the market by not buying them. Buying a watch from a dealer at a higher retail price should always be avoided. If you want to do a peer-to-peer transaction because someone is only willing to give up a wrist watch for more than retail, this is a rare enough (and private) situation that it doesn’t matter. ‘not affect the market. For now, my advice is to apply the rule that friends don’t let their friends spend more than the retail price on a wristwatch.