23-11-2021, 08:16 AM
(22-11-2021, 11:30 PM)shadow_walker Wrote:(21-11-2021, 04:15 PM)Choon Wrote:(16-11-2021, 02:44 PM)shadow_walker Wrote: It is very normal for customers to give good reviews. Sales associates will ask customers to give reviews and customers will give 5 stars as they hope to get their allocation to the sport watches.
As a buyer of watches, I am confident that THG's margin will continue to expand. In the past, ADs have to give discounts for Rolex watches. Today, the resale value of Rolex is much higher than the RSP, especially for the sport watches. A Daytona is worth 20-30k premium in the resale market compared to the price that customers will purchase from the AD.
In order to have a chance to apply for these sport watches, you have to buy the unwanted watches from the AD. The unwanted watches used to be the Rolex datejust and oyster perpetual, but today it is no longer possible to buy these watches. Therefore, you have to buy from other non-Rolex brands to be deemed a loyal customer. Non-Rolex brands have much higher margin than Rolex, which is why ADs margin will only expand. If you are not Rolex, Patek, Richard Mille, AP, you can only rely on the ADs. Revenue growth might not be very impressive, but the margin expansion is huge from the change in mix. Recently, I have observed that non-Rolex shelf is getting empty too and this is a sign of the demand.
https://www.rolex.com/rolex-dealers/sing...#mode=list THG is the biggest distributor of Rolex in SG. The shortage in Rolex has benefitted Rolex, ADs, 2nd hand dealer and customers. Everybody wins other than people who are new to Rolex. Will secondary prices for Rolex ever fall? Nobody knows unless perhaps in a global economic crisis. But certainly not in an environment where many got very rich from the markets, properties and crypto.
"If you are not Rolex, Patek, Richard Mille, AP, you can only rely on the ADs."
Even if it is a brand with some legacy, class and poise, and retailing in the 5 digits (say F.P. Journe, Ulysse Nardin) - these brands by just themselves are not viable commercially?
Certainly some overgeneralisation on my part, niche brands like F.P. Journe won't have issue selling by themselves. Omega has also been improving on its strategy and market positioning. However, there are a number of brands in which you can purchase brand new watches on the secondary market at more than 40% discounts.
Prices of watches are transparent and you can easily do a quick search on Carousell or Chrono24. When you can buy a brand new watches at more than 40% discount on the secondary market, most people won't buy it from the ADs.
Why Rolex sports watches such as the Rolex Oyster Perpetual are so hard to find and pre-owned models cost twice as much as new ones | South China Morning Post (scmp.com)
The great Rolex watch shortage (yahoo.com)
Rolex can increase its production to meet the shortage, but they understand the value of scarcity. Scarcity creates demand in luxury and allows them to raise prices. Yet, Rolex still requires the ADs as a scapegoat. Rolex: "Finally, it should be noted that Rolex watches are available exclusively from official retailers, who independently manage the allocation of watches to customers."
https://www.rolexforums.com/showthread.php?t=804563
Rolex has been reducing the number of ADs, so that they can ensure adequate supply for the bigger ADs.
As long as Rolex remains in shortage, THG will have higher ROE through higher margin and higher inventory turnover. Walk in to THG stores and you will see how empty the shelf is. Even the non-Rolex shelf is no longer fully stocked.
Thks for sharing.