It is our understanding at Global Watch Shop that the Rolex price increase 2018 will come into effect from 1st October 2018 across all Rolex models. This we understand will be a UK price increase only, whilst prices in the Eurozone will stay the same. The increase is expected to be approximately 5% across all models. The 2018 Rolex price increase is the first in the UK since November 2016 when prices were increased by approximately 10% in the UK.
A Rolex price increase in the UK but not the Eurozone would seemingly be a strategic move by Rolex to close the gap between the UK price, and the Eurozone price where there is currently a difference of approximately 13%, meaning that the UK is still, even after the 2018 Rolex price increase, one of the cheapest places in the world to buy Rolex watches.
With the value of preowned watches tracking the value of new watches, a Rolex price increase is generally a welcomed event as it drives the price higher, making Rolex watches an attractive investment. However, there are a number of factors that potentially make this price increase insignificant at best and potentially irrelevant to the price of preowned Rolex watches.
With a lack of supply of Rolex watches in the UK market as well as the increased demand, prices have already largely caught up with the inefficiencies between the UK and Eurozone Rolex prices, with preowned prices being closer allied to the new Eurozone price. The UK increase of 5% will have little - if any - effect on that and preowned prices we suspect will continue to be based on the Eurozone equivalent.
There are two outstanding issues and inefficiencies with the Rolex pricing structure between the UK and Eurozone that could be addressed through a Rolex price increase.
Firstly, we have approximately 13% difference between the two price lists (when you allow for currency exchange rates), and secondly, the issue of premiums over RRP for Rolex Sports Models which generally adds between 20% and as much as 150% to the retail price of the watch. Given that we currently have free trade between the Eurozone and the UK, and that Brexit negotiations will soon be coming to a head (revealing if free trade is still an option), now may not be the best time for Rolex to solve the issue of price differentials between the two zones, although the Rolex price increase of 5% does start to close that gap.
The second issue, of premiums over the list price being commanded on all the most popular models, can only be addressed by a combined price increase against both the UK & Eurozone price lists - so again, this does not entirely address the problem.
So why now? Rolex are not a brand that publishes their strategic direction, so we can only speculate with our prior experience in mind. My view is that the Rolex price increase 2018 maybe the first of a number of increases. The timing means that we should not expect another increase before we have certainty on the outcome of Brexit. With the free trade agreement between the Eurozone and the UK, having a price differential between the two zones causes inefficiency in the market and drives buyers towards one zone (the UK) rather than the other (Eurozone) in search of cheaper prices. This is unlike the situation between the UK and the USA (or the Eurozone and the US) where trade tariffs apply, so there is no need to align prices. Should there be no free trade deal between the UK and the Eurozone, Rolex will have less need to find alignment in prices between the separate pricing structures. However, if (as expected) a trade deal will be agreed, then we expect the value of the pound to rise against the value of the Euro, further narrowing and possibly eliminating the price differentials between the two pricing structures.
This will just leave the issue of premiums over RRP. Currently, on many Rolex watches, retail price in the UK is an irrelevance for most people when looking to buy, as (with the exception of a small few) it is proving impossible to buy Rolex watches at RRP. This would indicate that Rolex undervalue their watches when compared to the value that the market places upon them. This I believe will lead Rolex to significantly increasing the retail price of their most popular models, bringing the price more in line with the market valuation as it stands. This would finally solve the problem and bring a sense of balance back to the market.
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