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Rolex Buying Up Unsold Stock to Combat Gray Marketing

Rolex Becoming its Own Best Customer?

In what may be another sign of these troubled economic times, Rolex is reported in German-language Swiss newspaper Tages Anzeiger to have undertaken an effort to buy back unsold stocks of Rolex watches from Authorized Dealers’ shelves in an attempt to discourage merchants from dumping the product at fires sale prices or on the gray market.

To those unfamiliar with the intricacies of markeitng luxury goods like watches, the gray market can become a thorn in the side of brand marketers.  Not only must prices of luxury goods be carefully controlled thourgh distribution agreements, but if  desperate dealers in the authorized distribution network resell the watches wholesale to gray dealers the resulting competition can further push price levels down.

According to the article so far the practice has been mostly limited to dealers in Asia, though dealers in deliveries in Europe have been curtailed in Europe and dealers have already been warned against over-discounting to keep prices from falling.

Here’s a Google English translation of the article describing the buyback campaign, and here’s the article in the original German if you prefer.

Thanks to fellow collector “Don Aldo” for the tip that led to this post.

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Continuing the Discussion

  1. J.C. Biver in The Economist – I Already Have a Watch. linked to this post on 19 November 2009

    […] to higher discounting to move existing stocks out the door.   By contrast, even the venerable Rolex even had resort to buying back unsold stock from ADs in certian markets to head off over-discounting or wholesale dumping on the gray market by […]