I see lots of people talking about watch prices but often I see the definition of price moving around and used inconsistently. This raises a bunch of questions but the one I keep coming back to is:
Q. If a brand changes its distribution model (Seiko/Omega/Breitling for example) such that MSRPs don't really change but discounts are smaller and harder to get are they raising prices?
Personally I don't think so but what are your thoughts?
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Agreed, I look at discounts as one-off deals. If I can get them for every watch, amazing, if not, it is what it is...
I know this isn't an economics discussion board, but I think some econ could prove enlightening here.
Thus, if MSRP for a product doesn't change, but discounts start drying up, the manufacturer didn't raise prices. The manufacturer doesn't control the market / real price. The market controls the market / real price. The market raised the price of the watches.
I know this isn't an economics discussion board, but I think some econ could prove enlightening here.
Thus, if MSRP for a product doesn't change, but discounts start drying up, the manufacturer didn't raise prices. The manufacturer doesn't control the market / real price. The market controls the market / real price. The market raised the price of the watches.
Overall I'd agree however your post raises a couple of interesting points.
1. Breitling. As an outsider, the margins on Breitling in the USA are way higher than elsewhere. The Premier B09 I'm looking to buy in the US has an MSRP 8400USD pre shipping and pre tax - that's 11,866AUD. That watch in Australia has an MSRP of 10990AUD POST TAX (a gst of 10%). Take away the tax and the equivalent Oz MSRP is 7000USD - 17% less.
2. I think what people are reacting to is the manufacturer using inventory and distribution controls to effectively intervene in the market to curb discounting and put a thumb on the scale of the "free" market. Marc from long island has been absolutely open that Seiko will cut off retailers discounting too heavily these days. Federico did a video saying Breitling and Omega are doing the same thing to his suppliers (so Breitlings are no longer on Delray). Lots of brands are clearly using special/limited/capsule collections to prevent large excesses of inventory and mass migrations to the grey market. Likewise there are more boutiques, less ADs, more boutique and (OEM) online only specials.
As I said I do not see this as the manufacturer raising the price but from viewing videos and comments 99% of people seem to think it is - ie look at pretty much everything said about the pricing of the 5KX.
The price of a watch is what somebody is actually willing to pay for it.
Overall I'd agree however your post raises a couple of interesting points.
1. Breitling. As an outsider, the margins on Breitling in the USA are way higher than elsewhere. The Premier B09 I'm looking to buy in the US has an MSRP 8400USD pre shipping and pre tax - that's 11,866AUD. That watch in Australia has an MSRP of 10990AUD POST TAX (a gst of 10%). Take away the tax and the equivalent Oz MSRP is 7000USD - 17% less.
2. I think what people are reacting to is the manufacturer using inventory and distribution controls to effectively intervene in the market to curb discounting and put a thumb on the scale of the "free" market. Marc from long island has been absolutely open that Seiko will cut off retailers discounting too heavily these days. Federico did a video saying Breitling and Omega are doing the same thing to his suppliers (so Breitlings are no longer on Delray). Lots of brands are clearly using special/limited/capsule collections to prevent large excesses of inventory and mass migrations to the grey market. Likewise there are more boutiques, less ADs, more boutique and (OEM) online only specials.
As I said I do not see this as the manufacturer raising the price but from viewing videos and comments 99% of people seem to think it is - ie look at pretty much everything said about the pricing of the 5KX.
Yes, agreed 100% that the manufacturers are working hard to optimize channel strategy, which they absolutely should be doing to try to maximize profits and build long-term brand equity.
Breitling and Omega, wish to position their goods as "exclusive" in the public's mindset. Even more, they wish to signal to the public that their watches are as desirable as the equivalent Rolex. However, the Omega and Breitling brands pale in comparison to the Rolex brand. (Hey, all you Rolex haters / Omega fanboys, don't get angry, I'm an Omega fanboy too - look at my handle: Omega Nut.) To do that, they set very high list prices, and have contractual arrangements with their ADs to prevent large discounting that would admit, "Okay, fine, our brand is not as strong as Rolex's, so we gotta sell at a lower price." And, as part of this strategy, Breitling and Omega are, rightfully, opening more and more boutiques and culling low-volume ADs. Again, very smart on their parts.
Nonetheless, the market price is the market price, set by supply and demand.
To your point about YT Videos and reviews and forum posts complaining about the evils of the grey market, and the conspiracy-mongering about manufacturers purposefully suppressing supply in order to raise prices... My key take-aways from this vast cesspool of commentary are three-fold:
The brands must have an idea of what their watches are actually selling for at retail, so if they make adjustments to their distribution model to curtail discounts, they are actively attempting to raise transaction prices up towards MSRP levels. From that standpoint I do feel that they are indeed raising prices. Unless the distribution chain simply lives with slimmer margins, it will result in higher prices to the consumer, and the brands are fully aware of that. Of course, the market may dictate that their products simply won't sell unless the original discount levels are in place.