January 10, 2022
by David Bredan
A new year in the Gregorian calendar brings many things. We won’t bore you with a cheesy list but cut right to the chase instead: The first days of 2022 introduced considerable and noticeable Rolex price increases, especially on steel luxury watch models. In this article, you will find the retail price increases on the most sought-after Rolex watch collections, along with our commentary.
Relentless inflation, increasing wages, and other costs of manufacturing, pandemic-related extra expenses, and a host of other catalysts have recently been driving prices of just about every consumer product sold in the developed world. Singling out watches, let alone a single watch brand, isn’t exactly fair, but it is necessary. So, let’s begin by saying two things.
First, given the aforementioned, it really is no surprise that wristwatch retail prices across the board will increase in 2022. Second, we are going with Rolex as an example because, in many ways, it dictates the actions, mood, and strategy of the greater watch industry – even by the admission of other major luxury watch manufacturers. According to Morgan Stanley research, Rolex accounts for one-quarter of the entire Swiss watch industry’s annual turnover, based on an implied retail sales value of CHF 8 billion in 2020. So what you are about to read regarding Rolex is likely to soon happen to the luxury watchmaker of your choice.
Contrary to the practice of most other major luxury watchmakers, Rolex admirably publishes the manufacturer’s suggested retail price (MSRP) of just about every regular production model prominently on the product’s respective page. Excluded from this rule are some of the ultra-high-end precious metal, high-jewelry, and “if you have to ask, you definitely can’t afford it” types of pieces. In a world where a great variety of regular-production Rolex watches are selling for 30-50% over retail, and sometimes a whole lot more, one thing Rolex can’t be blamed for is not making this piece of information available to you. How wrong / desperate / stupid / vulgar (pick one or more) it is to severely overpay for any watch beyond its retail price, we at aBlogtoWatch have authored many articles about, as well as on the supply and distribution issues and global dynamics in demand – including this year’s April’s Fools article where the joke was on Patek Philippe.
A major reason watchmakers need to be careful with hiking prices is that luxury watch pricing is very much a one-way street – where going backward is a very painful and unsustainable experience. Why? Because it is very easy to become a discounted luxury brand where customers quickly grow accustomed to calculating with and expecting an ever greater discount – once you’ve become a discounted brand, with a damaged image and pricing power, reestablishing the practice of systematically selling at retail becomes an extremely costly and often borderline impossible undertaking to accomplish. This is why, in 2018, for example, Cartier has ended a two-year inventory buy-back spree where it has purchased back 500 million Euros worth of stuck Cartier luxury watch inventory, all in an effort to avoid becoming a heavily discounted brand.
And so, the wiser luxury brands tend to exercise caution when increasing their suggested retail prices – which, mind you, already contain a hefty profit margin. For that to happen, at least one of two things has to be in effect, and to a sustained and heightened extent. For one, costs related to manufacturing, distribution, or marketing have to have climbed considerably, and without the promise of a decrease. Two, there has to be a demand that greatly exceeds supply. There have been luxury brands in every industry that have enjoyed momentary success, empowering them to jump the trigger and raise prices on existing products too fast – or abandon bread-and-butter collections and jump into a price bracket a category or two higher. Making a successful return after the often inevitable falling from the grace of the buying public is an even greater accomplishment than building a successful brand.
In short, there are many mid-to-long-term reasons why exercising great caution when hiking prices on luxury products is the prudent thing to do. And if there is one luxury brand that gives itself all the time in the world, planning for the long-to-very-long-term, free from the pressure of growth- and dividend-hungry investors of any kind — well, that would be Rolex. And so, for Rolex to increase prices, it is safe to say that both those aforementioned factors have to come into play — and come into play they have. It is fair to assume that pandemic-related safety measures, an admitted shortage in capable watchmakers (and all other professionals involved in the designing, manufacturing, finishing, and assembling of a luxury watch), and inter-industry cost increases (affecting suppliers of base materials, tools, etc.) have all taken effect. Furhtermore, Rolex management is, of course, well aware of the immense imbalance between its supply and demand, especially when it comes to its steel — Oystersteel — models such as the Daytona, Submariner, and lately, even the colorful Oyster Perpetual.
This context should help better understand the timing and the extent of Rolex’s 2022 retail price increases, as gathered by aBlogtoWatch in U.S. dollar amounts in the table above. As you can see, steel Rolex watches from the best-selling Daytona and Submariner to the more obscure pieces such as the Milgauss Z-Blue 116400GV — a watch that’s getting rather long in the tooth as we debuted it some 8 years ago, in 2014, here — have all increased by 10-11 percent, as far as their MSRP in USD is concerned.
The MSRP of the Rolex Submariner Date in steel, reference 126610LN, has just stepped over the $10,000 mark.
Increases from 2021 to 2022 prices are just about the same in both British pounds and Euros.
Interestingly, the all-steel Rolex Datejust surged only 6.4 and 3.2 percent in the 36mm and 41mm sizes, respectively. Equally low, relatively speaking, was the price increase on the Oyster Perpetual models, clearly the collection that serves as the point of entry into the Rolex brand. By contrast, gold watches don’t seem to have increased in price by much at all — that increase was formulated a year or so ago, as prices on all-gold watches like the Day-Date increased noticeably not too long ago. Gold prices have climbed from the $1,500-per-ounce range of mid-2019 all the way to above $2,000 in August 2020, and since then, gold prices have more or less settled at around $1,800, without another assault on the $2,000 barrier. As such, the price of the quintessential gold Rolex watch, the Day-Date 36 in 18k yellow gold, has remained unchanged at $33,950 for 2022.
We should stress that Rolex price increases aren’t always timed for the new year; the company has not tied itself to the calendar when executing price corrections. They may occur any time during the year, possibly multiple times within a 12-month period, and affect, as we have seen in this article, different models and collections to a varying extent. Facing such a powerful demand, with customers around the world clearly having both the funds and the willingness to spend more on their next Rolex watch, it is understandable that “the Crown” has deemed it safe to increase the retail price on many of its best-selling steel luxury watches for 2022.
The question, almost rhetorical, is whether a 10% increase will suffice to cool the market a bit. On that, we’ll say that chances are that the “used” and grey market – where a lot of like-new-in-box Rolex watches exchange hands well over their recommended retail price – will easily soak up that difference, at least for the time being. In closing, all we can say is that the aBlogtoWatch team both understands an all-conquering lust to own one specific reference and urges to you act against that and do not spend over retail on any watch.
Stay tuned to aBlogtoWatch for more luxury watch industry-related news and analysis — and in the meantime, let me and the team know in the comments below whether you think this increase will suffice to make a difference. You can browse more watches and pricing on the official Rolex website.