Rolex’s conservative approach to price increases this year reflects a broader trend in the luxury goods industry towards moderation, according to Morgan Stanley (NYSE:MS) analysts.
According to the bank’s estimation, average watch prices increased by 2.9% in January, a contrast to the cumulative annual growth rate (CAGR) of +4.8% observed from 2020 to 2023.
This historically low price increase suggested that “pricing will be a much more limited driver” in the luxury goods sector going forward, said Morgan Stanley (NYSE:MS).
This restraint may be attributed to a combination of factors, including a slight dip in Rolex's relative industry performance, a general slowdown in Swiss watch exports, and a significant reduction in the premium commanded by second-hand Rolex models.
Morgan Stanley suggested that Rolex’s decision to moderate price increases reflects a cautious approach, possibly aimed at sustaining market share gains without alienating customers sensitive to price fluctuations.
In 2022, Rolex held an impressive 29.2% market share, a figure that rose to 30.9% when including Tudor, its sister brand.
This strong market presence was underpinned by a robust turnover of 9.3 billion Swiss francs (£8.5 billion) in the same year.