Selling Rolex watches just got even more profitable for The Watches of Switzerland Group as it has withdrawn the offer of interest-free credit for customers.
Interest-free credit is widely available from major jewellers, but it is a hidden cost to the business and is also seen as a form of discounting, which is not permitted for Rolex’s authorised dealers.
Although The Watches of Switzerland Group says it has taken the decision to withdraw the free financing unilaterally, the company’s chief executive Brian Duffy told WatchPro today that he hopes others will follow suit. If they do not, buying a Rolex on credit from Watches of Switzerland or Goldsmiths will be more expensive than its competitors.
“That will be the case if others do not follow suit, but we are publicising it in the hope that others do see it as an opportunity. It is a tough market out there, Rolex apart, for everybody. Businesses need to be profitable so that they can maintain the level of investment they need, and this is a step in that direction,” Mr Duffy suggests. “It is a financial incentive that comes into the same category as other discounts and Rolex does not need a financial incentive for the consumer to buy it,” he adds.
Bucherer told WatchPro today that it does not offer interest-free credit on Rolex. A member of Fraser Hart’s support team also confirmed that interest-free credit is not available for Rolex.
Interest-free credit was withdrawn by The Watches of Switzerland Group for Rolex in November, but had been tested before that to see how customers reacted. “Most customers just switched to paying in cash and a smaller proportion took the option of interest-bearing credit. This means the consumer is bearing the cost of the credit, not having it subsidised by us,” Mr Duffy explains.
The cost of credit can be substantial to the customer. A pre-owned Rolex listed on Watches of Switzerland’s website today for £7995 can be paid for with credit over 48 months at a 9.9% interest rate, which takes the total cost of the watch to £9472.
By effectively pushing up the price of Rolex watches, The Watches of Switzerland Group may also nudge customers towards other brands where interest-free credit is available; a tactic that might help alleviate the current shortages for Rolex.
“Given the supply issues, the demand for the brand, it is something that we do not feel is right for the brand and our business so we have taken the step to eliminate interest-free credit,” Mr Duffy explains.