Characteristics Of Macro-Environment Of Canadian Market For Rolex Expansion
The Canadian culture is changing and is currently facing a growth in the market for luxury goods as well as luxury watches. Not only is this a great opportunity for Rolex to continue selling watches in this country, but also start to target the current millennials that want a luxury watch and haven’t bought one yet. In 2017 Canadian commerce experienced a 30% growth including the purchase of watches. This is great for the Canadian economy as well as the fact that Rolex can adapt to these changes and target new consumers while doing so.
Baby Boomers represent a large population in Canada and are considered the group that spends the most amount of money on luxury goods. This is due to the fact that they have a high disposable income from the years that they have been saving. The USA and Canada are having a trend which shows that the wealthy are continuing to get wealthier and how most of these individuals are men. This is very convenient for Rolex due to the fact that the majority of the watches they produce are for men and for people who are willing to spend a lot of money for a luxury watch. Not only are Canadians a great market for the watchmaking company, but also, they possess a major financial district which is where most of the sales of luxury accessories are occurring. More than 50% is being sold in Toronto.
Technological Technological influences on the luxury watches industry include the production of synthetic diamonds. The production of synthetic decreases costs of diamonds by up to 20% and allows certainty of ethical practices, which connects to Canadian consumers’ social values for luxury accessories.
There are many economic factors that can influence the luxury watch industry. Increasing income in Canada will positively affect the luxury watch industry by increasing the number of potential clients. Canadian income is expected to increase by 3. 4% by 2024 and currently Statistics Canada (2015) reports that the top 10% have an income above $80, 400 CAD. Opposing this, IBISWorld (2018) states that increasing debt rates of Canadians, as well as housing prices could lead to a recession in Canada, therefore decreasing Canadian’s expenditure especially on luxury goods, which will decrease the number of potential clients in the luxury watch industry. Finally, prices of gold can influence the luxury watch industry as it can influence the cost of many products. Currently prices of gold are increasing, and supply of gold is expected to decrease by one third in the next decade which will further increase price and decrease availability which can influence the cost and composition of many products in the watch industry.
The main concern for political regulations for the luxury watch industry is the tariffs on importing jewelry. Depending on the nature of the jewelry tariffs they can be up to 8. 5%. This can increase costs of jewelry made outside of Canada. Additionally, creating jewelry in Canada has limitation as imports of rough diamonds, diamonds not yet cut or polished, are limited to only countries who are approved by the Kimberley Process, which ensures the ethical extraction of diamonds. One other minor political regulation that the luxury watch industry must be aware of are the limit on the amount of lead used in children’s jewelry. All these regulations limit the ability for the luxury watch industry to produce certain products that will be entering Canada and can increase costs of producing products. Additionally, because the manufacturing site is located in Switzerland, the governmental policies in Switzerland may significantly affect the company. Also, importation policies apply in this case as well.