While so many major brands have created a grey market for their watches by oversupplying the market, Rolex, Patek Philippe and Audemars Piguet face the opposite problem as their authorised dealers cry out for product that their customers are demanding.
Rolex, in particular, is in danger of damaging relationships with its retail partners because they are at the sharp end of customer frustration when they cannot get the watches they want.
Many of these customers are turning to the secondary market where they can buy the models they want online and are prepared to pay eye-watering prices for instant gratification.
There are also concerns about some authorised dealers receiving preferential treatment from the big three brands.
On a recent trip to America, WatchPro heard one story of a hugely successful authorised dealer being unable to secure certain models for a long term customer, only to learn that same customer had managed to walk in and purchase his desired watch from a larger group with multiple Patek Philippe and Rolex doors.
It is almost impossible for the manufacturers to perfectly police this type of activity, but it is vital that ADs feel they are competing on a level playing field and their concerns are heard.
Over the past few months, WatchPro has visited dozens of authorised Rolex dealers in several countries and found alarming evidence of the drought.
I have searched the cabinets of authorised dealers in Dubai, central London, Edinburgh, Heathrow and Gatwick Airports, Las Vegas, New York, Los Angeles and San Francisco and not one of them had a single steel GMT or Submariner.
On a visit to the highly respected Hyde Park Jewelers in Newport Beach, California, a huge Rolex room had a third of its cabinets completely empty. This is not a good look for Rolex and it is catastrophic for an authorised dealer paying high rents for the sort of prime retail position that Rolex demands of its partners.
Faith in Rolex fixing this issue has all-but evaporated, despite a belief that production is increasing by around 6% per year. It is assumed (although never confirmed) that Rolex is making around one million watches per year, which would mean an additional 60,000 watches are being made in 2019.
In addition, Rolex is continuing to trim its global network of authorised dealers, which should lead to its most productive partners gaining share and infinitesimally better allocations.
With demand so dramatically exceeding supply for Rolex steel sports models, I see no end in sight for the current drought.
An extra 60,000 watches per year is a drop in the ocean that will do nothing to alleviate the shortage, and this means prices on the secondary market will remain well above retail prices at authorised dealers. This makes the watches even more desirable because they are investment assets, which fuels even stronger demand. You can call this a vicious or virtuous circle, depending on your vantage point.
It would be wrong for Rolex to increase supply any more than its current — rumoured — 6% because it must retain its reputation as the world’s most trusted luxury brand.
What it could do is shift production capacity from precious metal models to the steel watches that its authorised dealers so desperately need. Only time will tell how far down this path Rolex is prepared to go.