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CORDER’S COLUMN: Rolex drought shows no sign of easing

Rolex Glass Door
Rob Corder, managing editor, WatchPro.

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.

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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.

15 Comments

  1. I am beginning to wonder if Rolex has production problems or a shortage of materials. It seems crazy to let ADs go without supply’s and at the same time expect them to keep prominent, empty window positions available in their stores. Retailers can only afford to sell nothing for so long.

  2. I was on the waiting list for a Tudor GMT at Goldsmiths, walked into Beaverbrooks opposite they had two in stock, and BB58’s that my son was waiting for again at Goldsmiths. So it’s true, some Ad’s are more equal than others. We had been on the waiting list for 6 months.

  3. It’s true, walking in to an AD and seeing an array of completely empty display cases makes it look as though they are going out of business. It looks cheap and in my case, doesn’t instil desire for the product, but derision for the brand.
    I can have a completely bespoke Porsche delivered in 6 – 12 months, yet an off the shelf steel Submariner has a wait list of years. Tragic.

  4. I wouldn’t pay 2 to 3 times for a Rolex that I can get better from another Brand and then still wait for it over years. Even Tudor is making you wait for the Black Bay 58. It’s all a bit silly and you are absolutely right, it’s damaging the Brand. That’s the great thing about capitalism, someone else will step in who does it better (and cheaper) likely. Good article.

  5. Pleeaassee child! Rolex doesn’t care if they lose customers or AD’s or anyone or anything else. They have incorporated a business strategy that I can’t fathom, while seeming to discard who their customer base used to be in favor of trying to build a new customer base from the younger generation, who by the way, diesn’t seem to have the same desire for Rolex. I believe Rolex has come to believe in their own arrogance so much so that it has blinded a business strategy that has turned this previous customer against them and who now is so frustrated with their disdain of a once solid customer base that I hope they fail miserably and fall right on their tucouses, Where they belong. It’s sad to say but I actually have come to hope they end up paying financially for their absurd arrogance and disrespect of what once was a loyal customer base. If I have repeated myself here somewhat it is the result of that much frustration.

  6. Been on the waiting list six months for an oyster perpetual, just cancelled and bought a Seamaster on long term interest free credit so that’s the end of me as a potential Rolex customer. I don’t know what kind of marketing strategy made that happen

  7. My dealer, this year, was able to sell me an Explorer and a steel Submariner. I waited 2 months to procure after each request. Cannot get a Daytona to save my life. USA dealer.

  8. Desirability comes from scarcity, not from high price. Rolex, Patek (and Supreme!), are masters of their craft.

  9. I’ve had no problem getting any Rolex I have requested. I have all the desirable sports models. Can’t say the same for the Patek 5711/1A I’ve been looking for.

  10. Rolex can open the floodgates and build as many watches as they can sell, but then, they they are no longer as desirable and they will be left with a large manufacturing cost base and falling demand.

    Better business model to keep supply below demand so your can control the market and ensure all models remain desirable.

    Remember folks, Rolex is a trust so they can do what they like and if that means pissing off a few prospective owners, then so be it.

  11. According to me the shortage of Rolex steel sports watches is due to the fact that retailers sell them for huge premium to known buyers. In other words Rolex is turning a blind eye to what is going on.

  12. Prices are accelerating fast here in London England, just before Christmas 2019 we are seeing Rolex prices achieving staggering heights. Even Explorers and Explorer IIs are making 30-50% on the used market and the dealers are closing down. There’s like about six authorised dealers left in the central London area and their displays are almost empty, just a handful left, twin-tones with diamonds, women’s sizes. Other manufacturer’s cases have a nice selection. But wealthy male customers don’t care – they just want ROLEX.

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Rob Corder

The author Rob Corder