Rolex will not speak on the record about future production plans, but moves are afoot to resolve the current crisis in steel professional watches.
One of my key jobs as editor of WatchPro in both the United Kingdom and United States is to keep my ear to the ground for hints about what is coming down the track from the major Swiss brands.
Careful scrutiny of financial reports mixed with constantly trading stories with retailers, brand managers, collectors and journalists helps me gradually adjust a random fuzzy screen into a just-about-discernible picture. I do not claim to have a perfect picture, but I hope it isn’t entirely false either.
It takes a particularly well-tuned ear to decipher what the future holds for Rolex because, as any journalist or authorised dealer will tell you, there are no official announcements other than when Rolex Testimonee Roger Federer wins another Rolex-sponsored Grand Slam tennis tournament.
Remarkably, this lack of communication only makes the world trust Rolex even more. It has topped the Forbes list of the world’s most reputable companies for the past two years, beating Lego and Disney into second and third in 2019.
If, as the saying goes, an empty vessel makes the most noise, then I suppose the fullest (or most fulsome) vessel makes the least noise.
The question every Rolex customer and authorised dealer wants answering today is whether or when the current drought for steel tool watches will ease?
And the answer is: in two years’ time, according to a consensus of opinions in the market that includes the views of Swiss watchmaking competitors, journalists that have the trust of Rolex and several authorised dealers.
Of course, this could prove wildly wide of the mark, but there is good reason to believe it is true, not least because people who might have been given reliable information believe it to be the case.
Even those without access to industry insiders can come to a logical view based on the undeniable fact that Rolex is one of the smartest companies on the planet and that it will not allow a situation that is damaging to its brand to continue indefinitely.
Rolex is operating a multi-tiered strategy to address the current shortages.
First, it is shifting demand using its sophisticated marketing. For example, the cooperative advertising Rolex does with its authorised dealers is all going into promoting watches that are available such as its precious metal classics like Day-Dates and DateJusts, particularly women’s models. I cannot remember the last time I saw an official Rolex advert for a Submariner or Daytona.
This is not just happening in traditional print advertising. Scroll back through Rolex’s official Instagram account and the last time a steel professional watch was mentioned was in June when it pushed its Sea-Dweller (not one of the top four watches with the longest waiting lists). You have to go back to the March launch of the new GMT Master II Black and Blue at Baselworld to find mention of one of the true unicorn watches.
This social media promotion is not just limited to Rolex, itself. The company manages the feeds of its authorised dealers as well so that they are also promoting the precious metal Oyster Perpetual Classic models.
The way Rolex is presented online at every authorised dealer world-wide is also managed centrally by the Swiss watchmaker and you will not be seeing any professional watches anywhere near high traffic home pages.
This has been happening for some time, and there is no sign that it is blowing the froth off demand yet. But I expect it will eventually because I trust Rolex will get it right.
On the supply side, the secrecy on production is almost entirely impenetrable. However, most authorised dealers I speak to believe Rolex is making around one million watches per year and that it is increasing production by around 6% annually — an additional 60,000 watches.
Assuming Rolex wants to narrow the delta between demand and supply, it has to make more professional steel watches. On top of its current production, all of the additional 60,000 watches could be made in Oystersteel and this would help a little (assuming demand does not continue to increase).
There could also be some realignment of production so that a higher proportion of watches are made in steel. I would not over-estimate this shift because Rolex does want to retain its image as a manufacturer of both functional and luxury watches. And it wants to maintain its image for making exceptional watches for women as well as men.
Cynics will probably say that Rolex is delighted with the current distance between demand and supply because it is dramatically increasing prices on the secondary market, which makes Rolex watches one of the greatest investment assets anybody can (or cannot) buy.
But the shortage is hurting because it is harming Rolex’s authorised dealers, and up with that Rolex will not put.
I walk into half a dozen Rolex ADs every month to see what is available. This month I have been to New York, London, Glasgow, Basel and Dubai. Everywhere I go there are half-empty cabinets and unhappy sales consultants.
The Rolex business model is built on happy ADs that willingly give Rolex prime positions in their best-placed stores. They buy Rolex’s fixtures, furnishings and stock. They open shop-in-shops and boutiques. The likes of Bucherer in Switzerland and London, Ahmed Seddiqui & Sons in Dubai and The Hour Glass in Singapore pour millions into real estate to promote Rolex.
They have not got the wobbles about continuing with this investment, yet, but money will only continue to gush in the direction of Rolex if the watches these retailers need are sent by return post.
I talk around and around these topics almost every day with industry leaders and, as I say, a picture starts to emerge.
Supply and demand for Rolex Oystersteel Professional watches will start to move towards balance in two years’ time because it must.