Cambridge English Dictionary defines “retail” as the activity of selling goods to the public, usually in shops.
By that definition, Rolex stopped being a retail brand last year and shows no sign of returning any time soon.
The reality today is that members of the public cannot simply walk into a shop and walk out with a Rolex.
This was once true for just a handful of references: steel Daytonas, Batman GMTs or Hulk Submariners, but shortages have now spread across the entire steel men’s watch range and is rapidly engulfing even the precious metal portfolio — even ladies’ Datejusts are hard to find.
As almost everybody now realises, Rolex authorised dealers do not sell watches to the public, they allocate them to customers that bring other benefits to them beyond the sale of a Submariner.
These benefits are mainly to do with taking care of customers who buy other, higher margin watches and jewelry in significant quantities.
Read my top ten tips on how to buy a unicorn watch (written in 2019 and even more relevant today).
This new type of customer is adding to the problem.
Once, they might have scored an Oyster Perpetual with the dial colour of their choice (Tiffany Blue) if they had a history of buying a couple of other five-figure watches over the previous decade.
That will not move anybody up a waiting list today.
They will need to buy far more stuff at much higher prices that is more difficult to shift: high margin gold and diamonds or gem-studded ladies’ Datejusts, for example.
Flippers are making shortages even worse because they are persuading authorised dealers — mostly in other parts of the world — to sell them bundles of Rolex watches that they can turn for a profit.
With a budget of, say, £200,000, they do the math on what a bundle needs to contain to make a decent margin. They can take a lot of watches with little value over retail as long as they secure a few unicorn watches in the grab.
This is why virtually all references are now in short supply.
Rolex wants us to believe it is powerless when it comes to damping down the current price madness.
“Our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches – something we refuse to do as the quality of our products must never be compromised,” the statement added.
It is true that increasing supply rapidly would risk quality, but Rolex and its ADs could reduce demand by turning their waiting list policy on its head.
Rather than allocate watches to the customers that have bought most in the past, dealers could be forced to sell to new customers that have never bought a Rolex before.
You know, the sort of people that dream of owning a Rolex when they retire, or want to celebrate some other major life event.
This may not work long term, but could be employed for a year or two as a reset mechanism to normalise the market without damaging the Rolex name.
Because damage is most certainly being done.
Three examples with Rolex authorised dealers on three continents demonstrate to me how bad things have become.
First was on a recent trip to Dubai, where the airport cabinets of every watch brand were chock full, except for the five Rolex displays, which had three watches between them.
It was a horrible sight, and about as welcome to customers as empty supermarket shelves during the worst of the pandemic (interestingly, supermarkets stopped people stockpiling toilet rolls and paracetamol. Rolex’s response would have been to make them prove their purchase history before they could buy more).
Second was a trip to Bond Street, the iconic luxury shopping thoroughfare in the heart of London’s Mayfair.
There are three Rolex points of sale there: one is Wempe, the others, both run by Watches of Switzerland Group, are a Rolex monobrand and Mappin & Web.
The windows were remarkably full of watches, which was better than in Dubai. Regrettably, on closer inspection, they were “Exhibition Watches” and not for sale.
That is not retail, that is a museum.
The third example was sent to me directly by Watches of Switzerland Group as part of its publicity for opening the largest Rolex showroom in the United States after reconfiguring its retail space in the Wynn Resort in Las Vegas.
Among the PR assets was a video of a new type of digital window display that presents virtual watches rather than real ones for sale.
That’s the sort of thing you expect at an exhibition, not a retailer.
The fact that Rolex and its authorised dealers are turning to exhibition watches and exhibition displays is a sign that they have no intention of cooling the market and making Rolex a retail brand again.
Only time will tell if that does more harm than good to one of the world’s most trusted and respected brands.
Exactly the same in Rome Airport….nothing other than exhibits.
Great article Mr. Corder! Well said. Very on point.
Colin
Hi Rob. Do you think that when Rolex consumers stop buying these watches due to the lack of parts in stores, investors (the customer who signs up on the waiting list of 10 stores with the intention that if they give him one he will sell it immediately doubling his investment), will they stop buying them when they see that they are not sold and things will return to 2014?
Or will the Chinese consumer continue to demand Rolex as it is a good investment and will the current impossibility of buying Rolex at list price continue? Thank you
I have called the top of this market on more than one occasion and been proved wrong every time. There are more millionaires being minted every year than there are extra Rolex watches, so I do not see demand cooling any time soon.