Expectations were muted ahead of Rolex’s reveal of its 2021 watches at Watches and Wonders last month. The chaos of the past 12 months, ongoing economic damage from covid, and the fact that exciting new Submariners and Oyster Perpetuals have only recently started feeding into retail, all contributed to a deflated mood that an identikit Explorer II was unlikely to lift. So it has proved, only more so, suggests Robin Swithinbank, as he gauges reaction to this year’s Rolex novelties.
It never does to quote oneself, but in these very pages not so long ago, I was anticipating Rolex’s 2021 collection ahead of Watches and Wonders and offered this rather safe prediction: “It’s highly unlikely any of these new watches will rewrite the rubric.”
How wrong I was.
Not because Rolex sent hurricane-level winds of change through its collection, but because it didn’t even blow on it.
Rolex’s ‘new’ collection was social media catnip.
Parody accounts fell reliably into line by encouraging the faithful to spot the differences between old and new Explorer II models. Privately, even Rolex insiders admitted they couldn’t see them.
But so what? As one leading retailer put it to me in the aftermath, the Rolex brand is so strong that whatever it puts out ‘sells straight away’.
Will a step-and-repeat Explorer II, a liposuctioned Explorer and a meteorite dial that upgrades the Daytona from a unicorn to a UFO watch push the feeling on?
Rolex is on a roll. A month before that online presentation, Morgan Stanley released its annual Swiss watch industry report. The report’s title was unequivocal: “King Rolex”, it simply said.
Below the headline was the estimation that Rolex’s market share continued to grow during the pandemic, hitting 24.9 per cent in 2020. By that count, one in every four dollars spent on a luxury wristwatch is now spent on a Rolex.
The race to the top isn’t even close. For context, Morgan Stanley has Omega in second with 8.8 percent. Cartier’s next with 6.7 per cent. Breitling, which grew its market share during the pandemic according to the bank’s research, manages a modest 2.4 per cent.
Using Morgan Stanley’s figures, it you put Omega, Cartier, Patek Philippe and TAG Heuer together, you still don’t have a business as big as Rolex’s.
This poses a problem for people, like me, who try to compartmentalise the watch industry’s direction of travel.
Talk of rapid shifts to ecommerce, direct-to-consumer retail, sustainability as a prerequisite to purchase, genderless watches and the independents (they’re so much more interesting, right?) looks daft when applied to Rolex.
It has no ecommerce. It has no retail. It doesn’t make watches out of recycled fishing nets. It still delineates its ‘Lady’ watches. And while it’s technically independent, it can’t for a moment be qualified alongside the quirky, artisanal brands the term acts as a cover for.
The rules don’t apply to Rolex.
It’s not having it all its own way, though. The pandemic hit Rolex right between the eyes, for a while at least. With its factory closed last spring, and without an ecomm business to sustain sales during lock downs, progress was halted.
To quote Morgan Stanley’s calculations again, Rolex may have produced 190,000 fewer watches last year, falling from a figure of one million to 810,000, a drop that knocked its bottom line back by an estimated CHF 780m (that’s a Tissot and a Montblanc, apparently, while we’re adding context).
Which begs the question – can Rolex return to pre-pandemic levels with a collection facelift even Dolly Parton wouldn’t pay for?
If it does, it won’t be because of Europe, where Covid restrictions have already blighted this year’s trading. All eyes instead turn to the Far East, and to a booming China.
Market research company Bain reckons China’s luxury goods market achieved almost 50 per cent growth in 2020, putting it on track to be the largest market for luxury by 2025.
Factors behind the surge included the so-called repatriation of spend to China because of travel bans, digitalisation, as well as the fillip caused by the relaxation of duties in the fast-rising Chinese retail destination of Hainan, where Bain calculated sales were up by 98 per cent year-on-year.
The Chinese bump will be welcome, but with several brands admitting more than half their business is now in the Middle Kingdom, the risk of over-exposure returns. As Xi Jinping’s anti-corruption campaign of 2012 showed, over-reliance on China is short-sighted.
In that light, Rolex’s soft collection update makes more sense. At 43mm, the Explorer II won’t be a big seller in China, while a movement upgrade should keep punters in traditional markets already married to the aesthetic happy.
Instead, Chinese consumers predisposed to smaller watch cases get steel and bi-colour 36mm Explorers, shrunk by 3mm (and leaving the Cellini as Rolex’s only 39mm watch, curiously), a breezy palm-motif 36mm Datejust and some high-tariff diamond-set pieces. For retailers everywhere, the higher the price point, the better, of course.
Does that make China Rolex’s sole focus? It shouldn’t – and won’t. Brands ignore the US and major European markets at their peril. A better explanation for this year’s direction would be that Rolex is keeping some of its powder dry, as it did last year until the first wave of the pandemic waned and retail opened up again.
What is the point in a new Submariner or GMT Master II when half the world can’t shop? Better to save them for when this is all over.
And let’s not forget, Watches and Wonders fell only seven short months after the new Kermit and a raft of Oyster Perpetual 36 models with coloured dials, all of which prompted a buyer feeding frenzy.
If any brand has the luxury of biding its time, it’s Rolex, after all.