Last week I was on a business trip to Dubai, Rob Corder writes, and it gave me a chance to check out how far and wide shortages of luxury Swiss watches have spread.
The answer, interestingly, is not very far at all.
Recent financial reports from the likes of Swatch Group, Richemont and LVMH have described how production was hit in 2020 by covid restrictions.
This has been used by marketeers to suggest there are shortages of watches far beyond the usual suspects of Rolex’s steel sports watches, Patek Philippe’s Nautilus and Audemars Piguet’s Royal Oak.
The reason marketeers like this narrative is because it nudges people towards buying now rather than later when shortages may be even more acute.
There is much to unpack here.
First, it is true that lost production has cleared up the channel to some extent.
However, rather than creating shortages, for most brands, and particularly for core collections from big players like Omega, Cartier and TAG Heuer, production cuts have merely led to less over-supply, which has been helpful to retailers.
Secondly, brands have created artificial shortages. They make limited editions and they often only sell them through their own boutiques so the watches appear to be hard to find.
In reality, there is no significant supply shortage for 99% of watch brands, there is just an unusually healthy alignment between supply and demand.
And another thing
One final thought. Dubai airport had dozens of brands represented, but only the Rolex cabinets were empty. Specifically, there were three watches on sale from five large Rolex cabinets while most other brands had one cabinet each, all filled with watches.
This is far worse than a year or two ago when there would at least have been Rolex watches on sale in precious metals, particularly diamond-studded ladies’ pieces.
What is happening now (and this is happening all over the world, not just in Dubai), is that dealers will only sell the most popular watches to people who also buy the least popular models from Rolex or other brands or expensive jewellery.
Oftentimes flippers are doing this in one go, spending six- or seven-figure sums on bundles of watches that include pieces on which they can instantly double their money.
The ladies’ DateJusts and Day Dates are swept into these bundles even though there is no profit in them, and that is why you do not even see these watches for sale anymore.
The title of this article is false and misleading. There is no Rolex shortage and you are not a fool. Rob Corder clearly has a negative bias against Rolex. Many of his past articles are blatantly inaccurate, full of animosity, and opinion based rather than factual. This article is no different.
As a US Based ORJ, we can attest to Rolex’s public statement that there is no shortage and simply an over demand. During the last three years, we have seen significant double digit growth in units and supply. We expect the same for 2022. There is simply an over demand that the continuously increasing watch supply cannot support. Speak directly to an ORJ for factual information and try to steer clear of fake, misleading news stories like these.
I agree with some of your comment, but not all. I fail to see how you can say there is no shortage, but I agree it is caused by a massive increase in demand over recent years, not artificially created production limits by Rolex. If you browse this site, you will see I speak with retailers all the time, and they are hugely valuable when it comes to getting to the truth of these issues. What I would say, however, is that they are not always entirely straight about how Rolex watches are sold and allocated to customers. If all Rolex watches were sold to genuine watch lovers who want to wear them for life, we would not see tens of thousands of new and unworn watches for sale on the secondary market.
Rob Corder is absolutely correct! The frustration is that new Rolex customers like myself who want to WEAR a particular model to celebrate a special occasion have been shutout because of the flippers access to as many watches as they want. Wouldn’t it be nice if the AD would sell one sport steel model to a customer, or conversely not allow a flipper to continue to buy the same model over and over again? Prima facie evidence is that the showcases at the AD are empty, yet any Rolex you want can be bought on the grey market at well over retail. Thank you Rob for highlighting this situation out.
“that there is no shortage and simply an over demand” This is a weird statement. If more people want a watch than there are units of that watch available, that is a shortage. This statement only makes sense if you substitute “supply shock” for shortage. Let’s say that suddenly production halts, or substantially slows, at Rolex because of the lack of a component needed to complete a watch. It could be several things. Maybe workers are out due to Covid. Maybe the sapphire maker have production problems so shipments are short or delayed. Maybe a pipe burst in the factory. Those things affect supply so it appears the same as a shortage to the marketplace. But I think in this case what we’re seeing is pent-up demand from customers emerging from the Covid lockdown. Also, other kinds of discretionary spending are still off, such as international travel, so the money flows into watches. This situation, more or less steady production with a surge in demand is a kind of shortage. Rolex is just playing word games.
The most striking comment in this article is in Rob’s reply to ORJ, where he correctly states that the dealers are selling these watches to those reselling in the gray market. There can be no other explanation for how brand new Rolex watches of recent vintage with the protective coatings still in tact are available in the gray market for 50-100% markup. If the authorized retailers stopped selling to gray market dealers, honest customers could purchase a new Rolex which wold in turn lower demand on the gray market, brining prices down as well. I blame the retailers who are in league with the gray market dealers for the predicament we’re in.
This is a once in a lifetime situation for Rolex AD’s to cash in. Whilst it is deeply frustrating for many customers and imo hugely damaging for Rolex on a reputational level with so many of their in demand watches ending up in the Gray Market it’s difficult to totally blame ADs for cashing in and selling to flippers who will buy their entire quota and/or only to customers prepared to buy a ton of other stuff they don’t want just for the chance of acquiring a steel Rolex tool watch. The best advice I can give is to not join this party. The watches simply are not that good or worth the hassle. Imo
I think the real consumer’s marked will saturate and we will have a recession on the way that will lead to gray market start dropping prices liquidation of the inventory before you start to see Rolexes appear in authorized dealer showcases. I think this is the moment to sell that Haulk you have in the safe and keep the money in the bank to expand your collection next year or so.