https://www.yahoo.com/finance/news/why-the-rolex-watch-shortage-is-a-perfect-storm-144250922.html

Article below

Let’s say you’re a well-to-do businessman or woman or otherwise successful professional. You’ve put in the time to hone your craft, made the right career moves, climbed the corporate ladder, and likely drive home in your German-built, luxury sports sedan.

Yes, you’ve made it, and now you might be thinking to yourself, "It’s time I bought that status symbol that lets everyone else know I’ve made it whenever I walk into a room" — a Rolex.

Well I’ve got some bad news for - you probably can’t get one.


The great Rolex shortage

There are shortages around the globe these days — from cars to the microchips that go into them, to coffee beans, and even toilet paper. The pandemic supply crunch fueled much of this, and this goes even for high-end wristwatches.

While sales of these wristwatches dipped during the height of the pandemic in 2020, purchases have recently jumped higher. According to the FHS, a Swiss watch industry research group, Swiss watch sales were up 7.6% in July compared to the pre-pandemic baseline of 2019. Sales growth jumped a whopping 48.5% in the U.S. in July compared to 2019 levels, and even 75% in China.

Now overall Swiss watch sales are up, but for privately-held Rolex the situation is more complex. Paul Altieri, CEO of online watch retailer Bob’s Watches, says the story for Rolex in particular has been many years in the making, even before factory shutdowns that crimped supply.

“Supply to some extent due to COVID, where the factory was closed down for several months, that exacerbated the problem, but the [supply] problem had already existed before,” Altieri said in an interview.

“Global demand has steadily increased the last five years, and supply has kind of stayed constant, it’s a classic supply-demand situation going on,” he said, and this puts an “upward pressure on prices.”

Altieri doesn't think Rolex is purposefully suppressing supply; it’s just that demand is so strong for a luxury item like Rolex watches, he said.

Case in point: Bob’s Watches use an email alert system for notifying buyers when the watch they are interested in is in stock, and once that email goes out, those watches get scooped up - quickly.

“The new models that do hit the site, can sometimes sell in 15 minutes,” Altieri explains. If you’re too late, within minutes or seconds even, “They can be gone.”

‘A perfect storm’

Watch expert and journalist Eric Wind of Wind Vintage sees a confluence of factors pushing Rolex prices up and availability down.

“I think it's really a perfect storm,” he told Yahoo Finance Live. In addition to the supply constraints and overall demand for the product rising, he says, there are now more ways for regular owners, and dealers alike, to sell across the globe.

“There's many more ways to sell these watches online than ever before - so anyone that could buy, for instance, a [Rolex] Daytona or Submariner can easily do it and sell it for thousands of dollars more than they paid,” he says.

“It's kind of like the sneaker mentality with StockX and being able to resell sneakers online much easier; the same is the case with watches. [There are] many more players in the market.”

Can the shortage be reversed?

“There’s no one event that caused this [phenomenon]," Ariel Adams, founder of popular watch blog aBlogtoWatch said in an interview.

“Rolex has made it clear that they are not going to increase production of popular watches to meet demand, and that makes sense because they are trying to create long term value for their clients, they don’t want to flood the market and reduce the value of these things,” Adams says. Furthermore the pandemic has reduced watch supply by 70%, and “there really are less watches to go around.”

The supply shortage and demand problem is, from Adams' point of view, being taken advantage of by both “scrupulous and unscrupulous” dealers.

The Rolex Oyster Perpetual (Credit: Bob's Watches)
The Rolex Oyster Perpetual (Credit: Bob's Watches)
Certain authorized dealers, or ADs as they are called in the industry, will sometimes ask their prospective clients to buy a less popular watch first, before they can be put on the dealer’s list for desirable Rolex models — like a Submariner, GMT, or Explorer — when the watches become available. This is a common phenomenon in the industry; it’s not illegal but can be very frustrating for a buyer.

The more unscrupulous dealers will take these popular Rolex models, sell them above cost to gray market, or unauthorized watch dealers, who will then sell the watch directly to the consumer at an even more elevated cost, usually online.

And the biggest reason this problem exists, Adams says, is because there is no official list from Rolex of buyers who are on a waiting list. As noted, the dealers have their own list of clients that want certain watches, and when a batch of new watches arrive at the dealer, the dealer sells them to whomever the dealer prefers: long-standing clients, high rollers, etc.

The tricky part is Rolex dealers do not know what watches they will be sent. They are essentially sent a “mystery box,” Adams said, and they must sell what they get — good watches and not so desirable watches. Hence the dealer-level lists of preferred clients.

Rolex could fix all of the frustration from a buyer point of view, Adams said, if Rolex created an official waitlist, or a guaranteed way for people to buy watches they want at retail prices. This would solve the problem, even if prospective buyers had to wait.

“The majority of overspending would go away,” Adams explained.

While an official wait list would be great news for Rolex watch fans, the instant gratification of getting your hands on that Rolex "Batman" GMT, even when you have thousands of dollars in your pocket, is going to be delayed.

Note: Yahoo Finance contacted Rolex for official comment on this story. We received the company's response shortly after publication:

"The scarcity of our products is not a strategy on our part. 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. This level of excellence requires time, and as we have always done, we will continue to take the necessary time to ensure that all our watches not only comply with our standards of excellence, but also meet the expectations of our customers in terms of quality, reliability and robustness. Rolex does not compromise on what it takes to produce exceptional watches.

All Rolex watches are developed and produced in-house at our four sites in Switzerland. They are assembled by hand, with extreme care, to meet the brand's unique and high-quality standards of quality, performance and aesthetics. Understandably, this naturally restricts our production capacities – which we continue to increase as much as possible and always according to our quality criteria.

Finally, it should be noted that Rolex watches are available exclusively from official retailers, who independently manage the allocation of watches to customers."

— —

This isn’t new.

It’s more folks finally wanting one and can’t get one.

Started in 2017 with AD’s.

The world is just realizing how cheap Rolexes are when it comes to luxury watches. The world is also buying consumer luxury goods at a much higher rate.

If I was Rolex I wouldn’t change a thing. When MSRP is below the used price of a watch, you got demand like no other.

I’ve given up on buying a new 126610LV. The price and the frustration just aren’t worth it.

Love the designs, not dealing with the B$.

I found a good AD, would have to go to Memphis.

If interested PM me and I'll send rep details.

Got frustrated and put my money into a SEP. Next time I squirrel enough away I’ll let you know. Appreciated.

To be honest, it’s very much like the Randall knife market.

And a small number of custom hunting rifle companies.

Or custom 1911s.

I just thought it was interesting that it was on a mainstream site like Yahoo. Also I have slightly been thinking about putting my name down for a Submariner. I have posted my fathers Timex that is a dead ringer for a Submariner so I thought I would finish what he started. Never bought anything luxury like that so very unsure about how or what to expect if I do. I am pretty confident that buying at MSRP would be a great investment even though I would rather pass it down and tell the story.

So from what I read price and availability are affected right now by supply chain, decreased production due to COVID and increase in demand over past years. So buying through an AD is the best way to go but just expect a long wait due to the reality that I would be far down an already big list and constantly getting bumped by people who are existing customers who have “paid their dues” so to speak.

I filled out the inquiry form on a Tuesday morning at an AD across the state. Called me that afternoon, we had a chat and I went and got it the next day.

You can find a good AD if you look hard enough, I had to drive 8 hours round trip.

Worth it.

He’s in FL…. He’s screwed.  Outside of NYC/TX/CA, it’s the toughest US geography to find a Rolex at an AD.

Yes FL is ridiculous to find a new Rolex right now.  I've been to every AD within a couple hundred miles and each one has empty Rolex cases.  I've been added to the list at a couple ADs and others just laughed at the idea that I wanted a new sub.  Really hoping for a new 124060 at close to msrp but starting to lose hope.  Don't really want to go grey market but looks like it may be the only option.

It's a few hour drive to TN!

If you want AD details, PM me!

Your AD would be able to get me a kermit?

Is a LB considered "custom"?

Thanks and will do.

Visited the Rolex flagship AD on 5th Ave in Manhattan today around 2pm…a grand total of three Ladie’s watches on display.  Salesman was eager to check out my 2001 GMT though.  Geez Rolex, is this the best you can do?

Rolex effectively pre sells every watch they make, at full msrp to a newly upgraded and wealthier customer base.

Contrary to what many think their primary business is, it ain’t selling watches.  They’re a luxury experience marketing company.

There’s hasn’t been a professional model on display in NYC in years.

All are sold before they leave the vault.