A story this week about shortages of Rolex steel sports watches has become WatchPro‘s most read article of the year and sparked fierce debate on both sides of the Atlantic.
The conversation was kicked off by Danny Govberg, owner of authorised dealer Govberg Jewelers in Philadelphia, who said that the current demand for Rolex professional models is greater than he has seen for 30 years.
Mr Govberg suggests that the demand for models like the 2018 GMT Master II and perpetually over-subscribed models such as the Daytona is part of a lifestyle trend where people want to wear the same watch all day at the office and then at the weekend on the beach or golf course.
But David Alabaster, manager of UK-based jeweller C.H. Moody and Son, thinks that the rise of internet forums has stirred up a frenzy for certain Rolex models. That excessive demand causes prices to rise on secondary market sites like Chrono24 and Chronext. When new and boxed Rolexes are being ‘flipped’ on these sites at double or more their price at authorized dealers, it creates a viscous circle that increases demand even more and pushes prices up to stratospheric levels. “The internet and watch forums are making people crazy,” he says.
Mr Alabaster accuses people on forums of falsely accusing Rolex of restricting supplies in order to drive up prices on the secondary market. “Look at the watch forums and see all those agitated “victims” of Rolex not making enough steel professional watches for them to get their hands on,” he scoffs.
Rolex cannot throw a switch that it immediately manufacturers more steel sports watches at the expense of higher volume Datejusts and Day-Dates,” Mr Alabaster argues, although he is as frustrated as his customers that he can’t get his hands on more of the hottest models. “As a Rolex AD the requests I get daily for steel professional watches is equal to the number I am allocated annually from Rolex. I have to spend an increasing amount of time telling people what they can’t have. It is very frustrating,” he describes.
Grey marketeers who want to buy in the UK and sell in other countries, and flippers that want to buy from anywhere and sell online, are transforming the market for the most popular watches. “The advantages that the secondary/grey marketeers have over Rolex ADs include being able to source their watches globally and retail them online, at the same time hiking up the second-hand prices so high that consequently there is a huge demand for these easily resold watches by many people wanting to flip them and make a quick big profit. This is at the expense of people wanting to wear them for their own pleasure,” Mr Alabaster says.
As a provincial authorised dealer in small town in the North of England, Mr Alabaster accepts he will be allocated fewer watches than the major multiples and London power players, and does his best to keep customers happy in his local area who buy Rolexes for the love of wearing them. That is not easy when demand is so much greater than supply. “We have a three year waiting list for 2018 GMTs,” he reveals. “During my meeting with Rolex at Baselworld this year where I was trying to get as much allocation as possible, I was being passed notes from my secretary with orders for 35 GMTs. We will get three. I have to pull names out of a hat to keep it fair,” he reveals.
Mr Alabaster struggles to come up with any solution to the shortage while internet forums and stellar prices on secondary markets continue to generate a frenzy of demand. “There is a sense of youth entitlement that everybody should get the watch they want immediately, but 75% of them will be flipped. London is the biggest source of flippers,” he says.
All he can do is speak to customers as they make inquiries and try to separate genuine watch lovers from opportunists. As a practical measure, he also takes the security stickers of the watches he sells; something real customers would welcome so they can try on the watch, but flippers hate. “I’ve turned down a sale of £30,000 in the past because I could tell I was dealing with grey marketeers,” Mr Alabaster states.