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CORDER’S COLUMN: Rolex drought will ease within two years

Rolex empty cabinets
Rob Corder, managing editor, WatchPro.

Rolex will not speak on the record about future production plans, but moves are afoot to resolve the current crisis in steel professional watches.

One of my key jobs as editor of WatchPro in both the United Kingdom and United States is to keep my ear to the ground for hints about what is coming down the track from the major Swiss brands.

Careful scrutiny of financial reports mixed with constantly trading stories with retailers, brand managers, collectors and journalists helps me gradually adjust a random fuzzy screen into a just-about-discernible picture. I do not claim to have a perfect picture, but I hope it isn’t entirely false either.

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It takes a particularly well-tuned ear to decipher what the future holds for Rolex because, as any journalist or authorized dealer will tell you, there are no official announcements other than when Rolex Testimonee Roger Federer wins another Rolex-sponsored Grand Slam tennis tournament.

Remarkably, this lack of communication only makes the world trust Rolex even more. It has topped the Forbes list of the world’s most reputable companies for the past two years, beating Lego and Disney into second and third in 2019.

If, as the saying goes, an empty vessel makes the most noise, then I suppose the fullest (or most fulsome) vessel makes the least noise.

The question every Rolex customer and authorized dealer wants answering today is whether or when the current drought for steel tool watches will ease?

And the answer is: in two years’ time, according to a consensus of opinions in the market that includes the views of Swiss watchmaking competitors, journalists that have the trust of Rolex and several authorized dealers.

Of course, this could prove wildly wide of the mark, but there is good reason to believe it is true, not least because people who might have been given reliable information believe it to be the case.

Even those without access to industry insiders can come to a logical view based on the undeniable fact that Rolex is one of the smartest companies on the planet and that it will not allow a situation that is damaging to its brand to continue indefinitely.

Rolex is operating a multi-tiered strategy to address the current shortages. First, it is shifting demand using its sophisticated marketing. For example, the cooperative advertising Rolex does with its authorized dealers is all going into promoting watches that are available like its precious metal classics like Day-Dates and DateJusts, particularly women’s models. I cannot remember the last time I saw an official Rolex advert for a Submariner or Daytona.

This not just happening in traditional print advertising. Scroll back through Rolex’s official Instagram account and the last time a steel professional watch was mentioned was in June when it pushed its Sea-Dweller (not one of the top four watches with the longest waiting lists). You have to go back to the March launch of the new GMT Master II Batman at Baselworld to find mention of one of the true unicorn watches.

This social media promotion is not just limited to Rolex, itself. The company manages the feeds of its authorized dealers as well so that they are also promoting the precious metal Oyster Perpetual Classic models.

The way Rolex is presented online at every authorized dealer world-wide is also managed centrally by the Swiss watchmaker and you will not be seeing any professional watches anywhere near high traffic home pages.

This has been happening for some time, and there is no sign that it is blowing the froth off demand yet. But I expect it will eventually because I trust Rolex will get it right.

On the supply side, the secrecy on production is almost entirely impenetrable. However, most authorized dealers I speak to believe Rolex is making around one million watches per year and that it is increasing production by around 6% annually — an additional 60,000 watches.

Assuming Rolex wants to narrow the delta between demand and supply, it has to make more professional steel watches. On top of its current production, all of the additional 60,000 watches could be made in Oystersteel and this would help a little (assuming demand does not continue to increase).

There could also be some realignment of production so that a higher proportion of watches are made in steel. I would not over-estimate this shift because Rolex does want to retain its image as a manufacturer of both functional and luxury watches. And it wants to maintain its image for making exceptional watches for women as well as men.

Cynics will probably say that Rolex is delighted with the current distance between demand and supply because it is dramatically increasing prices on the secondary market, which makes Rolex watches one of the greatest investment assets anybody can (or cannot) buy.

But the shortage is hurting because it is harming Rolex’s authorized dealers, and up with that Rolex will not put.

I walk into half a dozen Rolex ADs every month to see what is available. This month I have been to New York, London, Glasgow, Basel and Dubai. Everywhere I go there are half-empty cabinets and unhappy sales consultants.

The Rolex business model is built on happy ADs that willingly give Rolex prime positions in their best-placed stores. They buy Rolex’s fixtures, furnishings and stock. They open shop-in-shops and boutiques. The likes of Bucherer in Switzerland and London, Ahmed Seddiqui & Sons in Dubai and The Hour Glass in Singapore pour millions into real estate to promote Rolex.

They have not got the wobbles about continuing with this investment, yet, but money will only continue to gush in the direction of Rolex if the watches these retailers need are sent by return post.

I talk around and around these topics almost every day with industry leaders and, as I say, a picture starts to emerge.

Supply and demand for Rolex Oystersteel Professional watches will start to move towards balance in two years’ time because it must.

Tags : Corder's ColumnRolex
Rob Corder

The author Rob Corder

12 Comments

  1. Damage done , I’m finished with Rolex at this point , I was never a major collector but, I do have 5 Rolex and have moved on to other brands that don’t play games with their consumers .

  2. ADs are not hurting. They are selling all their SS stock to punters who spend $100k + or the Grey market (where do you think the Greys get their watches from)?

    1. The animosity in this comment section is exhibit A of why Rolex ADs are frustrated. The inability to even remotely approach demand means they spend all day saying ‘no’ and making perspective clients angry.

      Let’s review why ADs might be genuinely frustrated with the current situation:

      – luxury is cyclical – You want to maximize profit in the booms to cover the busts. The inability to make more money today is frustrating to ADs – especially as risk of a recession mounts.

      – the brand is being damaged – Rolex stands for celebrating achievement. The fact that no one can even come close to walking into an AD to celebrate a personal milestone separates the brand from its central marketing message. Not a good look.

      – AD brands are being damaged – many ADs are small and family owned. Their reputation is being damaged from poor client experiences.

      – ADs are now in the detective business – They are responsible for avoiding resellers, with risk of losing their AD status. Not fun for them. Risky and scary.

      – AD cases are empty – ADs spend big money on large Rolex spaces and these are now empty. It looks embarrassing and is wasted retail space – which isn’t cheap.

      So there you have it.

  3. Prediction: It won’t – this is the new normal. You will never see a steel sports model on display in an AD ever again. Unless there’s perhaps a global recession or something.

    1. Been in a few ADs in Northern England. Practically treated with contempt. What? Not a previous customer?
      Haha clear off! Sadly disillusioned.

  4. But the shortage is hurting because it is harming Rolex’s authorized dealers, and up with that Rolex will not put.

    I walk into half a dozen Rolex ADs every month to see what is available. This month I have been to New York, London, Glasgow, Basel and Dubai. Everywhere I go there are half-empty cabinets and unhappy sales consultants.

    The Rolex business model is built on happy ADs that willingly give Rolex prime positions in their best-placed stores. They buy Rolex’s fixtures, furnishings and stock. They open shop-in-shops and boutiques. The likes of Bucherer in Switzerland and London, Ahmed Seddiqui & Sons in Dubai and The Hour Glass in Singapore pour millions into real estate to promote Rolex.

    With all my respect to your vast experience why do you think such like situation really makes ADs unhappy? On one side, dealer I spoke to was unhappy as he could have done triple the turnover provided he had the stock, but on another side he was frankly more than enthusiastic and happy as everything he received was pre-sold, made a good profit, almost business was running by itself. He compared to what situation was 10 years ago, when again he was unhappy but for a different reason – sales were not fine, not too many customers, a apart for Daytona and consequently operating profit was minute at that time.
    So, as of my understanding Rolex will balance it up to a certain extent, I mean demand and supply, but from now onwards in such a way that demand will always prevail!

    1. ADs are like farmers, they will always find something to be unhappy about rain or shine, so I do take their complaints about the current drought with a healthy dose of cynicism. And, yes, they are happy that they now sell professional watches at full MSRP, which means full margin. I would also agree there is no shortage of potential partners banging on Rolex’s door wanting to work with them. However, there is genuine frustration as well. Just examine the picture at the top of this article. I will not name the retailer, but it is a store run by one of the biggest Rolex partners in the world in their home country of Switzerland. A massively expensive chunk of real estate is being paid for by this retailer, and it has no Rolex watches to sell. That is not a great look for customers that have often traveled from the other side of the world to shop with them.

  5. If Rolex truly wanted to do something they could try to snuff out grey market resellers. These guys are vultures. When I see these companies asking double retail with 10 blue face sky dwellers and 10 white dial Daytona’s it really puts things into perspective. Let’s be real these AD’s have to be getting kick backs. They are only allowed to sell at retail. They certainly know what the secondary market is doing. They partner with a grey market dealer who kicks back a few thousand per watch. Rolex/AD’s should try to make sure these watches are going to end users not people looking to double up. Walking into an AD with a request is a waste of time. You want a watch? Better buy some lube because you’re gonna get screwed at a grey dealer.

    1. Rolex closely monitors this exact issue. The temptation to take a cut of inflated prices on the grey market must be enormous, but the risk of them selling to a Rolex-sent secret shopper is very real. Losing Rolex would be catastrophic for their business so I do not believe they would take the risk.

  6. Rolex will lose on this. The sole Rolex stores are going into the Christmas season with no inventory. The regular customers (myself included) don’t bother to drop in anymore. Two years – wishful thinking. A company that considers itself to a charity organization, rather a watch company first – not a franchise I would want these days.

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