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.
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."
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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