Buying a Rolex watch is getting harder – how the company strategically controls supply and demand

Rolex watches are hard to find, even though the luxury brand is generally believed to produce as many as a million per year
As a result, prices for second-hand Rolexes have shot up, in some cases to almost three times the retail price – and Rolex probably likes things just as they are

Timepieces

Business Insider

Published: 7:15am, 5 Aug, 2021

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Yes, people are having a hard time getting their hands on them; and yes, all are more expensive now than they were last year; but unlike the first two, the scarcity of Rolex is strategic.

While there may have briefly been supply chain disruption for watchmakers at the peak of the coronavirus pandemic, Adam Golden, of vintage dealer Menta Watches, said that the issues in the past year are a mere blip compared with larger trends happening in the luxury watch market generally and with Rolex in particular.

“Rolex seems to have structured their business in such a way that they’re controlling distribution and who gets what, at a retail level,” he said. A decade ago, most models were available on-demand from authorised dealers (ADs) of the brand, he explained.

Rolex watches, like the Oyster Perpetual Explorer are becoming increasingly hard to find.

On a recent trip to a shop in the US state of Florida, Golden said there was just one Rolex available to buy – a ladies’ Datejust that a customer had ordered and cancelled.

In Houston, Texas, real estate investor Tyron McDaniel tweeted that he was unable to find a men’s Rolex and that many stores wouldn’t get new ones for another year and a half.

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But Golden says watches are still flowing to the brand’s preferred ADs, and that the backlog is more illusion than reality. Rolex is generally believed to produce as many as a million watches per year.

“Rolex would like to perpetuate the image that there’s a shortage and that there’s such high demand that they can’t produce enough to satisfy the demand, but I think in reality it’s just very controlled release in order to keep that demand super high,” he said.

Rolex did not respond to requests for comment on this story.

The Rolex Oyster Perpetual Datejust 36. The company is generally believed to produce as many as a million watches per year.

Another result of this artificially constrained supply of new watches is the absolute explosion of prices on the resale market, where some now command far higher prices used than they do at the retail counter.

For example, a steel Daytona is advertised on the Rolex website for US$13,150, but over at Chrono24 the exact same watch is listed for more than US$36,000. What other asset appreciates so instantly after purchase?

Rolex is by no means alone here, but it is a leading brand in the pre-owned watch market, which is expected to reach US$29 billion to US$32 billion in sales by 2025, according to a recent report from consultancy firm McKinsey.

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“Rolex could probably do a number of things to fix the current situation and increase the supplies of these watches and dampen the secondary market,” Golden said. “But I think at this point they’re choosing not to, because it’s good business for them.”

Over on Twitter, one commenter recommended McDaniel take a look at the exquisitely handcrafted mechanical timepieces made by German watchmaker Nomos Glashütte, whose most expensive model comes in at US$21,500.

“Nice watch,” McDaniel replied, “but it’s not a Rolex.”

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