Scarcity of Rolex leading to a possible brand crisis.

[teck21]

It is a brand crisis indeed, but not for Rolex.

It is a brand crisis for the Rolex WIS who won’t pay today’s applicable entry fee.


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[Harry-57]

The "surplus" of stock in grey dealers show that Rolex are selling a lot of watches.

I don't think the Rolex marketing department will be particularly inclined to change direction to allow individuals to buy watches that they can't currently get from ADs. The absence of display models shows that most of their stock is pre sold.

This might be skewed, but it is not unusual. Dealers in various sectors stay in touch with clients with particular requirements, meaning that some things never go on to public display. I've bought property before it went on the market, and been offered very desirable used cars that the dealer will never advertise. Or occasionally a huge discount on a new car. I'm nobody special. It's just a relationship thing. They will have a list of people like me, who have been buying things from them over a number of years. Just like my AD.

If the only way I can have something I want is to reassemble the market to suit my needs, this is very the reason why I can't have it. This kills the brand for me but does not kill the brand. In time things will change. But in what direction we don't know.

[Oxfordian]

Originally Posted by mdqs67

New to the community but I have been thinking about this long and hard. As the scarcity of rolex watches at AD's increases...meaning you walk into an AD and they have 3 watches where before they had roughly 100 on display and the grey market having a surplus of models available but at double the cost does this not present a problem for Rolex as a Brand in regards to maintaining and capturing market share for the strategic longterm.

People who are passionate about Rolex who used to be able to "Afford" a 9K watch can not even find one and if they do they must spend crazy money either cultivating a relationship with an AD or buy on the grey market.

This leads me to believe that the broken process for acquiring a product like Rolex today and will begin to lose customers because people are so frustrated with the now broken process of acquiring a new Rolex watch that they go elsewhere to watches that provide better quality, accuracy and more innovation. Not to say that the AD's have vast portions of their stores with empty shells. I believe it is a fine line that Rolex is walking...that could have long term implications for the brand. I would love to know what everyone thinks....

When I was in my AD trying on a TT Sub the SA told me that whilst the quantity of watches they are getting from Rolex is down on normal levels virtually every watch they get is sold.

This makes the business very busy, not only that but the traditional window fillers are also selling as people spend that money that they have saved during the covid crisis.

The delivery that they had received that week comprised of 20 watches, 16 were pre-sold awaiting collection, 3 had gone into the window and one was sitting on my wrist as I had first refusal.

So whilst it may appear on the surface that the AD has nothing to sell and the situation is dire, the reality is often much different. Don't forget that a lot of customers going into the store are not Rolex diehards, they are searching for a luxury watch they like, most dealers have other brands to sell and they are seeing a pick-up there.

Without a doubt production at Rolex has suffered due to Covid, staff cannot be assembling watches if they are off work due to illness, we have all seen these effects in our daily lives, during covid demand for Rolex or other luxury items has not fallen, in fact it has probably increased.

[Rashid.bk]

Now that you’re done venting, continue on to the next stage of grief. The faster you get through it the faster you’ll see this new reality at Rolex and the Swiss watch in general, they’re just popular.
Once you stop trying to rationalize Rolex or Hermes’ business model, you’ll be able to spend that time getting on a list somewhere and finally buying a watch. Oh you’re going to justify you’re POV buy showing Rolex and taking your money elsewhere, we at large thank you, as there’s one less person on the list for the greys and us to compete on the list with.

[Bizcut1]

Crisis? What crisis?

[Nairn1980]

Originally Posted by Danishtext

The mistake many people make is thinking that rolex is too big to fail.

Oh here we go

[Rashid.bk]

Originally Posted by Nairn1980

Oh here we go

…again.

[Filo25]

I thought I would go for an exercise in frustration and check every AD in central London earlier this week, stocks really insanely low across the board nothing much apart from small TT DJs and DDs, I think I saw one YM37 across everywhere we visited.

Chatting to a few dealers and yes supply has been hurt here by the pandemic, but demand has been way up as well, if shortages are going to kill demand Rolex, it isn't showing much sign of doing it yet!

Definitely seems to be a bit more stock outside London though, was elsewhere the previous week and did see quite a few TT DJ41s (really saw nothing in mens sizes in London), the gold skydweller on oysterflex, TT SD43, full gold blue submariner and a few YM37s.

A few London ADs were saying Rolex are going to start sending them a display model, not for sale for various models, so people can at least see and try on what they are ordering, but that the feeling was in future that stock levels at ADs would be even lower and it would pretty much a case of registering interest to buy anything.

[Ganymede]

Originally Posted by mdqs67

New to the community but I have been thinking about this long and hard. As the scarcity of rolex watches at AD's increases...meaning you walk into an AD and they have 3 watches where before they had roughly 100 on display and the grey market having a surplus of models available but at double the cost does this not present a problem for Rolex as a Brand in regards to maintaining and capturing market share for the strategic longterm.

People who are passionate about Rolex who used to be able to "Afford" a 9K watch can not even find one and if they do they must spend crazy money either cultivating a relationship with an AD or buy on the grey market.

This leads me to believe that the broken process for acquiring a product like Rolex today and will begin to lose customers because people are so frustrated with the now broken process of acquiring a new Rolex watch that they go elsewhere to watches that provide better quality, accuracy and more innovation. Not to say that the AD's have vast portions of their stores with empty shells. I believe it is a fine line that Rolex is walking...that could have long term implications for the brand. I would love to know what everyone thinks....

I walked into my local authorized dealer to look at buying a Datejust…

They had nothing there. The Rolex case was barren. In fact, I think even the watch pillows had been sold!

I think that’s a pretty good sign that demand is still up.

[train-time]

My local AD is right in your market. They have had record sales for the past two years with two locations. They are in plans with Rolex to add a third location soon. Just because you don't see full cases doesn't mean that they don't get the pieces that people want.

[chiscott_29]

Originally Posted by Fleetlord

The vast, vast majority of "people" you mention don't want a "watch".

They want a ROLEX

There simply is no substitute. The other brands simply don't exist to these individuals.

Exactly. That’s why I say they have the most valuable and envious brand recognition in the world.

I’m not at all suggesting everybody needs to love Rolex - We all know there are lots of collectors that don’t for various reasons. But the reality is there are really two types of people: Those who want a Rolex, and those that lie and say they don’t.

I don’t see how that ever materially changes barring some sort of catastrophic behavior or scandal.


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[fed_fan]

It hurts the brand perception for some and elevates it for others. Some frustrated by lack of inventory and others energized to collect hot / in demand models. And for Rolex and it’s ADs their unit economics, working capital, ROIC, etc. have never been stronger so difficult to argue they’re hurting themselves.

Suppose it comes down to the durability of the current state of affairs. But even if the market resets and stainless steel sports comes back in dealer’s cases, I would bet many of the “old guard” will pick up where they left off and purchase again.

[watchwatcher]

The brand "crisis" was a few years ago, when you tried on the watches you wanted at the AD and then bought them for a steep discount at your favorite TS.

All these threads that try to explain the "fallacy" of Rolex don't take this into account, nor do they look at the big picture from the company's perspective.

When you see Rolex watches either A, readily available, or B, heavily discounted, then you will know there is a crisis.

[Mystro]

Originally Posted by teck21

It is a brand crisis indeed, but not for Rolex.

It is a brand crisis for the Rolex WIS who won’t pay today’s applicable entry fee.


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X2. The only Rolex crisis is for those on the outside looking in. Money is what makes the luxury world go round. There are plenty of fine luxury watch brands that are in stock and pay under msrp. No one “needs” a Rolex.

[Mendota]

Originally Posted by 77T

Had a new thought…Rolex should launch a new brand of chocolates. All shapes of models you can’t find at the AD.

Each piece made with a thin wisp of gold leaf hammered from purified Rolex 24k gracing the dial.

Yum - that way you can have your Rolex and eat it too…


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Haha! I love it!

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[perpetual]

I'm no economics major - but I do know this. Every market follows the same basic rules: more demand than supply -> low inventory -> high prices.

There is no 'crisis' and there is no drama about the Rolex brand. Take the emotion out of this discussion and it is simply a product that is in limited supply right now, along with record high available discretionary income among it's potential customers. This is not a hard equation to understand.

Think about the USA. The government handed out what, $6T in newly printed cash? Look at the database of people who received 'PPP' grant money - there are plenty who did not really need the cash but took the opportunity. I personally know some of them. I guarantee they are spending the money on discretionary items, of which a luxury watch is certainly in scope.

Once these unusual circumstances are gone, the market will return to normal.

No drama, no 'crisis'. Just simple cause and effect.

And let's not forget that the best thing for a bubble in any market, is a correction. When that happens we can talk 'crisis' but it'll be a different use of that term.

[VogelPhoenix]

Originally Posted by doboy007

I don’t know if anyone would think that.

see reply #36 in this thread...

[zewill]

Originally Posted by vh2k

So, Rolex sells every watch they make; ADs are selling them faster than ever before, at the highest transaction prices in their history; and Rolex and their ADs are gaining so many customers that they will begin to lose customers? Beyond illogical.

Two years ago, demand for Rolex was X. Now, it is 2X. That’s an INCREASE in customers.

.

That’s a shortsighted post. No, that’s an increase in SALES. Not customers. If the greys hoard all the watches which they do, many customers are annoyed and do the right choice of not going grey. I agree with OP,they are losing customers. Sure, they might not care as they still sell, but it is shifting the brand someplace else. Also, do you really think ADs enjoy telling people ‘no chance sorry’ and client leaves… how do you think the client feels? Has 10k$ to spend, thought about this purchase for years and gets declined as soon as he Enters the doorstep? Insulting if anything…

[Snerks]

Originally Posted by Kyle3130

It will never fail. It’s a private company and the trust is bigger than you think.

It will absolutely fail one day. Everything does. Might not be our lifetime, or generations to come, but at some point in the infinite of our universe, Rolex will fail.

[WalterW]

Incorrect. The stupidity of mankind never fails to amaze

[douglasf13]

Originally Posted by Snerks

It will absolutely fail one day. Everything does. Might not be our lifetime, or generations to come, but at some point in the infinite of our universe, Rolex will fail.

Yep, just ask my formerly expensive gold pocket watch from 1904. It amazes me that people think things like old cars and analog watches will increase in value forever, especially considering where we’re going with technology.

[johnwigan]

Supplies will return to normal. Covid hit production. Fiscal stimulus. People have abnormal amounts of disposable income and time due to Covid. People becoming amateur flippers due to Covid. There is record unfulfilled demand for lots of other things as well. Not just Rolex. Inflation is increasing. It is a perfect storm. And yet people think (wish) what is happening now will just continue

Rolex is building to increase production levels to higher than ever before in the next few years.

Why on these boards Rolex shortages and a crappy customer experience is so relished tells me there are a lot of people here who are flippers. Or people who somehow like that their watch has not dropped in value or has even increased a bit. Perhaps they like the supposed exclusivity (not in reality). But if your Rolex is intended for your wrist then being able to get a watch quicker and have a good experience should be welcomed. And to even get a discount or get a bargain on the used market - great. All good if you're actually interested in the watches themselves.

But listening to some on these boards it would a disaster for them if you could walk into an AD and just pick up what you want. My view is what is happening now is not normal and will not continue.

[JRell]

Originally Posted by johnwigan

Supplies will return to normal. Covid hit production. Fiscal stimulus. People have abnormal amounts of disposable income and time due to Covid. People becoming amateur flippers due to Covid. There is record unfulfilled demand for lots of other things as well. Not just Rolex. Inflation is increasing. It is a perfect storm. And yet people think (wish) what is happening now will just continue

Rolex is building to increase production levels to higher than ever before in the next few years.

Why on these boards Rolex shortages and a crappy customer experience is so relished tells me there are a lot of people here who are flippers. Or people who somehow like that their watch has not dropped in value or has even increased a bit. Perhaps they like the supposed exclusivity (not in reality). But if your Rolex is intended for your wrist then being able to get a watch quicker and have a good experience should be welcomed. And to even get a discount or get a bargain on the used market - great. All good if you're actually interested in the watches themselves.

But listening to some on these boards it would a disaster for them if you could walk into an AD and just pick up what you want. My view is what is happening now is not normal and will not continue.

Well said - exactly. Really no reason to expand past this post!

[Yellow5]

There are multiple facets to the issue, and I think Grey Market dealers, ADs, and Rolex all share a portion of the blame. Rolex watches aren’t created to be coddled, stored in safes, or flashed on Instagram for likes or whatever. They tell the time, and are built to last and look nice. I feel bad for each of the three, as none of them could have thought the crazyness we see right now would be a future reality. Sure, Daytona’s over list is one thing, but triple list is so bonkers I don’t know how to start. Lots of folks that bought in at that level are going to ragrat that decision later.

There will be a time, sometime in the next few years, when the collectible bubble will burst and we that bought things for their intended purpose won’t care, and the investor money will move somewhere else. I hope that day comes soon.

[JRell]

Originally Posted by Yellow5

There are multiple facets to the issue, and I think Grey Market dealers, ADs, and Rolex all share a portion of the blame. Rolex watches aren’t created to be coddled, stored in safes, or flashed on Instagram for likes or whatever. They tell the time, and are built to last and look nice. I feel bad for each of the three, as none of them could have thought the crazyness we see right now would be a future reality. Sure, Daytona’s over list is one thing, but triple list is so bonkers I don’t know how to start. Lots of folks that bought in at that level are going to ragrat that decision later.

There will be a time, sometime in the next few years, when the collectible bubble will burst and we that bought things for their intended purpose won’t care, and the investor money will move somewhere else. I hope that day comes soon.

A big reason I won’t pay double/triple for a watch, when the market value in a few years will drop. People are buying the market. Yes I know someone people don’t care, money is nothing to them, they want it now, time is money, etc. Money or not, I can’t justify it.

[TunaTuna]

Rolex doesn't care, they can now sell any watch in their line at any time. Doesn't seem like a crisis to me when the line is so long with customers and flippers waiting to buy everything. EVERYTHING. Seems like they have a great strategy that many other companies wish they could pull off

[vh2k]

Originally Posted by zewill

That’s a shortsighted post. No, that’s an increase in SALES. Not customers. If the greys hoard all the watches which they do, many customers are annoyed and do the right choice of not going grey. I agree with OP, they are losing customers. Sure, they might not care as they still sell, but it is shifting the brand someplace else. Also, do you really think ADs enjoy telling people ‘no chance sorry’ and client leaves… how do you think the client feels? Has 10k$ to spend, thought about this purchase for years and gets declined as soon as he Enters the doorstep? Insulting if anything…

1. The entire Swiss watch industry is SHRINKING. There are only a handful of brands who are doing very well and growing: Rolex, AP, PP, RM, Lange, Tudor, and a few meaningless independents. So, yes, total watch customers are going down... but customer demand for the top brands (including Rolex) is sky high. For the top brands, sales are up and (potential) customers (i.e., demand) is increasing. Any customers who leave the brand are replaced by many more eager new customers. Net customers (demand) is increasing.

2. Greys hoarding all the watches? This has been debunked time and time again. 95% of new Rolexes are in the hands of Rolex-loving owners. Sure some of them flip their watches (especially the hot ones) for a quick profit. Can't be avoided. But, there is no secret underground bunker full of millions of watches.

3. ADs can be savvy and sell other brands or jewelry... but their entire purpose is to cultivate lifetime customer value. Sales people always want the easy sell, more product, more marketing, more demand gen, etc. If ADs were in charge, they would tell Rolex to make 5 million watches per year -- regardless of long-term impact. That's the natural bias of the sales/distribution channel. In the vast majority of cases, SAs are effective in communicating WHY cases are empty... and that actually increases Rolex brand equity.

[Chester01]

Im in the minority here, but there is a reason for the gray market...they serve a function. The gray market gives the AD a regular and predictable stream of buyers. As these watches get more and more expensive and only available to the oligarchs, they are becoming less and less relevant and their actual history and significance is in steep decline (simply read the is it safe posts here). The gray market takes them, holds them up to the highest bidder, pinching supply. Now the folks with money, they are happy to pay the premium to get those pics on the instabook. But its creates a false sense of demand, as folks see these circulated amongst celebs and the "feeling" is there is so much demand. The AD needs the gray, because there are less and less buying jewelry and other lux good, and this is documented in advertishing literature as millennials and younger generations are eschewing overt signs of hierarchy and privilege.

I have to say, more and more vacations I am on, plenty of folks that can afford Rolex are simply opting for Apple watches. Rolex is just becoming associated with run away capitalism and serious inequity. Thats not in my mind great brand building. A few of us know their history here, but 99% here see that some instaceleb has it and so they want it, and they too want to show it off. Shame, as they were given out to special forces and while expensive were attainable were purchased by service members during active military use and used as tools by some major players in the 20th century. Now, simply a way to flaunt ones status. Its to the point i'm embarrassed to wear the thing anymore.

[mml4]

A significant number of times on this Forum I have read that the majority of transactions for Rolex are between "dealers" and not between dealers and end users. If this is even close to being true then it doesn't bode well for the Brand.
I don't pretend to know what the true state of the market is but I do believe my eyes. They tell me that there is an enormous number of dormant Rolex at insane prices on display at unauthorized outlets.

If what I surmise is true then something has got to give sooner or later.
All bubbles eventually burst!!

[Nav01L]

Originally Posted by mdqs67

New to the community but I have been thinking about this long and hard. As the scarcity of rolex watches at AD's increases...meaning you walk into an AD and they have 3 watches where before they had roughly 100 on display and the grey market having a surplus of models available but at double the cost does this not present a problem for Rolex as a Brand in regards to maintaining and capturing market share for the strategic longterm.

People who are passionate about Rolex who used to be able to "Afford" a 9K watch can not even find one and if they do they must spend crazy money either cultivating a relationship with an AD or buy on the grey market.

This leads me to believe that the broken process for acquiring a product like Rolex today and will begin to lose customers because people are so frustrated with the now broken process of acquiring a new Rolex watch that they go elsewhere to watches that provide better quality, accuracy and more innovation. Not to say that the AD's have vast portions of their stores with empty shells. I believe it is a fine line that Rolex is walking...that could have long term implications for the brand. I would love to know what everyone thinks....

Veblen had a few thoughts about this.