“The coronavirus is keeping Chinese tourists away from its London boutiques, British retailer Watches of Switzerland said,” reuters.com reports, “but local demand for Rolex sales is so strong it is making up for the decline.” And once that demand is satisfied? The Asian Rolex market’s coronavirus-caused disappearance spells good news for people waiting for a Rolex, bad news for Rolex resale . . .
Rolex didn’t get to be the world’s preeminent watch brand without learning how to balance the supply – demand equation. In Asia, the supply of Rolex exceeds demand. As in there’s a large supply and nearasdammit no demand.
Common sense says Rolex would begin to channel some of their Asian supply to Rolex-deficient dealers in the U.S., U.K. and other markets. Common sense is right. Watches of Switzerland’s Chief Executive Brian Duffy gives us the inside dope on the current state of play re: Rolex sales and supplies in the U.K.
Duffy said there was some evidence of brands shipping unsold stock from China to other markets.
“There will be stockbuilding because consumption clearly has reduced in China and a lot of Chinese-dependent markets, Hong Kong and Switzerland probably being the next obvious.”
Demand for Rolex, but also Patek Philippe and Audemars Piguet, was so strong there were actually supply constraints, he said.
“So if there’s a reduction in one consumer group, it’ll be to the benefit of others,” Duffy said, adding they’d not had any additional allocation of product yet.
Game this out.
Rolex satisfies pent-up demand in the U.S., the Eurozone and Brazil (for all I know) with Asian stock. At the same time they throttle down production and/or stockpile Rolexes. Either way, the Geneva watchmaker will not flood the market. Nor will they reduce prices. BUT –
You have to believe that a lot of the demand for pre-owned Rolex comes from buyers who went to an authorized dealer only to hear “there’s a waiting list.”
They bought pre-owned or flipped new stock to scratch the Rolex itch. Some bought below msrp, some above. That demand was also driven by the general impact retail scarcity has on a brand’s rep. You can’t even buy a new Rolex? They must be awesome!
Coronageddon changes that equation, with suddenly full Rolex AD watch cases. And let’s not forget the coronavirus’ general effect on Rolex sales. People who fear they may be restricted to quarters are thinking more about food, toilet paper, water and stock prices than adding a luxury Rolex to their collection, or starting down the Rolex road.
What of the grail Rolex like the stainless steel panda dial Daytona? Once again, it’s a simple supply – demand equation. But this one’s shrouded in mystery. How strong is the demand for these sought-after pieces and how much supply of these pieces will Rolex redirect to the U.S. and other still hot markets? Dunno.
I imagine a fair few Rolex owners must be thinking hmmm, I better sell my grail watch now, before coronavirus craters the pre-owned market.
By the same token, a fair few potential buyers must be thinking hmmm, maybe I should wait to see if the prices come down before buying. Which adds momentum to the downward spiral. Especially after reading
HoDinkee’s coverage this article.
I reckon it’s a good time to sell a pre-owned Rolex and a great time to hang fire and see how this plays out. As always, danger equals opportunity. Need I say it? I sincerely hope that the coronavirus pandemic is limited until a vaccine can be created and distributed. In other words, I hope I’m wrong.