Rolex Shortage Easing?

0
135

Rolex shortage

Rolex shortage? Yeah, there’s a Rolex shortage. Authorized dealers around the country, around the world, are welcoming COVID-19 weary/wary customers with empty showcases. While the Rolex factory is back online – albeit cranking-out fewer timepieces than before (thank you social distancing) – the question remains: will the Rolex shortage ease? If so, when? Let’s ask an expert . . .

“During his investor call, Brian Duffy, CEO of Watches of Switzerland Group, made a simple, but potentially important observation,” watchpro.com reports. “‘Supply is always our biggest constraining factor. But we are seeing a bigger impact on demand than on supply.’”

Under this analysis, as Rolex reanimates production, increased supply will meet diminished demand. The shortage of Rolex watches at your local authorized dealer will disappear. You’ll be able to walk in and buy a Rolex, maybe even an Explorer. But not . . .

Rolex shortage - Daytona

A box-fresh steel panda-faced Rolex Daytona. Demand for those bad boys shows no signs of waning. The chances that Rolex will ramp-up production of Daytonas and other “Grail watches” to meet the nearasdammit insatiable demand are somewhere between slim and none, and Slim just left town.

Mr Duffy says there has been no change to the group’s waiting lists for these watches. “We will not add anybody to waiting lists if we think they will have to wait more than three years. Waiting lists have not reduced this year,” he reveals.

OK then! Forget that for laugh.

There are three ways the “supply will catch-up to demand” prediction can go wrong: demand for Rolex increases significantly, demand for Rolex falls significantly or a COVID-19 resurgence in Switzerland forces Rolex to shut down production again.

Rolex boutique Macau

I don’t think anyone’s predicting a sudden rush on Rolex stores. The world economy’s taken a gut punch. While it’s picked itself off the matt, it’s still staggering around, trying to regain its balance, wary that Mr. COVID is coming out of his corner for Round 2.

If that happens in any significant way, Rolex demand could swan dive and production would shut down. Which would leave us back where we were in March – no Rolex, no sales.

Meanwhile, The Federation of the Swiss Watch industry reports July Swiss watch exports were down 17 percent versus last year. Industry analysts figure the market for Rolex and other luxury watches is in a very slow recovery mode. Which will allow Rolex to gradually restock Rolex-less dealers.

Rolex shortage - and no show jumping

Rolex is owned by a foundation. In November of last year, Rolex was producing some 1m watches per year, banking billions.

With that kind of cash and no shareholders clamoring for short-term profits, Rolex can do whatever the hell it wants; sales, marketing, pricing, product, distribution and production-wise. Anything.

As Rolex is insulated from the usual mega-corporation’s financial pressures, as Rolex has survived plenty of economic shocks, as Rolex is unionized, as Rolex is Swiss, their number one priority is simple: keep their “family” employed. Doing the same things there were doing before China unleashed the pandemic.

Rolex Explorer 1

So Rolex will just go back to producing 1m watches per year and let the market take care of itself. The only real cloud on that horizon: suppliers struggling to weather the storm. Rolex makes most of what they make in-house. So that’s a delay, not a show-stopper.

There’s an end to the Rolex shortage in sight. By Spring ’21 or so, I reckon all will be well. How all this affects the pre-owned market is another story.

Leave a Reply