The Rolex Watch Shortage
If you have tried to purchase a brand-new, stainless steel Rolex sports watch from an authorized dealer within the last couple years, then there is a fairly good chance that you were told that there are none currently in stock, and that there is a rather long waitlist for whatever model you intended to purchase. A number of theories exist regarding the possible causes behind this lack of supply; however internationally, there seems to be a widespread shortage of Rolex watches.
Calling it a “Rolex watch shortage” may be slight hyperbole, as there are still a number of brand-new Rolex watches to be found at authorized dealers. However, it seems that the only ones available for immediate purchase are those craft from precious metals. The various stainless steel Rolex sports models seem to be in the shortest supply, with waitlists for certain references reaching several years in length; however even humble Oyster Perpetual models are now becoming increasingly less plentiful as time progresses.
A big contributing factor behind the shortage is due to the combination of an incredibly high demand for Rolex watches, and the current record-high prices for them. Rolex timepieces have always been relatively expensive; however it is only within the last couple decades that they have become the luxury-oriented status symbols that they are today. Even after you account for inflation, a standard Rolex Day-Date has not always cost as much as an entry-level Mercedes Benz.
With the current retail prices of today, a modern Rolex President now costs as much as a foreign luxury sedan, and even the classic, two-tone Datejust now has a sticker price that exceeds the five-figure price point. By comparison, a stainless steel Submariner – arguably Rolex’s most iconic and instantly recognizable line of watches – now seems like quite a bargain, as it can be purchased for only $7,500, if you are willing to forgo the convenience of having a date display.
A record-high demand for Rolex watches, combined with an increasing percentage of that demand being centered upon their more modestly priced offerings, results in a shortage of watches, one that particularly impacts those that are craft from stainless steel. Given the vast resources at Rolex’s disposal, it would be foolish to think that they are simply not capable of keeping up with the present demand. In all likelihood, it is not that Rolex cannot keep up with demand; it is simply not in their best interest to do so.
In the wake of the 2008 financial crisis, many luxury timepiece manufacturers learned that chasing maximum sales figures could quickly lead to gross overproduction, and a total saturation in the marketplace. This in turn, results in plummeting prices, and a decrease in general demand, largely due to the overflow of products that get sold on the gray market for significantly below their retail values. Rolex is not immune to the potential ill effects of gray market sales; however one way to help mitigate its impact is to approach production increases with a set and controlled rate.
First and foremost, controlled and scheduled production increases guarantee that there will not be a huge saturation of products on the market, unless demand absolutely goes down the toilet in the most rapid and unexpected of manners. This helps to preserve the desirability of their most sought after new releases, and allows Rolex to maximize the longevity and overall “must have it” factor of their watches for as long as possible. Additionally, nothing makes Rolex’s retail prices seem more reasonable than when pre-owned watches – which are currently still in production and available through authorized dealers – sell for nearly twice their sticker prices on the open market.
Lastly, Rolex makes a greater profit when they sell watches that are made from precious metals. The movement inside a stainless steel Sky-Dweller is entirely identical to the one inside an all-gold Sky-Dweller; however it costs less than one-third of the price. The total difference in retail price between a stainless steel Rolex Sky-Dweller and its yellow gold counterpart is in excess of $30,000; however the total amount of gold in the watch is not worth one-third of that. Excluding the cost of the gold itself, Rolex’s production expenses are nearly symmetrical for the two watches, which explains why they would much rather sell one gold Sky-Dweller than three stainless steel ones.
As with most things, Rolex is staying silent about this matter, and will likely never come forward to offer an explanation for why they cannot (or more likely will not) manufacture enough stainless steel watches to meet demand. However, when looking at the numbers and taking into consideration that Rolex is the most well-known luxury brand on this planet, it becomes clear that Rolex’s prerogative is not to try to please the public on an immediate basis, but rather do what is going to be best for their overall brand and the lifecycle of their products. This may leave many prospective buyers frustrated; however clearly this approach is not deterring the sale of stainless steel Rolex sport watches; the multi-year long waitlists can confirm that.
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