Rolex and why you probably can’t buy the one you want
Better to treat the procurement of a Rolex as a journey.
By Jason Marsden
Since the beginning of time, retail has operated on the basic premise that you give your money to the retailer and they give you the goods you want. When it comes to most luxury items this still holds true, the only qualifier is that you need to have enough money to pay for the item.
Having decided that you wish to purchase a particular Rolex you find out the retail price and save enough to one day walk into your local authorised dealer. Envisaging a warm welcome and to be swept to an awaiting chair or maybe special area, the staff would proffer the watch in a dazzle of unboxing and gloved presentation. That evening (or sooner) the watch would be appearing in your WeChat blog and eliciting complements and congratulations from your many friends.
Today the reality may be very different. If you walk in to just about any authorised Rolex dealer, anywhere in the world and ask for a stainless steel sports model, you will very likely be told “I’m sorry we do not have any of those available at the moment”.
There are certainly Rolex watches available for immediate purchase from authorised dealers but these will generally be an island amongst a sea of empty display cushions. Precious metal models, gem set cases, smaller (eg 36mm case size) models, ladies and dress watches such as the Cellini range will be available in store. Missing will be men’s stainless steel professional models from the Submariner, Daytona, Sea-Dweller, GMT-Master, Explorer, Yacht-Master and even Milgauss and Air-King ranges.
So what is going on? To answer this, we need to understand a little more about Rolex the company.
The Rolex brand was registered 1908 in London by Hans Wilsdorf and Alfred Davis with the company becoming Rolex Watch Co Ltd in 1915. Following the First World War the company was moved to Geneva Switzerland, and Montres Rolex SA became the new registered company.
Following the death of his wife in 1944 and without any children, Hans Wilsdorf set up a trust to inherit his shares. Since 1960 Rolex has been owned by the Hans Wilsdorf Foundation, a registered charity. Being a charity Rolex does not have to operate in the normal business world of supply and demand. They do not have to return increasing profits to shareholders, report sales or justify anything they do.
The black face one is simply referred to as a Submariner and it is the modern iteration of the original James Bond watch. This watch has a water proof rating of 300m.The second has the face that transitions from blue to black. This is a special model of the Sea Dweller range made in conjunction with the famous movie producer and undersea explorer James Cameron. The blue to back face depicts the change in light as you dive into the depths with the green text on the dial matching James Cameron’s submarine. This watch has a water proof rating of a massive 3,900m!
Rolex is one of the very few watch manufacturers that does everything in house, they even have their own precious metal foundry and gem setting facility. It is even believed that they have their own people to source meteorites for those time pieces that feature an exotic meteorite dial. The company is famously secretive with hardly a hint of upcoming models. This combined with their in-house nature gives the Rolex production sites an almost Willy Wonka magical mystique.
No one outside Rolex really knows how many watches they produce in a year but best estimates put it between 800,000 and one million. This may seem a lot but when considered that this is across their entire product range – and it is extensive – then it is not too hard to see why stainless steel sports orientated models may be in short supply.
The luxury watch market has grown immensely in the last decade with other brands breaking new price points (see my last month’s Seiko article). Whilst Rolex prices have been going up these have typically been limited to mid single figure increases every couple of years or so. Thus the intrinsic demand for the Rolex brand and closing of the gap between Rolex and other luxury watch makes has seen a confluence of excess demand on a relatively fixed supply.
Faced with such a situation Rolex could do one of two things, increase supply or put their prices up until demand drops back to match the available production. Whilst there is talk that they are increasing their production capacity a small amount it does not seem likely that they will be anywhere close to supplying all of these currently near impossible to get models to anywhere near the current demand.
As for price increases they could bump prices up but it must be remembered that if they were to put their stainless steel model prices up then surely they would have to maintain the premium higher pricing of their precious metal and gem set models which may have a detrimental effect on total sales. The third option available to Rolex and the one they seem to be happy with, is do nothing.
By having an undersupply of some models this keeps the brand exclusive and highly valued. There is a positive flow on benefit to their second brand, Tudor, that invariably will be a substitute purchase for a customer who wants Rolex build quality and the brand association at a lower price and with immediate availability. The Tudor Black Bay range has seen a significant upswing over recent years.
The short supply of these models has also seen an unusual retail phenomenon where the second hand prices are above (sometimes almost double) the recommended retail price.
Authorised Dealers are only allowed to sell at the retail price thus someone purchasing a sought after Submariner could theoretically sell it straight away for a profit of thousands of dollars. This flipping does nothing to benefit Rolex and unfortunately reduces those watches into a commodity rather than something to be worn and appreciated.
Rolex themselves do not want to see their watches on sold in this manner and Authorised Dealers are very careful to try and ensure what few of these watches they get are sold to genuine customers and not to someone who will go and immediately on-sell it.
So how can you obtain one of these highly sought after models? You can choose to buy on the secondary market at a price well above the retail. Be aware that this Rolex “bubble” may not last forever and you may see a significant drop in value at some future point. By not purchasing through an Authorised Dealer you will also miss out on the new watch purchasing experience that only buying new can provide.
Fakes and replicas are getting a lot more sophisticated these days and even the provision of box and papers along with a careful examination of the movement by anyone other than a specially trained technician could see you spending a lot of money on something worthless. Better to treat the procurement of a Rolex as a journey.
It used to be that explorers would take Rolex with them on an adventure, now the adventure is often in pursuit of the watch! Get to know your local Authorised Dealer, in Christchurch that is Partridge Jewellers on Cashel St, led by Sam and his team.
Take the opportunity to explore other brands along the way, Omega, Breitling, IWC to name just a few. By building a sales history and relationship with your local dealer you will be in good stead when finally your turn comes to be offered that very special piece.
About the writer:
Jason Marsden is a Retail Property Manager for Colliers International and an avid watch collector. His collection includes not just some famous Swiss luxury watch brands but also a number of vintage Seiko.