Yahoo Finance asked Rolex to comment on the supply shortage of Rolex watches, and surprisingly, they did. Unsurprisingly, the comment doesn’t really answer much, and I am skeptical of what it does answer.

Rolex has had a supply shortage of stainless steel watches for years, beginning in 2016. When the new Daytona was announced at Baselworld that year, people who wanted one had to get on lists at their Authorized Dealer. The BLNR GMT MASTER II (Batman) also experienced high demand and waiting lists.

Rolex’s statement to Yahoo Finance says two things:

• Rolex is working at maximum capacity and can’t make more without sacrificing quality
• Authorized Dealers manage which customers can buy a watch

This is bullshit.

But first, the whole quote:

The scarcity of our products is not a strategy on our part. Our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches – something we refuse to do as the quality of our products must never be compromised. This level of excellence requires time, and as we have always done, we will continue to take the necessary time to ensure that all our watches not only comply with our standards of excellence, but also meet the expectations of our customers in terms of quality, reliability and robustness. Rolex does not compromise on what it takes to produce exceptional watches.

All Rolex watches are developed and produced in-house at our four sites in Switzerland. They are assembled by hand, with extreme care, to meet the brand’s unique and high-quality standards of quality, performance and aesthetics. Understandably, this naturally restricts our production capacities – which we continue to increase as much as possible and always according to our quality criteria.

Finally, it should be noted that Rolex watches are available exclusively from official retailers, who independently manage the allocation of watches to customers.

– Rolex to Yahoo Finance, 2021

Why this is BS

BS reason number 1

“Rolex cannot increase supply without sacrificing quality.”

Rolex has had years to increase supply. The shortage of Rolex watches began in 2016. You cannot tell me with any seriousness that a company with their resources is unable to plan for increased materials stockpiling, and lacks the ability to open new production lines to increase production capacity. It would be one thing if this was the first time Rolex were experiencing such a thing, but 5 years into a supply shortage rings hollow.

I attempted to see if there was at all a pandemic-related reason that could account for the continued shortage. Some reports put steel prices up 219% since 2020. But Swiss Steel suppliers have been dropping prices and having trouble selling enough steel.

Swiss Steel Holding, formerly Schmolz+Bickenbach, registered a cautiously positive recovery in the third quarter after two disappointing quarters due to the Covid-19 pandemic impact. … The average sales price/tonne of steel was €1,534/tonne ($1,805) versus €1,654 in Q3 2019. 

https://eurometal.net/swiss-steel-eyes-recovery-but-shipments-still-low/

Even presuming that there is a steel shortage now, it doesn’t satisfy me that they could not have stockpiled the material they know they will use, and fixed their ability to scale years ago. As Ben Clymer said in 2019, “Rolex can’t deliver shit.”

BS reason number 2

“The authorized dealers allocate watches to customers.”

Blaming the Authorized Dealers is bullshit. The Authorized Dealers get their direction from Rolex HQ. There’s a whole fetishization around forming a deep, meaningful romance with your local Authorized dealer in hopes that they will sell you something.

There are waiting lists. There’s the concept of buying a watch you don’t want to establish that you’re an existing, loyal customer, worth selling a Rolex to. There’s the concept of buying a his&hers set for the same reason. There’s guidance on the internet, shaming people for daring to go into an authorized dealer, and having the unmitigated audacity to express interest in more than one model of watch, because it shows you aren’t serious and committed to one model. Also, apparently, you get better service when watch shopping if you go in wearing a nice watch.

All this is nonsense. No customer should have to prostrate themselves before the Authorized Dealer. The most blatant example is the Chicago AD who is currently being prosecuted in the US District Court For The Northern District Of Illinois Eastern Division.

Rolex’s policies for Authorized Dealers are pretty clear:

• all sales must be in person to the consumer.
• all protective stickers must be removed from the watch at time of sale (this is to prevent gray market resellers)
• sales professionals must be wearing a Rolex timepiece and a Rolex scarf or tie while making Rolex sales

Jewelers will sell Rolex products only to
               ultimate consumers, at the retail level, in transactions that
               originate over-the-counter at its authorized location(s). All
               other methods of the sale (except for Rolex-approved
               corporate/presentation sales) are considered transshipping.

But since Rolex dictates policies to Authorized Dealers, they can also dictate waiting lists, allocation, and anything else they wished. They just don’t desire to do so.

Do Rolex AD’s have stock of desirable watches?

Mixed. I have been told by sales reps who sell other brands into AD’s that they absolutely have stock of the desirable watches in the vault. They’ve shown me pictures of vaults with GMT Master II, Daytona, and Submariners. If you have an existing relationship, or are prepared to spend a lot of money, the vault opens. If there’s no relationship, the AD will say, “the wait list for a GMT Master II is 5 years”, as a polite way of saying, ‘we aren’t selling to you.’

What is this “form a romance with your AD” business?

There’s a thread on reddit that asks people for anecdotes about how long it took the AD to get you a watch, which model, and what the prior relationship was. One poster wrote, “Have a really kind AD who means it when he says the relationship matters. Brought him a bottle of whiskey and a hand written note after we met the first time thanking him for explaining the process. Little details like that helped me big time,” allowing that person to purchase a new Submariner with a 2 month wait time, after having already spent 11k on wedding bands with the salesperson.

Other purchasers on the thread indicate that it’s possible to purchase from an AD without a purchase history or relationship, but that wait times are about 2 – 4 months.

The problem with such a thread is that it only documents successful purchasers, not the people who wait and are never called on to purchase.

Rolex could fix every part of this. They just don’t want to. They could increase production. They could require ADs to keep stock on display. They could, but they don’t. Instead, they have one of the worst retail experiences possible.