If there is one topic of conversation that has dominated the watch world in recent years, it would have to be the dilemma surrounding Rolex waiting lists. While certain watches, like the stainless steel Daytona, have tested the patience of prospective buyers. As long as I can remember recently that curse has extended to basically all the stainless steel professional models. Demand has escalated to such extents that particularly hot watches, like the Hulk or Pepsi, commonly trade for twice their retail price on the grey market and show no signs of returning to more reasonable prices.
While the inflationary price on the grey market has crept up on those involved with watches, the extent of it becomes evident when you try to explain the situation to those who do not know or care about them. The topic has transcended the community in which it originated, with people who only know me as the guy who talks about watches approaching me and asking how to get their hands on these pieces, looking to make some easy money with a fast flip. Unfortunately, I have to disappoint them as I myself can’t buy any of these watches.
Since January, I have been trying to buy a Rolex, for strictly personal use rather than resale, and have been turned down by every Jewellery store I have approached. The topic tends to evoke a lot of emotions when brought up. There are annoyed retailers, who spend most of their day turning down the never changing requests from an overwhelming influx of new customers. There is disappointment for those looking to buy these watches to actually wear themselves but are denied the opportunity. And there is contempt, from those who dislike Rolex and think this a mischievous plan to limit supply and choke out the market.
In an effort to explain the many factors that influence this situation today we will try to take a more nuanced look at the situation. We will consider who could be to blame, or whether this is a crime without a perpetrator. We will ask ourselves whether simply increasing supply to match demand could be a solution, and how it could possibly make things worse rather than better. And finally we will look at what the possible upsides are of a waiting list system in an effort to add some perspective on this emotionally loaded topic.
First we will play the blame game. Who can I point the finger at and make responsible for the first world problem of not being able to spend several thousand of euros on a luxury item devoid of any real functionality. The most obvious target here, of course, is Rolex itself. Given that the real price (I am referring to the gray market one here) ends up being a result of where supply and demand meet, and that the supply is controlled by a single company, it only makes sense to hold them responsible. After all, Rolex could if they really wanted to just pump out one steel watch after another until everybody and their mother owns one. However, increasing supply for this kind of product comes with a lot of negative externalities which could affect everyone involved, more on this later.
Having touched on the supply side, let’s take a look at who is responsible for the crazy demand. And that is in the first line you, dear reader. Of course, no single individual can shift the market, but wanting what others have plays a big role here. After all, can you give an objective explanation why everybody loves a GMT-Master, but no one cares for the Explorer 2? Everybody wants the sun-ray dial Submariner, but as blue version on the Yacht-Master 1 hardly gets a second look. The fact of the matter is that there are steel professional models available, but with fashion seemingly being more concerned with imitation rather than innovation it is no wonder why the same watches always gather all the attention. Add to that the fact that developing countries will have a growing middle class, especially China in this instance, and the influx of people who can afford a Rolex has exploded in the last decade.
As much as the customer is responsible, though, I find it hard to consider them the ones that deserve any blame. After all people like what they like, and pretending otherwise isn’t particularly helpful or healthy either. There is one type of buyer, however, that gains rather little sympathy from my side which are the flippers. These are people looking to buy these watches solely to capitalize from their popularity. Having no intent to ever wear the watches they acquire, they instead lock them in the safe for a rainy day or flip them straight away for a juicy return on investment. This works like a multiplier on the whole situation, as high prices foster attention from more flippers who in turn drive up prices even higher.
Unfortunately, combating this issue is no easy task. As a result of this phenomenon we have seen authorized dealers become significantly more careful in who they allocate their products to. As such the popular models are usually only sold to local customers that have a pre-established connection with the specific store. It is clear to me that the ADs are trying to avoid flippers, after all they have to sell at the MSRP and with so few watches arriving they have become a sort of reward for their most lucrative customers. And just for a sense of scale just how few watches actually arrive, a local AD in one of the biggest malls in Europe I have talked to on the topic has told me so far he has only received a single Submariner Hulk in this calendar year.
Having looked at the different parties involved and the issues surrounding the crazy demand, let’s revisit the idea of simply increasing supply, a “solution” that inevitably stands in the room every time the topic is brought up. If it were so simple though, why wouldn’t they just do this? Is it really just because the almighty and elusive Rolex has nothing better to do than to mess with rich folk for the sake of it?
First of all, I think it has to be stated that given Rolex not being focused on profits as much as some other brands have to be I think that their current position is a rather comfortable one for them. Their products are more desirable than ever, and basically sold as soon as they hit the shop, adding a lot to the brand reputation. Therefore, I believe that while they may not purposefully create this shortage, it definitely does play into their hand.
Let’s envision a scenario where Rolex would try to satisfy the demand for their professional watches and just pump out one steel submariner after another, what would happen? Revisiting the concept of supply and demand the second hand price would eventually begin to fall before finally going below the retail price. While this new availability would certainly make a lot of people happy momentarily, long-term wise I think it could seriously damage both the owners of Rolex and the brand itself. Suddenly all the customers who bought a watch being told that it would only gain value lose that unrealised profit, making them think twice before ever buying a Rolex again.
Before ending this blog, I just want to touch upon whether the waiting list system really is that bad. Sure, it sucks not being able to buy the watch you want, I know that from personal experience. Then again being in the process of trying to buy a new Rolex I have to say that I enjoy the hunt. Calling up ADs, visiting them and having a chat, and finally (hopefully) receiving your watch makes the whole process so much more special. You may call me a sucker for Rolex, but really I am a believer in delayed gratification. This current situation isn’t ideal, and I do hope things become better in the near future. But for now I would advise you to enjoy the ride, and let’s have some perspective on these first world problems.