I don't understand the recent Rolex SS craze/shortage. What am I missing?

jankymutt · May 16, 2019

Flintlock
Without claiming to know anything about Rolex's business, as a former bean counter I can say the term "constraining production" is an amorphous term. Does it mean not adding a shift or not investing in more plant? If they are at or near full capacity of their existing plant and staff they are not constraining production even if they don't expand.

Some of you might remember the "Cabbage Patch" doll phenomenon of 30 years ago. There was huge demand, re-sellers were getting way more than retail. Coleco invested on increasing production facilities for dolls at a time their cash flow was short due to video game investments. The bubble burst and Coleco suffered bankruptcy. Of course iconic brands like Rolex shouldn't be as volatile as a toy but the same principle applies.

IMHO Rolex knows their business. They are doing something right. Being treated as a charity can't be too bad either.

I am in medicine, not finance, so my knowledge is limited, but your argument makes sense. Constraining product would result in significant changes to their business (laying off workers, shutting down machines, decreasing orders for raw materials). Trying to reverse all of that in the future would be difficult. My gut feeling is that the world economy has been rebounding from the 2008 recession. Western countries have a lot of rich people getting richer and emerging countries have a lot of new rich people. I think the prices will stay high until there is another global correction/recession.

Evitzee · May 16, 2019

Rolex is one of the most valuable brand names in the world, it's known around the world and is probably the biggest aspirational brand. They know their stuff. A million watches a year is a drop in the bucket compared to the people who want, and can afford, such a watch. Right now there is a shortage of steel models....even in far away places like Perth, Australia the local AD has NO stainless sport watches. None. And they have customers who want one. It is what it is. Will the shortage stop, no one knows. But no one has been able to buy a SS Daytona at an AD just walking in off the street for years, maybe the Sub's and GMT's will go the same route. I heard Rolex's biggest seller worldwide is the women's DateJust. No one knows Rolex's production or sales figures but I would suppose the plain old steel and steel/gold DateJusts, along with gold and platinum Day/Dates bring in the bulk of Rolex's income. The steel sports line is probably a PITA for them. If nothing else it's the constant clamoring for MORE of them that is disruptive to the process.

People say it's due to China....that may play a part but there are very large other factors at work.

dputydwg1 · May 16, 2019

Its the China effect

wsfarrell · May 16, 2019

Bushido
You can get a good sense of production numbers by looking up chronometer certifications which do get published by the certifying agency.

Brilliant, thanks.

wsfarrell · May 16, 2019

michael22
Isn't "random serial number' a contradiction in terms? Why would they go random?

It is a contradiction, but it's the term people use to describe Rolex's change to a non-sequential numbering system around 2010. The reason for the change, as with many Rolex decisions, is shrouded in mystery. Here's a thread on it from Rolex Forums.

opahman · May 16, 2019

From my understanding the supply is limited due to the availability of Rolex service technicians which is around 4000 globally. I’m sure this is not the only reason but it’s one issue.

WurstEver · May 16, 2019

I was in Japan recently and had cause to say to my partner "Ah, so THIS is where they've all gone!"
Of course, they're not all there. But boy, there's a lot around relative to most places I've seen.

JwRosenthal · May 16, 2019

Having lived through a few recesssions but always being financially conservative enough to never have them touch me-I’ll just wait another year or two and have my pick of whatever I want at 1/3 current value on the used market. It’s coming guys, the bubble never lasts that long. The greedy always find a way to fυck it up for everyone.

77deluxe · May 16, 2019

JwRosenthal
Having lived through a few recesssions but always being financially conservative enough to never have them touch me-I’ll just wait another year or two and have my pick of whatever I want at 1/3 current value on the used market. It’s coming guys, the bubble never lasts that long. The greedy always find a way to fυck it up for everyone.

1/3 the current value in 1-2 years? What are you predicting, global depression?

wsfarrell · May 16, 2019

WurstEver
I was in Japan recently and had cause to say to my partner "Ah, so THIS is where they've all gone!"
Of course, they're not all there. But boy, there's a lot around relative to most places I've seen.

Very interesting. I had a notion they were more plentiful outside the U.S.

JwRosenthal · May 16, 2019

77deluxe
1/3 the current value in 1-2 years? What are you predicting, global depression?

Not reading tea leaves, just know my history and when everyone is flying too close to the sun....

jankymutt · May 16, 2019

JwRosenthal
Not reading tea leaves, just know my history and when everyone is flying too close to the sun....

I can see that too. I live in the Boston area. Housing prices are through the roof. Young people (I'm 36) are coming out of school with mountains of debt and mediocre job prospects. They are spending 60-70% of their month income on housing and putting little/none into retirement. (I'm speaking of the young people at our company, but they are the norm, not the exception around here). Wages are not increasing and cost of living is only getting higher every year. My brother lives in Sacramento and the story is similar.

Evitzee · May 16, 2019

JwRosenthal
Having lived through a few recesssions but always being financially conservative enough to never have them touch me-I’ll just wait another year or two and have my pick of whatever I want at 1/3 current value on the used market. It’s coming guys, the bubble never lasts that long. The greedy always find a way to fυck it up for everyone.

Reality says the opposite will happen. I'm old enough to have been around in 1987 when the market dropped 22.6% on Black Monday in October. At the time I was living in Saudi Arabia but would transit through Zurich 3 or 4 times per year and I was buying vintage watches from a well known dealer. I mentioned to him that his business must have been hurt after the crash. "Just the opposite", he said, "people fled the financial markets and wanted places to put their money". His business was booming. Watches will not drop 1/3 when the next big market correction occurs. Good stuff will hold its value and will be sought after.

Observer · May 16, 2019

I went to the Rolex dealer in town and they said they'd be glad to call me if something comes in. The OB sells Rolex as well and he told me that Rolex just isn't shipping much out. He says several former Rolex sellers in town have closed up shop in recent years due, in part, to not being able to get product. Plenty of demand.

ScubaPro · May 16, 2019

Watch forums are the worst place to get information on things like watch sales, and anything Rolex does in terms of running their business. Rolex makes X number of watches each year, and then sells them. All over the world. They are very popular. The birth of the online watch sales sites that buy up the Rolex stock and then resell it at a profit has helped create a shortage, but Rolex is doing what they can to curtail this. As for getting a Seamaster instead of a Submariner, there's a reason Seamasters don't hold their value and are quite easy to get. But this is a posting on a watch forum. I suggest you ignore it.

Foo2rama · May 16, 2019

ScubaPro
Watch forums are the worst place to get information on things like watch sales, and anything Rolex does in terms of running their business. Rolex makes X number of watches each year, and then sells them. All over the world. They are very popular. The birth of the online watch sales sites that buy up the Rolex stock and then resell it at a profit has helped create a shortage, but Rolex is doing what they can to curtail this. As for getting a Seamaster instead of a Submariner, there's a reason Seamasters don't hold their value and are quite easy to get. But this is a posting on a watch forum. I suggest you ignore it.

That makes no sense as it would imply a bunch of things that are not happening from an economic theory standpoint, and from a observed data. It’s not grey market buying up stock and reselling.

Foo2rama · May 16, 2019

WurstEver
I was in Japan recently and had cause to say to my partner "Ah, so THIS is where they've all gone!"
Of course, they're not all there. But boy, there's a lot around relative to most places I've seen.

Are they new ones? Ceramic bezels? I see a lot of older ones...

WurstEver · May 16, 2019

Foo2rama
Are they new ones? Ceramic bezels? I see a lot of older ones...

New and old. There were more new than I've seen anywhere else recently... which I guess means more than zero 😉 We looked mostly around Ginza, Akihabara, and Nakano. Old ones were available by the metric truckload, especially in Nakano. The window shopping was a lot of fun.

JwRosenthal · May 16, 2019

Also, companies like

Evitzee
Reality says the opposite will happen. I'm old enough to have been around in 1987 when the market dropped 22.6% on Black Monday in October. At the time I was living in Saudi Arabia but would transit through Zurich 3 or 4 times per year and I was buying vintage watches from a well known dealer. I mentioned to him that his business must have been hurt after the crash. "Just the opposite", he said, "people fled the financial markets and wanted places to put their money". His business was booming. Watches will not drop 1/3 when the next big market correction occurs. Good stuff will hold its value and will be sought after.

Having lived through the same times but on a different continent, the experience was different. I lived in LA during the downturn of the late 80’s, the loss of CA aerospace and defense jobs, the housing crash of ‘91- lots of used car lots with Porsche’s and Ferrari’s, lots of pawn shops with Rolex’s.
The global landscape is different now than it was
then, I see more similarities with 1914 than I do with 1988....and scoring a sub at the AD will be the least of anyone’s concerns if it goes that way

Flintlock · May 17, 2019

What I don't understand is the grey market availability of a hot seller. If ADs are reselling to dealers at above list price isn't corporate concerned? That would have to be the only motive as the ADs don't have to discount to move product. I imagine corporate gets a boost by not honoring warranty on those sales, even though they have been paid in full. You'd think they'd just raise prices to match the scalpers.

I don't understand the recent Rolex SS craze/shortage. What am I missing?

jankymutt

Evitzee

dputydwg1

wsfarrell

wsfarrell

opahman

WurstEver

JwRosenthal

77deluxe

wsfarrell

JwRosenthal

jankymutt

Evitzee

Observer

ScubaPro

Foo2rama

Foo2rama

WurstEver

JwRosenthal

Flintlock

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