Rolex is finally speaking out about the shortage of their watches. For months, the high-end timepiece company has had what seemed like an inventory problem. But there have been critics who have said it’s an engineered issue, not a real one. Did the company create the problem to spur demand?

Adam Golden, an analyst of the industry, told Insider recently that, although there have been some pandemic-related supply chain disruptions for watchmakers generally, the situation here is different. Its shortage, or rather the appearance of shortage, is more fake than real, Golden said.

That charge got many people angry, with what a writer for Yahoo!News called a “perfect storm.”

The company has addressed this storm head-on. Its statement Sept. 23 begins on a reassuring tone: 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.”

Rolex as a corporation has done a very good job of protecting “Rolex” as a brand name. Photo credit: Shutterstock.com

Why is it in High Demand?

The wealthy villain in a movie, the one flaunting his wealth, driving in a vintage convertible, wearing a suit from London’s Savile Row, heading to a shareholders’ meeting where he will explain that greed is good: he is wearing a Rolex watch on his wrist.

This isn’t, of course, because he needs watches to tell time. This is because the watch, like the tailored suit and the classic car, says “I have it made.” 

The company, which was founded in London in 1905, invented the idea of a luxury watch there, and took it moved to Switzerland in a corporate move in 1920. 

The company, watch, and brand have been indelibly Swiss institutions ever since.   

The corporation has done a very good job of protecting “Rolex” as a brand name. And since it is explicitly a luxury brand, a fashion statement, Rolex was better prepared than many watchmakers to survive the rise of the digital world and the ubiquity of cell/smart phones that double as watches.

Does Rolex Have a Waiting List?

The luxury watch market still consists chiefly of purchases within brick-and-mortar stores, not online. There is a very old-fashioned distribution network through authorized dealers (ADs).

But the existence of online marketplaces is a threat. After all, ordinary people — unenviable middle-class folks — can use the internet, and can find such sites as AuthenticWatches.com. To the extent eCommerce in watches becomes customary, it will undermine the exclusive Rolex image, and in turn the company’s business model. 

One classic way to address this problem is to keep introducing ever-newer models. The status symbol is the latest model.(One might call this the sneaker approach to retailing, since sneaker brands have very effectively made it their own.) 

If the latest model is the exclusive one, then one expects long lines, or waiting lists. This has been a feature of the Rolex market since at least 2016. That year, the company released its Daytona 116500LN at Baselworld. 

To make the event more memorable, it also released a ceramic-bezel version of the Daytona, available with a choice of white or black dial. 

The hitch? You’d have to wait for it. Indeed, you could sign up with an AD and wait as much as a year before a representative of the AD would call you back with the happy news “your Rolex Daytona is here!” 

Similar long waiting lists developed for other recent Rolex models, the Submariner, Explorer, Sea-Dweller, GMT-Master II and more.

How the Pandemic Affected Rolex

But the shortages reached new levels under the pandemic conditions in 2020. Swiss authorities required that workers be spaced out in factories. In accord with this decision, Rolex cut back its production. 

And the waiting list for the hot models grew to three years. It would have grown further except that … when an authorized dealer had a waiting list for three years, it wasn’t supposed to continue to take names. The customers were be turned away, or steered toward less hotly demanded models. 

In 2020, the pandemic lowered both demand and supply. People were staying at home more. This lessened the number of occasions on which they’d have a chance to flash their high-end watch in front of admirers, so it lowered demand. 

Indeed, by some accounts, it lowered demand more than it lowered supply, resulting in price cuts on the secondary markets

In 2021, in Switzerland and elsewhere, people began to come out of the imposed isolations of the preceding year. Especially before the Delta variant made its appearance, there was a back-to-normal sense, and as part of this new normal, demand for Rolex’ spiked. 

There was no matching increase in supply to meet the spike in demand. This is the development that some call a fake shortage, or a strategy. What is certain is that Rolex became That Which Cannot Be Found. 

Even the company’s statement, after the initial reassurance quoted above, becomes a bit more ominous further down.

“All Rolex watches are developed and produced in-house at our four sites in Switzerland. They are assembled by hand, with extreme care,” it says. “Understandably, this naturally restricts our production capacities – which we continue to increase as much as possible and always according to our quality criteria.

Do you think the Rolex shortage is fake or real? Let us know your thoughts in the comments section below!