A few weeks ago, I wrote a post on Instagram regarding the Rolex introductions at Watches and Wonders. One of the comments it elicited was “I just want Rolex to stop playing the Fake Scarcity”. The commentor went on to say that they wanted to walk into a Rolex store and be able to buy any model they chose. My initial thought on reading this was, “Well I would like to walk into a Porsche dealer and buy a 911 GT3 in my chosen colour, and I know my wife would like to stroll into Hermes and pick up an alligator Birkin – but it ain’t going to happen.”
The truth is that I have heard this complaint from several sources and the underlying assumption in the minds of these conspiracy theorists is that Rolex have chosen to withhold supplies to retailers in order to drive up demand for their watches. When a police officer investigates a crime, the first question they ask is “cui bono?”, which means “who benefits from this act?” And that’s the question I ask anyone who mentions this conspiracy: “How does Rolex benefit from selling fewer watches?” I would be interested if anyone has a logical answer to this question.
Rolex workshop in Bienne
There are two immutable facts at the root of this problem; firstly, it is a natural urge to desire something which we can’t have, and secondly there are quite a lot of objects in this world where the demand exceeds the supply. Those who cannot accept these two facts are the proponents of the conspiracy. And, if this situation is explained to them, their immediate retort is “Then why don’t Rolex increase production?”, which is really just a different facet of the same misguided belief. Again, the assumption is that Rolex are staging some kind of Go-Slow – but for whose benefit?
Ironically Rolex did increase production last year. In a lengthy chat with a senior Rolex executive who I have known for well over a decade, I was told that production had increased by a sizeable amount. However, even if production increases from 100% to 110% and the demand remains at 180%, the prospective client will hardly notice.
Rolex World Headquarters in Geneva
Rolex are obviously aware of the unbalanced supply/demand equation and are committed to doing something about it – they announced a 1 billion CHF investment in a brand-new factory in a green field site as well as a 97,000 sq. ft facility in the same area to train workers for the new factory. Rolex never announce the size of any investment, but the 1bn CHF figure was widely quoted by all the Swiss news sources, so I am assuming it is not too far off the actual figure.
As a side note, the supply issue – if we are going to use that term – doesn’t stem from the disruption to the industry supply chain that was widely reported during the turbulent 2020-2021 period – as many people supposed to be the case. Rolex manufacture everything in house (except hands and sapphire glass, though that may change in time) and are perfectly capable of operating independently for a while. Instead, the bottle neck is finished movements, which the creation of new factories should help to alleviate.
The new factories are essentially medium to long term solutions to the supply problem; the short term outlook is promising too. It’s important to understand that the supply/demand equation is cyclical, and the cycle is swinging back to availability as the flippers and the crypto kids fall by the wayside. Many of them were ‘investing’ in watches and/or crypto with funds borrowed at very low interest rates; once the economy changed and most crypto coins lost massive amounts of value as interest rates rose simultaneously, they lost money and any interest in watches.
So don’t expect to suddenly see the “For Exhibition Only” signs vanish from the window of your local Rolex agent but everything points to an easing of the supply. And remember what your mother told you “Patience is a virtue”.
More details at Rolex.
