Rolex shortage explained: A Complete guide
The Rolex stainless steel shortage, Rolex sports model shortage, professionals shortage is one of the most discussed topics in the watch industry in recent years.
The craze for Rolex sports models has completely turned the availability of Rolex watches from authorized Rolex retailers upside down, and prices for these popular sports models have skyrocketed on the secondhand market due to the limited supply not meeting the demand.
The Rolex supply shortage is a huge topic that has many theories, reflections, and opinions, and in this article, we will try to summarize the Rolex shortage, in particular of stainless steel sports models.
When did the Rolex shortage begin?
Let’s start at the beginning.
Rolex is the world’s most recognized watch brand. No matter where in the world you are, or to who you mention the name, the vast majority of people will know about the brand.
Rolex as a company is extremely powerful and has done a great job in building its brand and brand name on the market. Today, Rolex watches are seen as the ultimate symbol of success.
But what is it that is causing official Rolex retailers to have year-long waiting lists for the most iconic sports models? And when did this craze begin?
As you can understand, the Rolex situation has not always been what it is today, where, in most cases, you cannot even get a professional Rolex watch from an authorized Rolex retailer unless you wait for years. It’s difficult to mention an exact time, but an obvious turning point was in 2016 when Rolex released the Daytona 116500LN at Baselworld. The Daytona has always been an iconic piece that has had a special place in history and played an important Rolex for the Rolex brand. But this came to be proven even further as Rolex released a ceramic-bezel version of the Daytona, available with white or black dial.
It wasn’t necessarily exactly at this time the Rolex shortage began, but it was a very clear turning point. At this time, the large mass started to talk about the year-long waiting lists for this model, speculations began, and the craze got greater as those who were early to have them caused the demand to increase even further as some people showed them on the internet and on social media.
It’s easy to understand why the Daytona 116500 is the watch that ”Started it all”. It’s new, it’s fresh, and it is iconic.
Now, people started noticing the waiting lists and the shortage of this specific watch. When people went to the authorized Rolex retailers to buy one, they were met with ”it’s sold out, but we can set you on the waiting list”. And the catch with this is that we humans always want what we cannot have. So this makes humans even more inclined and eager to get a hold of one.
Moving forward, today, the Rolex shortage does not only include the Daytona 116500LN. Today, it includes essentially all full stainless steel sports watches such as the Submariner, Explorer, Sea-Dweller, GMT-Master II and more.
Why are there no Rolex professional models?
There are endless theories as to why the waiting lists are so long and why it’s extremely difficult to get a hold of one from an authorized retailer, and we will go through a number of different theories further on.
What is interesting though is that Rolex sports models are not rare at all. Rolex watches are mass-produced, and they manufacture about 1 million watches per year. In other words, there are tons of watches on the secondhand market. It’s just that in recent years, the demand for them far exceeds the supply, and this naturally leads to a shortage – regardless of how many exist. Nobody knows the exact production numbers, but it is estimated to be somewhere slightly below 1 million watches per here.
The simple and short answer to the question of why there is a shortage of Rolex professional models – in particular, stainless steel sports models, is that the demand exceeds the supply. In other words the number of watches that Rolex manufacture. Have in mind that we are talking about the new watches that Rolex manufacture and send out to its authorized dealers.
However, what is interesting is that everyone is talking about a Rolex shortage, but this is only the case for new Rolex watches from Authorized dealers (AD). If you, for example, visit marketplaces like Chrono24, you can see that there are thousands of sports models available. Just to demonstrate, this is how many Rolex Submariner 116610LN is currently for sale on Chrono24:
Rolex shortage, eh?
At the same time, if you want into an AD asking for this model, they will either laugh, tell you that their waiting list is full, or mention that it is impossible to get one due to the demand. Or.. you may be lucky and get to be set on the list with no guarantees at all to ever get to buy one.
But this brings us to the next point, and that is pricing.
When it comes to pricing of stainless steel sorts Rolex watches, this is where it gets interesting.
When we asked Rolex about this during our meeting with them in Baselworld, they just acknowledged these watches are in high demand and that they were aware of the availability problem. For the Daytona, this has been the case since the 1990s. The same can always be said of any new model basically.
Availability varies between ADs and locations
Obviously, the availability of stainless steel sports Rolexes varies a lot. In writing moments, the Rolex models that are the hardest to get are the Daytona 116500, 126710BLNR, 126710BLRO, 116610LN, 114060, 126711CHNR, 116610LN, 116610LV. So there are still other sports models from Rolex that are relatively easy to get a hold of. But the catch is that as these sports models get increasingly difficult to find, people start looking at the next best thing. When this happens, these models also become harder to find. This includes models such as the Yacht-Master 126622, Explorer 1 and II, Milgauss. In some places, these models can be found in the window displays, but at other ADs, there is a long waiting list for these models as well. In recent times, some Datejust models, in particular, the Datejust 41 have become increasingly difficult to find.
While the shortage of Rolex has mainly been for stainless steel variants, two-tone versions and even some full gold version have also become increasingly popular and difficult to find. This also has to do with what we mentioned earlier, that when people cannot get the stainless steel versions, they start looking at the second best thing, which can be the two-tone Submariner. The 126711CHNR “Root beer”, for example, is today a watch that is very difficult to find and which has an equally long waiting list as, for example, the Submariner in steel. But with the way the Rolex sports market looks today, we can only expect that the sports models that are not as popular today, will eventually become more difficult to get. The Explorer II, for example, did not really have a waiting list at most ADs in 2018, but now has a waiting list in many places.
Different theories to the Rolex shortage
There are countless different theories as to why the stainless steel sports Rolex watches are so hard to get. Note that these are not our theories – we just share what other people argue is the reason behind the Rolex professional shortage.
Rolex is deliberately cutting supply
One theory to the Rolex sports model shortage is that Rolex is deliberately cutting supply.
FOMO and scarcity have a great effect on us humans. We always want what we cannot have, and scarcity has great importance for the perception of luxury, For example, if you can see ten Submariners standing in the window, would you be equally as inclined to buy as if there was only one in the window?
Scarcity is a basic strategy in the luxury industry that has proven to work extremely well. Look at Hermes, for example, with the Birkin and Kelly bags. These bags are similar to the Rolex professional steel watches: extremely difficult to buy at retail prices, and command a huge premium on the secondhand market. More about the secondhand premium further on, but what this tends to do is get more people to want to try to get a watch from an official retailer rather than buying it at a premium secondhand.
This is completely the opposite from just a few years ago when many people chose to buy watches secondhand since they were cheaper there. This meant that many ADs had to discount their Rolex watches to get them sold, which in turn hurts the brand, and decreases the profit.
Of course, have in mind that this is still the case for the majority of Rolex watches in their collection – just not for their stainless steel sports watches. But what tends to happen is that when people realize it is impossible to get a Submariner, they tend to look at the second closest watch, say the Explorer II. And when enough people have done so, this watch becomes equally difficult to get. And when the Explorer II is difficult to get, people start looking at the closest watch to that, say the Explorer 1. And so on…
This is what has happened with the Rolex sports watches and has made essentially the whole Professional line in steel quite difficult to find at an AD.
The benefit for many official dealers, is that people come into the store looking for a Submariner, for example, get to hear that it’s impossible, and then satisfy with another watch, for example, a Datejust, which didn’t exactly fly off the shelf previously, and still isn’t – but is selling considerably better than previously.
This brings us to the next point…
Rolex did not artificially create the shortage, but they try to maintain it
What is interesting is that many authorized retailers we have spoken with have said that they do not necessarily receive fewer watches from Rolex than what they did a few years ago. The difference is the demand, and retailers, as well as customers, get frustrated because the supply does not meet the demand.
One may speculate in the fact that the Rolex customer group has changed and also grown.
Today, you can see a lot of people from a younger generation buying and wearing Rolex watches, something that wasn’t as common just a decade ago.
If you envision the typical Rolex customers 20 years ago, and a typical customer today, I am sure you will think of two individuals with completely different characteristics.
From 2016 when the demand for Rolex sports watches started increasing, the economy has been great. In particular, the Asian economy has grown substantially, and the demand for luxury goods from the middle-and upper-middle class has increased dramatically. This can also lead to Rolex allocating more of its manufactured watches to ADs in Asia, and if they are not manufacturing more watches to compensate for the increased demand there, then naturally there will be a shortage.
Circling back to the title of this point is that Rolex did not artificially create the shortage, but they try to maintain it. This is a theory that you can hear quite often. What it means is that Rolex did not cut supply initially with the hopes to make its products more sought-after. Instead, due to an increased demand for various reasons, Rolex started noticing what happened, with waiting lists, prices on the secondhand market increasing, and so on.
And these effects are all very positive for the brand, and Rolex could have realized this and said:” what is happening is good for the company – what can we do to ensure it continues?”. And accordingly, they may now adjust the number of watches manufactured to ensure it never meets the demand. Because as the limited supply leads to great demand, it enhances exclusivity and the perception of the brand.
Rolex is producing watches at maximum capacity
“The demand is too high”. This is what you usually hear from most authorized Rolex retailers.
Another theory to the Rolex sports shortage is that Rolex is producing watches at maximum capacity. In other words, Rolex cannot keep up with the current surge in demand, and therefore, there is a shortage.
Those who argue that this is the case mean that Rolex first needs to educate new watchmakers and technicians, and this takes time.
But have in mind that the shortage ”began” in 2016 and Rolex has had some time to adjust to the increased demand. Of course, it’s important as a company to first see if it’s just a temporary spike and fluctuation before investing heavily in new staff and equipment, but Rolex has had some time to do so, and the demand is greater than ever.
In today’s market, the waiting lists for stainless teel sorts watches are never-ending, and many ADs have closed their waiting lists. With that said, the Rolex production is not just a little bit low from the current demand. It is substantially low and would need to be increased dramatically in order to meet the current demand.
But have in mind that Rolex is a billion-dollar company, and if they wanted to ramp up the production to meet demand, don’t you think they would be able to do so? Nobody really knows except Rolex themselves. A different idea is that if Rolex would want to meet the current demand for stainless steel sports watches, they could simply decrease the current production of watches that aren’t selling as well, such as Datejusts, Day-Dates, Pearlmasters, etc, and put those watchmakers and technicians to produce more sports watches instead. But they don’t…
One Rolex retailer says: ” In any given year, Rolex will only manufacture a certain percentage more watches than they did the prior year. So, let’s say the demand for Rolex has increased by 20% or 30% and the supply is only increased a fraction of that, a shortage occurs.
By gradually increasing its production each year, instead of rapidly ramping up based on the whims of the market, Rolex enjoys controlled growth and stability. As retailers, we all wish we could have the hard to get Rolex models when our clients want them because that would mean more happy customers and more sales.
However, watch companies that have dramatically increased production to match a market fervor are in a tough spot when things cool down. For example, many Swiss watchmakers overproduced before the downturn in 2008 and the market was flooded with high-end watches for years.”, and this is also a take on this highly discussed and debated topic.
”Rolex’s long-term strategy of controlled growth, in contrast, has made its watches hold their value extremely well and there has been zero compromises in their stringent quality control standards. This has been very comforting to those who have owned a Rolex watch over the years. ”
Prevents great discounting
Most other watch brands are sold at heavily discounted prices on the secondhand market due to an oversupply of the watches. And this naturally affects desirability and brand.
Rolex steel sports watches are on the other side, however, where ADs have no reason to discount them in order to get them sold, and this could be Rolex’s answer to the grey market.
Ask yourself: the current Rolex shortage, has it had positive effects for the brand so far?
Here are just some of the benefits that Rolex is enjoying:
- Professional watches selling at a premium on the secondhand market. Meaning that their brand is not damaged by heavily discounted prices, which makes people more inclined to buy watches from the grey market or secondhand. When watches cost more on the secondhand market than they do retail, more people will try to get them from the official retailers.
- Rolex has more customers than it can serve and ADs can sell the professional watches to waiting for customers before even putting them in the display. Previously, the ADs put the watches in the display and they could stand there for weeks, months, or even years unsold.
- The sales of precious metal watches have increased dramatically. Have in mind that Rolex has a higher profit margin for precious metal timepieces, which makes them more inclined to want to sell these.
- The Rolex brand is more recognized than ever before.
With that said, wouldn’t Rolex want to try to maintain the same situation for as long as possible?
Rolex is selling more precious metal watches
Since it is difficult to find stainless steel sports Rolexes, more and more people start looking at two-tone or full gold alternatives.
Furthermore, with some watches selling at such great premiums on the secondhand market, some people start seeing a much better value proposition, and it makes more sense to buy the same watch in gold. For example, the Daytona 116500LN is priced at roughly 12K EUR more than retail price on the secondhand market, and when reaching those numbers, you can buy a full gold Daytona for essentially the same price, and a full gold Daytona is relatively available at the ADs. And if it isn’t, you can buy it secondhand often at a discount, or at least close to the retail price (depending on the model).
So, which makes more sense?
Additionally, it has been proven that customers gravitate towards precious metal alternatives when the Rolex they want is not available in stainless steel.
To bring up some numbers, U.S. retail sales of gold watches rose 19% in value in the first half of 2019, according to the NPD Group. This proves what we have been discussing, that when people can’t buy stainless steel sports watches, they start looking at the gold or gold and steel alternatives.
Furthermore, platinum watch sales increased by 33%.
“Speaking with retailers of certain brands, they verify that, when consumers are frustrated and can’t find the steel sport model [they want], and it’s nowhere on the horizon, they many times gravitate to precious metal. So, the shortage of steel models helped to benefit precious metal. It’s not the only factor making gold and two-tone perform well, but it is definitely a factor.”
With that said, is the Rolex stainless steel sports shortage hurting or helping the Rolex brand?
Rolex watches selling at a premium
This is a hot topic that often sparks a lot of debate.
The prices of watches on the secondhand market are decided by supply and demand. It’s that simple.
The recommended retail prices that authorized Rolex retailers have to follow are quite an interesting thing in the world of retail, because if ADs were allowed, they would advertise their stainless steel sports watches for much higher than the recommended retail price.
When people cannot get the watch that they want, many people are willing to pay more just to get it. This is where the debate that Rolex is losing customers due to not having enough supply comes in, and people turning to the secondhand market, even if they would prefer to buy directly from an AD. Yet, overall, Rolex is selling more watches than ever, ‘so it doesn’t seem to be an issue that bothers the company.
At the beginning of the shortage, in 2017, Rolex told retailers to stop charging a premium for hot models
”Rolex has finally moved to end the years-old practice of its authorized Singapore retailers charging customers a premium for the hot Rolex models.
The move by the Swiss luxury watch-maker came about as the premiums charged for its Rolex Cosmograph Daytona sports watch hit new highs.”
Now, looking at it from a market perspective, it does not make much sense for retailers to sell the hot models at retail price, as, in some cases, the customer who gets to buy, for example, a steel Daytona, will make more money on that purchase than what the AD does. With that said, some ADs do charge premiums for their watches even if they are not allowed to by Rolex, as discussed in the different watch forums. But from an economical point, it doesn’t make sense to sell something at a lower price than what you can sell it for. But that’s just the way being a retailer works, and the rules they are meant to follow to continue to be an AD for Rolex.
Now, many people blame dealers for being the main reason why Rolex stainless steel sports watches are so hard to get, and this may or may not be the case.
However, we consistently receive inquiries from regular customers who have been offered to buy a hot sports model, or have just picked it up, and are looking to sell it in an unworn condition to make a profit.
So, the most common flippers in today’s Rolex market tend to be the regular customers who get the opportunity to buy a hot Rolex model and then cannot say no to the profit they get if they were to sell it. With that in mind, private persons who see their opportunity to make a quick buck may simply put themselves on the list for watches at a bunch of different ADs and then hope to get the opportunity to buy one. And when they do, they take the opportunity to sell it on at a premium.
The premium that many sports models command is simply too attractive to say no to, and more attractive than keeping the watch themselves. Obviously, there are many people who dislike this, but think what you want about it, that is the reality of today’s Rolex market.
New models VS old sports models
This is something that is very interesting to bring up.
In recent years, when the Rolex shortage has been present, the brand has released a number of different sports watches, including the 126710BLRO, and 116710BLNR. But it is important to separate between new and old models. Naturally, newly released models will be hyped and extremely in-demand at their launch, so it’s not super surprising that these novelties are difficult to get a hold of from an AD, and that the waiting lists are essentially closed.
But it’s so fascinating that a watch such as a Submariner often stood unsold in the window displays at official Rolex retailers just a few years ago. Today, they are nowhere to be seen there. How is it possible that the same watch stood unsold and could be bought at a discount from retail price, whereas today, some authorized retailers charge a premium for them (even though it is against policy), and so does the secondhand market, as it is dictated by supply and demand, and the prices from authorized retailers are not.
It’s the same watch, but all of a sudden, everyone wants it. How is that so? This can partly be explained by the fact that we humans always want what we cannot get (or at least is hard to get). Additionally, as the demand for sports watches have the prices of them have increased on the secondhand market, and now, almost all of them demand a premium. In other words, they sell for more on the secondhand market than what the retail price is. This is especially fascinating, as, on the secondhand market, an old and worn Rolex watch can be priced higher than what the retail price is for a brand new watch. But… The market always decides.
Perhaps this just goes to show that we humans are pack animals. As Rolex watches have become ”hyped” and ”cool” with people sharing photos on social media and such, the demand for the most common watches (which are naturally Rolex sports models to a large extent), increases. There are many people sharing photos of their watches on social media, and when so many share photos of their sports Rolex watch, more people want in on this, and thus the demand increases. This has undoubtedly been a contributing factor, but still far from the only factor.
Then, of course, you also have the fact that Rolex is an iconic brand with great prestige and rich history. This perhaps motivates the premium on the secondhand market a bit.
There are obviously many different explanations to this, and it’s probably a mixture of different theories – but only Rolex knows.
It’s a win for Rolex
At the end of the day, the Rolex craze is a huge win for the brand.
- Prevents the gray market, no discounts
- Selling more precious metal watches
- Makes the brand more desirable
- Leads to Rolex selling more other watches when the sports watches are nowhere to be found
When will the Rolex availability get better?
No-one really knows the answer to this question. At the moment, it doesn’t look like anything is going to change any time soon. However, remember that Rolex watches are luxury objects, and these tend to be the most when the economy gets slower. So when this happens, the demand for Rolex watches will probably decrease, and this will naturally have an impact on the availability of these watches. How much or how little this will affect the stainless steel sorts availability, only the future will tell.
Now, we cannot know for sure what is causing the shortage of stainless steel sports Rolex watches, but one thing is certain, and that is that the demand for Rolex watches has increased dramatically in recent years. Whether Rolex is deliberately cutting supply, consciously not meeting the increased demand, or doing everything they can, only Rolex themselves know.
But in recent times, Rolex has dramatically decreased the number of official retailers around the world. This should, at least in theory, mean that there are now fewer ADs, but the same amount of watches, so this should mean that each AD should receive more watches. But there are no guarantees, and the number of watches may not even be noticeable.
With Rolex ADs having waiting lists that consist of so many people that if they would fulfill them all, it would take up to 10 years or even more. With that said, Rolex is not short of just a few watches. Instead, the demand is far higher than that. So if Rolex ramps up the production with just a few thousand pieces or so, it would essentially still be unnoticeable.
We are not affiliated with Rolex in any way and thus do not have any insight into Rolex’s actual strategy, plans, and thoughts regarding the shortage of stainless steel professional models. This article is meant to highlight different theories behind the shortage, and we do not argue that one or another theory is correct, because the fact is that only Rolex SA knows the answer.
What do you think about the Rolex shortage of professional models? What do you think is the reason for it? Share your thoughts in the comment section below!