The real reason for Rolex scarcity

[Seibei]

Just read this article and all will become clear:

https://www.theguardian.com/business...richest-people

To put it simply there are more rich people in the world than ever before, their numbers are increasing and Rolex is not increasing production.

From the article:

"The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US."

The number of wealthy people in China is increasing at a rapid rate. If 10% of these 100 million rich Chinese want a Rolex, they need 10 million Rolex watches. Rolex makes 800.000 watches a year. Many of these are not that hot/desirable. You can do the math...

So, there is no grand conspiracy. There is no organization hoovering up Rolex watches, cornering the market and pumping up prices. There are simply more people than ever able to buy a Rolex watch and demand is far ahead of supply.

Unless Rolex ramps up production by an order of magnitude this situation is unlikely to change. There is no reason to expect the number of wealthy people will decrease.

Conclusion. If you want a Rolex watch buy it now. It is not going to become any cheaper or easier to get in the foreseeable future.

[6120]

That sounds logical and the most sensible explanation I have heard yet.

[Bluside]

Interesting. Boy, I need to invent the next must have thing for rich people. Any ideas?

[kieselguhr]

Thank you for sharing OP. Many of the forum members have been aware of this for a while now. There will still be forum members who insist that there is a conspiracy going on and that Rolex, their ADs, and the gray markets are plotting against them.

[2001jesper]

The change happened over a few months and hype has definitely been a driver for scarcity. I firmly believe that its a fad, and once the "rich and the famous" (trend-setters) move on to the next accessory, stock will once again become available. My best guess is 5 years? Dont believe that the current hype is sustainable on the long term

[uniqueMR]

Thanks for sharing!

[djgallo]

I agree with the OP 110% .....you nailed it!

To make matters worse and in addition....all of the other developing countries are increasing in wealth too....

[bigfatpauli]

I've been saying this for years. Everyone just keeps saying "supply has been cut".

Sigh...

[Wahlberg]

So why isn't this happening with other brands (Omega/VC/AP/Patek/...) or in other industries (cars, real estate, ...)?

I know they have been buying a lot of real estate in California, other parts of the US, Canada and such but if there are so many millionaires you should see the current effect x 2-3-4-5 times? It still seems reasonable what's going on.

And why aren't they buying Porsches/Ferrari's like crazy? Or other luxury items? Seems like these brands aren't dealing with these problems.

I truly can't imagine every Chinese millionaire desires a pepsi or hulk when they can easily spend 100k on 1 watch and buy several more. And why are all the Daytona's and BLNR sitting at 13-25k if they can easily spend and buy one at a grey?

[vicsdca]

"Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people."

It means you can actually be part of the top 10% of the world’s richest people without being rich at all...


Besides, there are only 4.4 million Chinese millionaires compared to 18.6 million American millionaires according to the article. The number of "wealthy" people in China is still relatively low.

Many Rolex buyers are living above their means, probably more than ever. It's just a fad, not the new normal.

[djgallo]

Originally Posted by 2001jesper

The change happened over a few months and hype has definitely been a driver for scarcity. I firmly believe that its a fad, and once the "rich and the famous" (trend-setters) move on to the next accessory, stock will once again become available. My best guess is 5 years? Dont believe that the current hype is sustainable on the long term

The change happened over a few months?......Really.........:banghead

[Manu74]

Originally Posted by Wahlberg

So why isn't this happening with other brands (Omega/VC/AP/Patek/...) or in other industries (cars, real estate, ...)?

I know they have been buying a lot of real estate in California, other parts of the US, Canada and such but if there are so many millionaires you should see the current effect x 2-3-4-5 times? It still seems reasonable what's going on.

And why aren't they buying Porsches/Ferrari's like crazy? Or other luxury items? Seems like these brands aren't dealing with these problems.

I truly can't imagine every Chinese millionaire desires a pepsi or hulk when they can easily spend 100k on 1 watch and buy several more. And why are all the Daytona's and BLNR sitting at 13-25k if they can easily spend and buy one at a grey?

Because of superior marketing and social media, the majority loves Rolex the most.

[Jona]

Originally Posted by vicsdca

"Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people."

It means you can actually be part of the top 10% of the world’s richest people without being rich at all...

I didn't know I was rich but I am sure glad I am.

[173rdabn]

Who knew?

[Jerrocop]

Originally Posted by Wahlberg

So why isn't this happening with other brands (Omega/VC/AP/Patek/...) or in other industries (cars, real estate, ...)?

I know they have been buying a lot of real estate in California, other parts of the US, Canada and such but if there are so many millionaires you should see the current effect x 2-3-4-5 times? It still seems reasonable what's going on.

And why aren't they buying Porsches/Ferrari's like crazy? Or other luxury items? Seems like these brands aren't dealing with these problems.

I truly can't imagine every Chinese millionaire desires a pepsi or hulk when they can easily spend 100k on 1 watch and buy several more. And why are all the Daytona's and BLNR sitting at 13-25k if they can easily spend and buy one at a grey?

Agreed. Though the OP's simple calculations are correct, the reason for the shortage is as correct or incorrect as anyone else that's throwing thier ideas out there. Pure speculation.

[djgallo]

Originally Posted by Wahlberg

So why isn't this happening with other brands (Omega/VC/AP/Patek/...)

Why isn’t it happening with other brands.....easy

Omega/VC/AP/Patek.....98% of most people never heard of them

Rolex.....99% of most people know the BRAND

[dori]

I think this might be a part of the problem. But can’t see how this happened so drastically in a matter of months.

Moreover, if what your saying is right, how is there no stock all around the WORLD? AD windows have seemed to all have the SS models vanish at once.... Are the Chinese traveling to every country out there selling Rolex and buy every SS they have? Sounds a bit strange... i think they forgot the PM models in stock........

No doubt that this article has some straight true facts, just can’t wrap up my head that this is what caused such a rapid strong outcome which we are currently experiencing.

I think AD’s and greys and holding on to a lot of stock because they found out they could inflate prices more and more. They just want more money- making you spend a certain amount at a store to get a model you desire/bundle up other watches/jewelry etc...


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[othertbone]

Not from what I see.

There are thousands of steel sports Rolex's for sale in just one south Florida jewelry district I know. One seller himself has hundreds of unworn examples. What about in your neighborhood? Same right? Crown & Caliber even has 19 Hulk's for sale!

Come on, a shortage, or scarcity means hard to find!

I was recently in NYC and went to the diamond district and saw hundreds of all your favorites in the windows, and thousands more inside. It's like that in every wealthy city in the world.

There is no shortage. Since Rolex prices have increased so much, the AD's make more money selling directly to the grey market at a premium then selling to you or me at retail.

The AD's are causing this and they are making a ton of money doing so.

Sorry, that is whats going on Boys.

[liu_watch]

If we all use circumstantial evidence like this to prove a point, the world would be upside down. Not saying OP’s incorrect...just too much assumptions.

[DoctorA]

Originally Posted by Bluside

Interesting. Boy, I need to invent the next must have thing for rich people. Any ideas?

With that many rich people, since we can’t easily get all the watches we want, maybe go into the watch box business for all the rich people to collect their watches in

[dori]

Originally Posted by othertbone

Not from what I see.

There are thousands of steel sports Rolex's for sale in just one south Florida jewelry district I know. What about in your neighborhood? Same right? Crown & Caliber even has 19 Hulk's for sale!

Come on, a shortage, or scarcity means hard to find!

I was recently in NYC and went to the diamond district and saw hundreds of all your favorites in the windows, and thousands more inside. It's like that in every wealthy city in the world.

There is no shortage. Since Rolex prices have increased so much, the AD's make more money selling directly to the grey market at a premium then selling to you or me at retail.

The AD's are causing this and they are making a ton of money doing so.

Sorry, that is whats going on Boys.

I agree with this. Just sounds so accurate and right


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[amanbra]

For me this is 100% correct but as to predict what the future holds is a slightly different story. This Chinese market has shown in the past to move away from particular brands just as quickly.

The thing is the grey market is taking advantage of it (good on them it's their livelihood) but for me the weird thing is these Chinese millionaires can afford to by SS pieces at these mark ups but not sure some of the folk around me can. I know folk that get a piece, wrap it in plastic, fret over wearing it as their main concern appears to be resale...

[77T]

A few challenging headwinds to the Credit Suisse study is that more Americans are being counted in the wealthy category for the wrong reason.

Recall that people having $110k or more in savings are being counted. But a higher percentage of the million or so new retirees each year are opting for lump-sum payouts of their defined pension plans. That means anywhere from $100k to $500k being dumped into their savings. But those funds + Social Security are their sole source of income for old age. They aren’t running out to buy a Rolex.

The Chinese wealth rate is not affected by that phenomenon. Instead, some currency adjustments can cause improper interpretations of the data. I don’t think China is growing in Rolex sales. I believe the rate today is less than in prior years.

What I believe is driving Rolex sales is an increasing % being funded by credit/consumer debt instruments. In June 2019, U.S. consumer debt rose 4.3% to $4.1 trillion. That surpassed last year's record and there is no reduction of that growth rate in sight.


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[Paul7]

Originally Posted by vicsdca

"Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people."

It means you can actually be part of the top 10% of the world’s richest people without being rich at all...


Besides, there are only 4.4 million Chinese millionaires compared to 18.6 million American millionaires according to the article. The number of "wealthy" people in China is still relatively low.

Many Rolex buyers are living above their means, probably more than ever. It's just a fad, not the new normal.

I can see a Chinese person with $109K in savings buying a Rolex, given that culture's emphasis on status and 'face'.

[amanbra]

Originally Posted by Wahlberg

So why isn't this happening with other brands (Omega/VC/AP/Patek/...) or in other industries (cars, real estate, ...)?

The thing is with the Chinese market they have a tendancy to fixate on a brand or two. With watches Rolex is king right in terms of brand recognition so they smashed it.

You should see what some of the top car brands are doing to try and get a base in China.

Chinese have really moved the real estate market in Sydney, Melbourne and Vancouver until legislation was put in.

[amanbra]

Originally Posted by djgallo

Why isn’t it happening with other brands.....easy

Omega/VC/AP/Patek.....98% of most people never heard of them

Rolex.....99% of most people know the BRAND

You'd say Omega is at like i don't know... 50% brand recognition based on your scale? still far behind Rolex but thanks to Mr Bond and the Olympics the general public know about them.

[kieselguhr]

Originally Posted by amanbra

Chinese have really moved the real estate market in Sydney, Melbourne and Vancouver until legislation was put in.

The smarter Chinese citizens experiencing prosperity wind falls have been buying property in the United States instead of luxury items. I remember trying to buy houses in 2012 in Las Vegas was a little challenging when all competitors were paying outright cash.

[Gold Crown]

Originally Posted by Seibei

Just read this article and all will become clear:

https://www.theguardian.com/business...richest-people

To put it simply there are more rich people in the world than ever before, their numbers are increasing and Rolex is not increasing production.

From the article:

"The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US."

The number of wealthy people in China is increasing at a rapid rate. If 10% of these 100 million rich Chinese want a Rolex, they need 10 million Rolex watches. Rolex makes 800.000 watches a year. Many of these are not that hot/desirable. You can do the math...

So, there is no grand conspiracy. There is no organization hoovering up Rolex watches, cornering the market and pumping up prices. There are simply more people than ever able to buy a Rolex watch and demand is far ahead of supply.

Unless Rolex ramps up production by an order of magnitude this situation is unlikely to change. There is no reason to expect the number of wealthy people will decrease.

Conclusion. If you want a Rolex watch buy it now. It is not going to become any cheaper or easier to get in the foreseeable future.

However there is one stupid Rolex for not even trying to fill the demand. That would be like going into a BMW dealership and there is only one car in the showroom to pick from. What Rolex is doing is simply bad business.

[NIHO]

So let me reiterate what you are saying:
1) all of these millionaires appeared 4 years ago, because 5 years ago everything minus the steel Daytona was on the shelf
2) All of these millionaires don't like Omega, since in their boutique you can find a million variations of the same steel watch
Sorry, but I am not buying this simple explanation. Rolex definitely made an acute change a few years ago.

[ganagati]

Originally Posted by Wahlberg

So why isn't this happening with other brands (Omega/VC/AP/Patek/...) or in other industries (cars, real estate, ...)?

Have you looked at Nautilus/Aquanaut prices? The same is happening to AP and Patek.