Is Rolex Shorting New Watches to Drive Its Certified-Pre-Owned Sales?

Getty, Rolex

To answer our question, we spoke with several watch industry experts, including two people with first-hand experience in Rolex’s authorized retail enterprises (both of whom chose to remain anonymous). Rolex declined to comment.

In our recent article about the near impossibility of purchasing a new Rolex Daytona, we concluded with this question: Is Rolex shorting the new market to compel customers to purchase from its new Certified Pre-Owned program? This seemed a fair, if somewhat cynical, question to ask after multiple authorized Rolex dealerships offered us little hope for a new Daytona while simultaneously directing us to pre-owned Daytonas at twice the retail price.

However, the Daytona is uniquely hard to get, and for that reason it is also uniquely expensive on the pre-owned market. Expert watch collector and watch industry veteran William Massena told us that, “Daytona production is artificially reduced. Rolex wants that one hard-to-get watch, and they’ve done that with the Daytona since 1988.” (In 1988, Rolex released the first auto-winding Daytona reference 16520.) Massena adds, “A brand has to have that one watch that’s hard to get.” As such, seeking out a Daytona is an especially disheartening experience, and it may have inspired our cynicism about Rolex’s retail strategies.

And yet, it is also nearly impossible to get any Rolex watch new at retail any time soon. The ubiquitous scarcity makes shopping at a Rolex boutique (if we can call even it shopping) both frustrating and surreal. They offer you a sparkling water with a smile knowing full well they’re going to deny your wishes, and this disingenuousness can make the Rolex retail experience quite tense. As one source with first-hand experience selling Rolex said of denying customers access, “It’s cringe and uptight. Most people go a little insane. Customers get edgy, and [salespeople] grow cringy.” Granted, some pre-owned Rolex models have come down toward retail prices, but there’s still a denial at the core of the pre-owned offering. The question as to whether Rolex has shorted the new market to bump up Certified Pre-Owned sales just seems to hang in the air at the brand’s boutiques.

When we asked experts whether Rolex was shorting the supply of new watches to sell used, each notably took a moment to consider it and then said no. However, our experts were mostly only able to speculate when offering alternative explanations for Rolex’s retail strategies. Their lack of clarity only confirms Rolex’s reputation as a cloistered corporate entity. Where most watch brands offer up their CEO’s for candid interviews with journalists, Rolex rarely speaks beyond formal press releases. Factory tours are nearly non-existent, and photos aren’t allowed. Rolex operates as a Swiss not-for-profit, and likely discloses no financial records to the Swiss government. I’ve long referred to Rolex as Willy-Wonka’s Watch Factory.

Despite this dearth of both definitive information from, or even about, Rolex, the experts we spoke with offered up some interesting and wide-ranging speculations.

The Global Rolex Shortage Is Not Intentional

The first thing that experts told us was that Rolex is not intentionally shorting the new market, but has run up against an unexpectedly high global demand.

William Massena told us that the idea that Rolex intentionally shorts supply, “is all bullshit, just rumors. If you talk for ten minutes with [Rolex CEO Jean-Frédéric] Dufour, you’ll learn he’s not happy and his retailers aren’t happy,” about the lack of new product. Paul Altieri of the (non-certified) pre-owned dealership Bob’s Watches told Robb Report that, “My gut reaction is no [they’re not intentionally shorting supply], because global demand is so high they can hardly handle it.” Watch expert Eric Wind said he, “wouldn’t use the word shorted.”

An anonymous insider told us that, “Rolex doesn’t intentionally short supply…[but]…during Covid, Rolex got caught with its pants down.” Indeed, all watch market data indicates that during the pandemic, demand for watches went through the roof, with Rolex, as always, especially in demand. This same source told us that Rolex has been using temporary factories to help fill the supply gap while the company builds its new factory. Altieri also mentioned the new factory, stating “global demand for luxury goods is so high these days, maybe [Rolex] just can’t meet global demand until the new factory is up and running.”

And Yet, Shorting Supply is a Known Luxury Strategy

Shorting supply is a standard luxury strategy. Not only does shorting supply allow a brand to drive prices skyward, but it creates the air of exclusivity—as well as actual exclusion. Altieri mentioned that, “Louis Vuitton and Hermes always produce 20 percent less than demand, because exclusion drives luxury. It’s good to be scarce.” But Altieri goes on to question the premise for Rolex because, “the global economy is flourishing, and Rolex is relatively affordable.”

Altieri’s point is well taken, because Rolex watches aren’t especially expensive when compared to other Swiss watch brands offering comparable quality and style. Some watch brands, like F. P. Journe, have adjusted their pricing to match skyrocketing pre-owned prices, while others, like Rexhep Rexhepi refuse to do so. Rolex has raised its retail prices recently, but only incrementally, and nowhere close to approaching the inflated pre-owned prices for hard-to-get watches like the Daytona.

And yet, however unintentionally, on the ground floor of their retail stores, Rolex appears to have executed the luxury strategy of excluding almost everyone except elite clients. Much like Ferrari, the aforementioned Louis Vuitton and Hermes, and any number of watch brands these days, Rolex now behaves according to the text-book luxury brand protocol of shorting supply.

If we believe the experts who agree that Rolex is not shorting supply intentionally, then it is an odd—even ironic—situation for a globally recognized premium brand to find itself acting as if it were an exclusive luxury brand. That indicates a lack of control, and perhaps Rolex has genuinely been caught with its pants down.

Whatever the case may be, people are growing annoyed with Rolex’s retail situation. Another anonymous source with extensive Rolex retail experience told Robb Report that, “People get cynical about Rolex because they’re like the super cool, popular kid in high school who you can’t image is a nice guy. Rolex is just so corporate.” Some of this impression may come back to Rolex’s business and manufacturing practices have long been shrouded in mystery. While many people around the world unquestionably admire Rolex and its watches, this is a brand only very few will ever feel very close to (e.g., compare Rolex to Omega who once made a Speedmaster for an Instagram hashtag). The more Rolex excludes customers from purchasing their products, the more likely it seems that some people will wonder if Rolex is intentionally making itself into an ultra-exclusive luxury brand.

One collector who has registered his interest but has yet to get “the call” for a new Rolex told Robb Report, “I feel disgusted. It’s not a large amount of money out of my portfolio, and they’re putting it on a pedestal as if it’s out of my reach. They’re not even that expensive. You finally put away all that money for retirement, the kids college tuition, your mortgage, and you want to treat yourself and you can’t.” Another collector, who finally got the call for his first new Rolex earlier this year, told us that, “It’s like getting that big promotion. It’s an incredibly good feeling. Like when the girl says ‘yes.’ I’d been worried the appeal was having been excluded…but when they opened that box I didn’t feel that way for a fucking heartbeat.”

Enter the Certified Pre-Owned Program

On May 3, 2023, Rolex announced its Certified Pre-Owned program. The official press release (the only statement on the topic we could secure from the brand) reads: “The Rolex Certified Pre-Owned program is designed to offer customers a service that stands out in terms of the quality delivered by Rolex, in keeping with its values of excellence. It provides the assurance of buying certified Rolex products and enables the end customer to benefit from the full know-how and professionalism of the brand’s worldwide network of experts.” While the message is positive, it’s an opaque and impersonal statement. The release is devoid of first-person subjects (“we” appears nowhere) and employs passive voice (e.g., “is designed to” rather than “Rolex designed”), both known strategies for creating narrative distance. Where many other watch brands might openly boast about their business strategy, Rolex is silent.

Rolex CEO Jean-Frédéric Dufour gave a rare interview to the Swiss newspaper NZZ in April of this year, and in it he mostly speaks of the global watch market downturn, currency exchange, and international interest rates. He says nothing about Rolex’s retail strategies, or how it interfaces with customers. Dufour does mention that, “We produce everything here at Swiss costs. So the Swiss franc is a challenge.” This statement goes no distance in helping us understand the Certified Pre-Owned program, but perhaps begs speculation as to whether Rolex sees the fast-growing pre-owned market as a way to mitigate the high costs of domestic labor.

One anonymous Rolex-affiliated source told Robb Report that Rolex operates its Certified Pre-Owned program as if it were a separate brand, and that it is, “on the same level as Tudor. There is no tray for CPO [Certified Pre-Owned] watches, and they’re not allowed to be displayed in the same room as the new watches.” When asked if Rolex trained its salespeople to leverage scarcity of new models toward the Certified Pre-Owned offerings, they said, “If the customer says they want to buy something today, then we mention CPO,” but that generally Rolex offers no incentive or instruction for salespeople to pivot from inquiries for new models to the Certified Pre-Owned offerings.

Is Rolex Making ‘Generational Moves’?

One anonymous informant told Robb Report that Rolex is making “generational moves,” and that “Rolex has been exploring this [CPO] program for over a decade.” William Massena echoed this when he said that, “Rolex operates like a Soviet country. It plans far ahead and is rigid in its execution.” Massena also said, “Rolex moves really slowly, [because] it has a huge board that makes enormous decisions.”

When pressed to answer what those generational moves were meant to accomplish, one informant told us, “The CPO program is about control. Rolex doesn’t care about money. It cares about control…of its brand, its service centers,” and that Rolex has been, “weeding out mom-and-pop stores. It’s possible that the pre-Covid shorting was a way to weed out those [dealerships] they didn’t want in their network.” William Massena said that the Certified Pre-Owned program might be helpful to some dealerships because, “If I dedicated half of my store to your brand, and you’ve got no new product to fill it, then there’s a problem.” Apparently Certified Pre-Owned watches could give a dealership something to sell, but Eric Wind suggested that authorized dealers, “are being made to take on CPO to keep their account, and they had to buy a lot of pre-owned models.”

A Healthy Mystique

The lack of consensus around Rolex’s strategies—or whether the company is even acting strategically—is perhaps the prime take-away from this discussion. Because Rolex remains an opaque communicator on its business strategies, even industry insiders can’t agree on what really goes on inside the most compelling watch brand in the world. Perhaps Rolex maintaining its, stoic, confident, strong-but-silent personality is the brand’s best strategy. Certainly the brand’s mystique is as healthy as it’s ever been, and it does seem as if its founder Hans Wilsdorf, who passed in 1960, is managing from the otherworld. As one Rolex employee once told me, “Uncle Hans is still at the helm.”