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Rolex watch shortage is a 'perfect storm'

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“It’s really a perfect storm,” Wind Vintage Founder Eric Wind says on the shortage of Rolexes and high-end watches.

Video Transcript

[MUSIC PLAYING]

SEANA SMITH: Let's talk about the watch industry because if you're in the market for say a new Rolex, you have to be prepared to wait. And you also have to be prepared to potentially pay even more for a watch. We want to talk about what exactly is going on here. Not only with Rolex but also what we're seeing from some of those other high-end watches.

And for that, we want to bring in Eric Wind, he's the founder of Wind Vintage. We also have our reporter, Pras Subramanian joining us as well. Eric, I guess help us make sense of what's going on, why is it so hard for some people to get their hands on high-end watches right now?

ERIC WIND: It's really insane. I never thought we'd see the market like it is today but over the last, I would say it really started in 2018 where we began seeing watches sell significantly above retail prices for almost every Rolex. So as a result, you go into most Rolex retailers now, they might have two or three watches for sale at most to the public. Typically midsize or precious metals watches that are very expensive.

PRAS SUBRAMANIAN: Hey, Eric. Pras here. So what do you think really is pushing up demand? Is it because of the fact that we had a COVID-related shutdown of the factories, is it because people just want to spend their money now more than before? Or is it just sort of a natural demand, people that want to have these high-end timepieces?

ERIC WIND: I think it's really a perfect storm. So you have people, there's many more ways to sell these watches online than ever before. So anyone that could buy, for instance, a Daytona or Submariner can easily do it and sell it for thousands of dollars more than they paid. So that's the first thing. I mean, it's kind of like the sneaker mentality with StockX and being able to resell sneakers online much easier. The same is the case with watches. Many more players in the market.

The shutdown of the factory last year for a couple of months didn't help when there was already huge demand and lots of people that maybe have more time on their hands, pun intended. And want to spend on luxury goods they can enjoy at home, rather than vacations and things like that which they're not able to do right now. So I think that's really a confluence of these events.

BRIAN CHEUNG: Well, Eric. I know a thing or two about sneakers from what I've got in the back there. But I mean, what is kind of transferable between watches and sneakers is that it's the producer that's kind of controlling the supply to make sure that it's a low quantity item that a lot of people want to have. So how much of this is due to actual supply constraints or maybe not being able to find the watchmakers versus Rolex and other watchmakers just deciding we don't want to put that supply out there because we know the demand is out there and we want to preserve that scarcity?

ERIC WIND: I think from what I understand, Rolex has been on 24-hour shifts for years other than the COVID shortage. They produce as we can guess, over a million watches a year. They're producing as many as possible with a broad vertical integration from the metals themselves to the production of the watch. So they're producing as many as they can, say it's over a million watches a year but you have many, many millions of people fighting to buy those watches at retail. So they're doing what they can. It's just demand far outstrips supply and there's tens, if not hundreds of thousands of you know, there's literally millions of people for the idea of purchasing the million-ish watches they make per year.

PRAS SUBRAMANIAN: Hey, Eric, real quick, I know that you are a big expert on certain specific models and you can actually go through all the serial numbers of the years and different slight variations and changes but what do you think are the top like three or so four models right now that people are really clamoring for and really trying to buy?

ERIC WIND: Yes, so it really is the sport models still for Rolex, it's the Submariner, the Daytona, which to give an example, there's a model that's called the John Mayer Daytona, which has a green dial in a gold case. That watch retails for about $36,000 and on the second-hand market sells for about $85,000. So you literally buy the watch and you can walk out of the store with $50,000 more in your pocket. Steel Daytonas retail around $13,000, with a white or black dial they sell on the secondary market for say $35,000.

And so that's where you get the biggest multiples but you have even the Submariners that sell for sometimes $5,000, $10,000 more than you pay for the retail price. GMT Masters, the Batman, and the Pepsi, that sell for $5,000 to $10,000 more than you pay. And all the models across the board, even Datejusts that typically were something you could always buy or are out-of-stock in the larger sizes.

SEANA SMITH: Eric, when we take a look at the supply issues and the fact that Rolex, for example, like you were saying, simply can't meet or keep up I should say with demand. Is this a problem that you see going away any time soon or is it something that's going to stick around for years to come?

ERIC WIND: It seems like unless they are suddenly able to produce 10 times as many watches, which I don't think they can do nor would they necessarily want to do, we're going to be stuck with these premiums for a long time. I think in the interim, we're seeing them shift a lot more movements into precious metals cases because like I said, a gold Daytona may be $36,000 but the same watch in steel is $13,000. So they would rather sell you the gold Daytona and they'll keep pushing the price on that. And they're just going to keep incrementally raising the prices.

SEANA SMITH: All right, Eric Wind, founder of Wind Vintage. Thanks so much for joining us. And of course, our thanks to Pras Subramanian as well. Don't go anywhere because coming up next, Influencers with David Novak, he's a former Yum! Brands chairman and CEO. That gets underway in just two minutes.