|In this Aug. 18 file photo, people wait to enter the Rolex store at Shinsegae Department Store in Jung District, Seoul. Korea Times file|
By Yoon Ja-young
Rolex watches have become a hot investment item in Korea, as it is getting harder and harder to find the luxury watches, due to restricted supply coupled with soaring demand.
At Diesel Mania, an internet forum on Naver for sharing information on fashion and trends, a user posted that he finally succeeded in purchasing a Rolex Datejust watch after a three-month wait. "At Hyundai Department Store on Sunday, there were 30 people waiting at 2 a.m. and 70 people at 5 a.m.," he wrote, as other users complimented him on his efforts and envied his "luck."
People stand in line starting before dawn to be the first customer to enter the Rolex shop in order to increase the possibility of buying a watch, but there is no guarantee that they will succeed. Due to the shortage of supply, customers here have been joking that they "only sell air at Rolex shops."
Some of those waiting in line want the watches for themselves, while others are buying to resell the watches, as they can make as much as a few months' salary by reselling them. Tired of waiting, some consumers have turned their eyes to second-hand ones, and some used popular models are sold at around twice their retail prices.
At online second-hand markets, one can find numerous offers to buy or sell Rolex watches. A Rolex Oyster Perpetual Submariner Date, for instance, is priced at 11.65 million won ($10,068) on the official Rolex Korea website. At We Watch trading, a used watch trading platform, the same model is sold at 24 million won.
Another seller was demanding 28 million won for a Rolex Oyster Perpetual Cosmograph Daytona purchased in 2017. At the official Rolex Korea website, it currently comes with a 21.24 million won price tag.
The shortage of Rolex watches seems to be a global phenomenon. Defining the shortage as a "perfect storm," Yahoo Finance recently reported that the Swiss watch sales were up 7.6 percent in July compared to pre-pandemic data. Sales grew 48.5 percent in the U.S., and 75 percent in China.
Despite the high demand, production has been restricted due to COVID-19, and Yahoo Finance reported that Rolex isn't likely to increase production to meet the demand. It noted that the watch maker is trying to create long-term value for clients instead of flooding the market and reducing the watches' value.
The strategy is evident when analyzing the business filings of Rolex Korea. It seems to put more focus on maintaining scarcity than on increasing sales or profits. It recorded 232.9 billion won total sales in 2020, which is down around 20 percent from a year ago. Rolex's operating profit also dipped by 49 percent to 28.3 billion won. Instead of increasing supply to meet the surging demand and pulling up the sales, it has been taking the totally different strategy of restricting per-capita purchases.