New York – Rolex sent shockwaves through the luxury industry this summer when it announced it was acquiring Bucherer.
The deal gives the watchmaker access to the retail market in a way it hasn’t had before, as Bucherer operates more than 100 points of sale, including 53 that carry Rolex and 48 that sell Rolex’s sister brand, Tudor.
For independent retailers who carry Rolex, this direct-to-consumer connection may seem like a cause for concern.
National Jeweler asked a luxury watch industry analyst and a watch executive for their insights on the historic deal and what it might mean for retailers.
The deal caught many by surprise, but it makes perfect sense.
Tim Stracke, CEO of watch marketplace Chrono24, said he was “super surprised” to hear news of the acquisition and had to double-check that what he heard was true.
Rolex has long denied having any plans to go direct to consumers, he noted.
Reginald Brack, the newly appointed senior vice president and director of jewellery and watches at Hindman Auctions, was also caught off guard. “My initial reaction was one of shock and surprise,” he said.
On second thought, however, the deal made sense to both of them.
“This is a deal where there was no alternative for either party,” Stracke told National Jeweler in a Zoom interview.”Rolex couldn’t say, ‘No, let someone else buy it.’ And for Bucherer, there was no other party that came close to the strategic fit that Rolex had.”
It was also a natural fit, as the two companies have worked together for nearly 100 years.
Jörg Bucherer, chairman of the board and great-grandson of the company’s founder, was one of the last people to know and work with Rolex founder Hans Wilsdorf, who died in 1960, Rolex said.
As Jörg has no direct descendants, he wanted to sell the business, which had been an independent entity. That’s when Rolex stepped in, taking the industry by surprise.
But as Brack, a long-time industry analyst, noted, Rolex is known for keeping things under wraps.
“Rolex has always been secretive. It’s always gone its own way. And it shouldn’t come as a surprise that it would choose to buy a storied retailer. The nature of Rolex is all about control,” he said.
Rolex wants more control over its distribution.
In December 2022, Rolex announced that it would certify its pre-owned watches, launching the Rolex Certified Pre-Owned programme, which allows retailers within its official distribution network to sell authenticated pre-owned Rolex watches.
The official US roll-out of the programme began in May, starting with Bucherer, which also piloted the programme in Europe, foreshadowing the acquisition to come.
While the purchase of a retailer is unprecedented for Rolex, the company is no stranger to acquisitions.
Both Stracke and Brack pointed out that Rolex has been quietly snapping up companies over the years.
“Rolex has made many, many acquisitions over the last 20 years, but the vast majority of them [were] to integrate its supply and value chain. A lot of the acquisitions have been internal,” says Stracke.
Brack added: “Over the years, Rolex has gained more control by buying its case makers, by buying its bracelet makers because a lot of those parts had been outsourced, and even by consolidating manufacturing facilities.
Rolex retailers shouldn’t panic, but they should proceed with caution.
Now that Rolex has access to a chain of retail outlets, its authorised retailers may be wondering, “What does this mean for us?
Will they be squeezed out? Not likely, say Stracke and Brack, but changes may be coming.
“Historically, Rolex was always considered a super-loyal partner, and I would say it will continue to remain loyal, probably more loyal than many other watch brands,” said Stracke.
However, Rolex retailers should be vigilant, particularly when it comes to following Rolex’s rules.
“I definitely think they should be concerned,” said Stracke.
“If they have a reason to kick you out, they will probably now do it even faster.”
Retailers looking to retire and hand over or sell their businesses may also be in danger of losing that partnership, said Stracke.
When it comes to supply, Bucherer may get first dibs.
For those who retain their partnership with Rolex, there may be a supply issue. “The demand for Rolex is so great globally that, if anything, it has trouble supplying its retail network with product,” said Brack.
When deciding who gets which watches, Rolex may play favorites with some of its models.
“Put yourself in Rolex’s shoes,” posits Stracke. “It can hand over a Rolex Daytona to Bucherer and keep the entire margin for themselves. Or it can hand over the very same watch to an independent retailer or group like Watches of Switzerland and then give 35 to 30 percent of the margin to the independent retailer.”
“You don’t really need to sell a Rolex, you just distribute it, right?” he added.The use of exhibition-only watches, which are models for display only, can help, Brack notes, by giving customers something to look at even if a watch isn’t available to buy.
“At the end of the day, I don’t think [Rolex] wants angry consumers. I don’t think they want their wholesale partners to be upset,” Brack said.
“I think [Rolex] will try to distribute the product evenly so that one region doesn’t go hungry while another region is stuffed.”
