Why Retailers Should (and Shouldn’t) Be Concerned About Rolex’s Bucherer Acquisition
Chrono24 CEO Tim Stracke and analyst Reginald Brack of Hindman Auctions shared their thoughts on Rolex’s foray into retail.
The deal gives the watchmaker access to retail in a way it hasn’t had before, as Bucherer operates more than 100 sales outlets, including 53 that offer Rolex and 48 that sell Rolex 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 the news about the acquisition and had to double-check if what he heard was true.
Rolex long has denied having plans to go direct to consumer, he noted.
Reginald Brack, the newly appointed senior vice president and director of jewelry and watches at Hindman Auctions, also was caught off guard. “My initial reaction was shock and surprise,” he said.
However, on second thought, the deal made sense to them both.
“This is a deal that didn’t have an alternative for both parties,” said Stracke in a Zoom interview with National Jeweler.
“Rolex could not say, ‘No, let somebody else buy it.’ And for Bucherer, there was no other party that was even close to having that strategic fit as Rolex.”
It was a natural fit as well, with the two companies having worked together for nearly 100 years.
Jörg Bucherer, chairman of the board of directors and great-grandson of the retailer’s founder, was one of the last people to have known and worked with Rolex founder Hans Wilsdorf, who died in 1960, said Rolex.
Since Jörg has no direct descendants, he was looking to sell the business, which was an independent entity until now. That’s where Rolex stepped in, catching the industry off guard.
But as Brack, a longtime 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 be a surprise that it decided to purchase a storied retailer. The very nature of Rolex is all about control,” he said.
Rolex wants more control of its distribution.
Rolex announced in December 2022 that it would certify its secondhand watches, launching the Rolex Certified Pre-Owned program, which allows retailers within its official distribution network to sell authenticated pre-owned Rolex watches.
The official U.S. rollout of the program began in May, starting with Bucherer, which also piloted the program in Europe, foreshadowing the acquisition to come.
While the acquisition of a retailer is unprecedented for Rolex, the company is no stranger to acquisitions.
Both Stracke and Brack pointed out that Rolex quietly has been scooping up companies over the years.
“Rolex has done many, many acquisitions over the last 20 years, but the vast majority of them [involved] integrating its supply and value chain. A lot of acquisitions were internally facing,” said Stracke.
Brack added, “Over the years, Rolex has gained more control by purchasing its case makers, by purchasing its bracelet makers, because a lot of those parts had been outsourced, and even consolidating manufacturing facilities.”
Rolex retailers shouldn’t panic but should proceed with caution.
Now that Rolex has access to a chain of retail stores, its authorized retailers may be wondering, what does this mean for us?
Are they about to be pushed out? Not likely, said 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, meaning models for display purposes only, may help, noted Brack, giving customers something to come in and see, even if a watch isn’t on-hand and available to buy.
“At the end of the day, I don’t think [Rolex] wants consumers who are upset. I don’t think they want wholesaler partners to be upset,” Brack said.
“I think [Rolex] will try to evenly distribute that product so that there’s not one region that goes hungry while another one gets full.”
Rolex likely still sees value in its partnerships.
In many ways, Rolex isn’t like other watch brands.
Shoppers can’t buy watches on the Rolex website.
Even when they go into a store that carries Rolex watches, shoppers may be denied a certain model if they’re not a known customer to the brand.
The company has gotten even stricter about shipping watches, said Brack, even when it’s a longtime, loyal customer of a wholesale jeweler partner.
This distribution style means the brick-and-mortar experience and having a relationship with wholesalers are crucial.
Bucherer operates more than 100 sales outlets worldwide, but the United States is a big country, and even with its 2018 acquisition of Tourneau, it doesn’t reach every major city. This is where the independent retailers come in.
“[Rolex] does put a great value in that in-person consumer experience and [know] that they need to rely on more than just the brick-and-mortar network. They need to rely on their existing, current, and future wholesale partners,” said Brack.
Given Rolex’s rules and restrictions, there’s undoubtedly a need for would-be Rolex customers to visit local jewelers, an arrangement with benefits to all parties.
“So more and more, those jewelers are wanting the consumers to come into the store physically. So, I don’t see that changing anytime soon. But with Rolex, one never knows,” said Brack.
Another Rolex acquisition is not out of the question.
Given Rolex’s history of being tight-lipped, it’s hard to say exactly what’s next for the storied watch brand, but the possibility of another acquisition remains.
Stracke said while he doesn’t expect Rolex to directly acquire more retail space or another retailer, like Watches of Switzerland, it may do so indirectly via smaller acquisitions by Bucherer.
“If Bucherer has the option to acquire promising retail spaces in the future, I’m sure it will not say no to that,” he said.
As for scooping up new brands, Stracke said that’s “unlikely,” but not something he would write off entirely.
For analyst Brack, whether or not Rolex will make more acquisitions depends on what these purchases would add to the customer experience and overall quality.
“For them, it’s always about improving the models, improving functionality. I think that if it can figure out a way to improve the customer experience, it will do it. And we may continue to be surprised by Rolex’s new innovations.”
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