Rolex buys Bucherer – The Seven Important Questions
Simon Schneider
5 September 2023 | 4 min read
In a big balls business move, Rolex has recently stated its intent to purchase the historic watch dealer Bucherer. Given the high amount of vertical integration in the business model of Rolex, it was an unwritten law that they would not enter the direct-to-consumer business. A lot has changed in the watch landscape, and the frustrations with the old system were growing due to production shortages and creative allocation methods.
All this fails to dampen the surprise of this news. The shock value of this news can be best visualized by looking at the stock of Watches of Switzerland, which dropped 30% once the headlines were written. We are yet to see what the Rolex ownership will mean for the watch-buying experience at Bucherer and the rest of the market. While the takeover is still subject to approval from competition authorities, this immediately begs exciting questions which we look to answer today.
Who is Bucherer, and why does Rolex want to buy them?
Founded in 1888, Bucherer is a leading watch and jewellery retailer. With 2400 employees and 1,6 billion in revenue, they are a heavyweight in the game, providing Rolex with an expansive global network. The patriarch and sole owner, Jörg Bucherer, stated not to have a successor in mind. With the family’s tight connection to the brand, I am sure he will rest comfortably knowing his family company is in the hands of Rolex.
As to their motive, buying an established dealer chain is significantly easier than trying to start from scratch. Due to the huge demand the brand is experiencing, anything but a global network would fail to satisfy customer needs in the first place. This move allows Rolex more control over its brand image, a higher margin on their product, as well as a store of value for their cash reserves in these inflationary times.
Will you get a Daytona now?
No.
But who will get a Daytona now?
Unfortunately, this will realistically change nothing about the nebulous mystery of who gets offered which watch. It will negatively impact your chances on the odds of being able to bribe an employee, as Rolex is known to run a very tight ship. At least in the short term, I would not advise you to get your hopes up for a steel Daytona.
Will this combat dealer shenanigans?
Rolex is definitely trying to strengthen its grip on the market. This can be both in their actual market share as well as their control over how their brand, arguably their most valuable asset, gets presented. While their Swiss secrecy may not let you believe it, they surely are self-aware of how they are perceived, and this is certainly also to combat the many frustrating experiences had when trying to buy a Rolex. As this is reducing their dependence on the other stores for distribution, this also implicitly raises the pressure felt by other ADs to follow the brand’s stringent rules.
Is Bucherer still independent?
According to Rolex, Bucherer is supposed to stay independent. Realistically, that statement is absurd. Even if they don’t share management, there will at least be, at some level, unconscious bias towards Rolex products.
How will the other brands sold at Bucherer react?
One thing is clear: nobody likes their competitors earning a piece of their pie. But some brands may be between a rock and a hard place here. With an over-reliance on the big chains in supply strategy, even if a company like Patek would want to pull their product, they have nowhere else to place it.
While a prestigious brand like Patek would be less reliant on an AD network to deliver their products, the less desirable brands certainly would financially feel the pressure if they pulled their product from Bucherer.
There may also be a prisoner’s dilemma situation here. Theoretically, if all brands worked together in pulling their product from Bucherer, they might come out stronger from this. Realistically however, through their individual motivations, they are likely to stay with Bucherer and, in turn, further the dominance of Rolex’ market position. The first to move was the swatch group, who put on their prettiest smiles and claimed to look forward to Rolex ownership.
How will this affect the other Rolex ADs?
For the other ADs, this means shape up or get out. In our previous blog article titled: How the Rolex Daytona Destroyed the watch market we already explained the increasing demands Rolex has from jewellers on how their brand gets presented. We have seen smaller stores lose their license or renovate, and with the change in the power dynamic, they will have little to no negotiation room left. Even the big chains have to tread carefully, as we have seen Wempe losing their Rolex license for both London and Madrid recently.
These are just some of the questions that have to be asked with this news and surely won’t be last. We will closely follow this development and update you here. One thing is for certain. This is the end of an era.