Rolex surprised the international luxury watch industry three weeks ago when it announced the acquisition of Swiss retailer Bucherer.
Bucherer has a worldwide store count of approximately 100, with annual sales estimated at $AU4.1 billion.
To date, Rolex’s only store is located in Geneva, and with the acquisition of Bucherer the company is expected to have a significant presence in consumer sales for the first time.
Discerning what the change in strategy means for the industry’s future is difficult. Since the announcement, many have speculated on how this will impact Rolex and, perhaps more importantly, its competitors.
“Some people have faith the company can put up a firewall,” Brendan Cunningham, professor of economics at Eastern Connecticut State University, told Rapaport News.
“I don’t know how they are going to work that out. Over time, there will be a temptation to do more through that relationship and leverage it a little more.”
After the announcement, Watches of Switzerland released a statement reassuring the market that Rolex did not intend to enter retail.
In an interview with Yahoo Finance, Breitling CEO Georges Kern offered similar sentiments.
“We love our collaboration with Bucherer; we have been working with them [for] many years. Rolex is a great company,” he said.
“They have the best behaviour in the industry; they respect all the other brands, and I’m very happy about this acquisition. And as far as I understand, nothing will change for us and for Bucherer in this relationship.”
The deal between Rolex and Bucherer is still subject to review by competition authorities before the takeover is finalised.
The two companies have worked together for 99 years, and in a statement, Rolex said this shared history motivated the acquisition. Ariel Adams, writer for ABlogToWatch, said protectionism was likely central to the deal.
“Much of the story is still a secret. We know that Swiss companies don’t like to cede control to non-Swiss entities, which would likely have been the case with any other buyer that Rolex,” he said.
“What I see here is a form of protectionism, as Rolex might not really know how to manage all this but feels more comfortable owning the problem than trusting it to someone else. There is a lot at risk.”
He added: “Rolex and Bucherer clearly had to contend with both the immediate dangers of another new Bucherer owner and a long list of potential problems that could occur. There is also a very strong cultural push to keep Swiss things Swiss.”
Michael Tay is the group managing director of Singapore-based The Hour Glass, with showrooms across Malaysia, Thailand, Hong Kong, Japan, Australia and New Zealand.
He expects that retailers will be asked to improve their quality of service in order to meet Rolex’s standards.
“What retailers are going to be required to do is step up the quality of service. This will focus their attention on ensuring the consumers’ experience is up to Rolex’s standards,” he told WatchPro.
“This acquisition has given Rolex an incredible opportunity to get a sense of what the final client is looking for. If you think about the touch points they have with clients today, that is really centred around the digital domain. The last mile engagement with consumers is lacking.”
Rolex chose Bucherer as its partner for the certified second-hand program, which launched earlier this year. Watches of Switzerland has announced that it has started selling certified second-hand Rolex watches in the UK.
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