Rolex and Bucherer: Future Luxury Watch Retail Strategies

Recently, Rolex’s senior management changes have attracted widespread attention, especially with several executives moving to senior positions at Bucherer. On the surface, this news may seem trivial, but it might actually signal that Rolex is set to enter the retail market directly, selling its watches directly to consumers through Bucherer’s more than 100 exclusive stores worldwide.

The impact of this strategy will be profound, potentially altering the landscape of luxury watch retail in Europe and the United States over the next decade. If Rolex chooses to support Bucherer, the distribution of independent jewelers and large retail groups, including Watches of Switzerland, The Hour Glass, and Ahmed Seddiqi & Sons, will be affected.

Furthermore, Rolex might restrict these retailers’ plans to expand their brand-exclusive stores, allowing Bucherer to gain growth opportunities more easily when competing with other Rolex authorized dealers. If a dealer wishes to retire or sell their business, Bucherer might have the right of first refusal.

These changes, though slow and gradual, could be fatal for other Rolex partners being squeezed out of opportunities. Like a frog being slowly boiled, they might miss the chance to escape as the water temperature gradually rises.

So, what will Rolex ultimately decide? Since announcing the acquisition of Bucherer last year, Rolex has not made any new comments, with the only reference being its statement at that time. According to Rolex’s corporate communications, Bucherer’s management will remain unchanged but will be integrated into the Rolex Group’s operations after the acquisition is approved by competition authorities.

Changes in the Luxury Watch Retail Market Following Rolex’s Acquisition of Bucherer

Since August 2023, Rolex has not issued any statements contradicting this. With European competition authorities having approved the acquisition over the summer, Rolex’s senior appointments are seen as part of the integration plan.

These changes seem slow, but Rolex’s executives will be able to gain an in-depth understanding of Bucherer’s financial situation, which is crucial for future decisions. Although both Bucherer and Rolex are private companies and do not need to disclose their headquarters accounts, their operations in the UK require financial reporting, allowing us to make comparisons.

Rather than comparing Rolex’s performance with Bucherer’s, I find it more interesting to compare it with Patek Philippe. Patek Philippe’s wholesale business in the UK is similar to Rolex’s, and it operates a directly managed store on Bond Street in London. This store generated £75 million in direct sales revenue in the 2023 fiscal year, with a gross profit margin of 35% and an operating profit margin of 17%.

In contrast, Patek Philippe’s wholesale business reported a turnover of £211 million, with a gross profit margin of 24% and an operating profit margin of 14%. These figures show that while Patek Philippe’s store has a higher gross profit margin, the gap with its wholesale business is not as large as expected.

This is crucial for Rolex’s future decisions. Even though Patek Philippe’s store has a higher gross profit margin, this may not be enough to convince Rolex to immediately open its own stores or operate retail through Bucherer. It is more likely that Rolex will use its deep understanding of retail operations to continuously raise standards for authorized dealers.

Based on my interactions with these authorized dealers over the past year, they also believe that their relationship with Rolex will continue, despite facing increasingly high demands to provide excellent customer experiences and maintain Rolex’s leadership in the luxury watch market.

In conclusion, how the relationship between Rolex and Bucherer develops will undoubtedly have a profound impact on the luxury watch retail market and is worth our continued attention. 

Related News : Rolex’s ‘Certified Pre-Owned Watch’ program.