Rolex acquires Bucherer, a prestigious, long-established watch manufacturer! We speculate on its true purpose and future impact.

On Friday, August 25, 2023, it was reported that Bucherer, one of the world's largest and most prestigious watch retailers, had been acquired by Rolex, a shocking development that sent shockwaves through the global watch industry. What does this mean? What are the reasons and future impacts? We'll explain and predict how the watch industry will react.

Big shock following introduction of certified pre-owned program!

"Could it be?" "I thought so?" "Could it be?" Rolex has once again announced major news that has shocked the watch industry: it has acquired Bucherer, a prestigious, long-established international watch retailer.

　Just like the announcement made about nine months ago on December 1, 2022, that Rolex would enter the secondary distribution business through its Certified Pre-Owned (CPO) program, many people may be thinking, "No way! I can't believe it!" However, this is a fact that Rolex has officially released, and it has the potential to revolutionize the watch industry.

　Authorized Rolex dealers around the world are confused by this situation and fear the possibility of a "worst-case scenario" for themselves. In fact, this news caused investors to worry about the future of the watch retail business, causing the share price of Watches of Switzerland Group (WOSG), the UK's largest Rolex retailer, to fall by approximately 28% on the London Stock Exchange on August 25th.

　Rolex has made it a basic corporate policy not to enter the retail business, meaning that it does not adopt a directly managed boutique strategy. Even with the Rolex CPO program, Rolex only provides full maintenance and a two-year international warranty, leaving pricing up to the retailer.

　However, Rolex is still involved in the used Rolex market, which accounts for approximately 80% of the market. The Rolex CPO program, which resolves concerns about the prices and quality of used Rolex watches, which have skyrocketed, is a bolt from the blue for the used watch market, and while the results are still unclear at this point, Rolex is undoubtedly on its way to becoming a "game changer" in the used watch business.

　Now, the acquisition of Bucherer and its group, one of the world's largest and most prestigious watch retailers, has come as no surprise to anyone involved with an authorized Rolex retailer who has heard this news: "Has this fundamental policy of not adopting a directly managed boutique strategy changed? If so, won't this be a big problem?"

　Amid the global luxury watch boom, luxury watch brands, led by Audemars Piguet, are further reducing their retail outlets and increasing the proportion of sales through their own boutiques rather than retail stores. So, in response to the news of Rolex's acquisition of Bucherer, authorized retailers are expressing great concern about potential future events, such as "Rolex will also pursue a boutique-only strategy. Our authorized retail contracts will be terminated. Or, at the very least, Bucherer will become a separate entity as a retailer, meaning our product supply will decrease." This is a natural concern, considering the situation in Japan, where a large number of retailers have been unable to carry Rolex watches over the past 20 years.

　However, Rolex stated in a press release that "The watch retailer will keep its name and continue to operate independently." Additionally, according to articles by Andy Hoffman of Bloomberg and Rob Corder of watch specialist media WatchPro, a representative from Watches of Switzerland, the largest authorized Rolex retailer in the UK, was notified of the announcement by Rolex in advance and assured them that the system used by Rolex to allocate products would not change, meaning that product supply would continue as usual.

　This acquisition is a huge undertaking, with Bucherer's market value estimated at around 40 billion Swiss francs (approximately 45 billion dollars), and therefore requires approval from the Swiss Federal Competition Commission (COMCO), which intervened in arbitration between the Swatch Group and watchmakers who had purchased ETA movements when the Swatch Group suspended external sales of ETA movements around 2000.

The main reason for the acquisition was "Bucherer's earnest desire"

　But why did Rolex acquire Bucherer and its group, one of the world's largest and most prestigious watch retailers?

　It is assumed that this is because Rolex responded to the strong desire of Jorg G. Bucherer, the third generation of the Bucherer founding family and grandson of founder Carl F. Bucherer, who currently leads the Bucherer Group, to absolutely prevent the business from falling into the hands of a non-Swiss corporate group and to ensure that it remains a 100% Swiss company.

　Jorg G. Bucherer is now nearly 90 years old and is a legend in the Swiss watch industry, said to be "the last person to have worked with Hans Wilsdorf, the founder of Rolex." However, there is reportedly no successor in his family. Therefore, this acquisition by Rolex is likely the most desirable outcome for Bucherer, with whom he has built a partnership of nearly a century, and for Jorg G. Bucherer in particular.

　Bucherer was founded in Lucerne, Switzerland in 1888 as a watch retailer, before Rolex was founded at the end of the 19th century. Bucherer was one of the first to launch the Rolex CPO program, and has been developing its watch business in close partnership with Rolex since 1924, almost 100 years ago. In other words, Bucherer can be considered a "quasi-family company" of Rolex.

　I visited the Bucherer headquarters in Lucerne in the 2000s, and the watch repair department there stocks a large number of old genuine Rolex parts. The repair manager even said, "We can repair things that Rolex headquarters can't." They also repair classic watches, and with a history of watch manufacturing, their repair skills are exceptional among watch retailers. They launched their own brand, "Carl F. Bucherer," in 2001, and have a solid reputation and track record as a watch brand.

　However, with no successor in sight, it was only a matter of time before the founding family of the Bucherer Group would give up on continuing the business and hand over the business to the new owner. Anticipating this, many companies and investors had been quietly exploring the possibility of acquiring the Bucherer Group for years.

　In other words, Rolex's acquisition of Bucherer can be interpreted as a defensive acquisition to protect the "quasi-family business" from such movements.

　For Rolex, there are many benefits and almost no drawbacks. Bucherer operates more than 100 stores worldwide. In the United States, which is now the world's No. 1 watch market, it operates 32 stores under the Tourneau name. This acquisition means that Rolex has a direct connection with those customers.

　It will also make it easier to monitor abnormal conditions in the pre-owned watch market and take measures to improve them, as symbolized by the Rolex CPO program. For Rolex, which positions its corporate activities as a form of social contribution, this will enable it to more directly address this issue, which is its greatest concern.

　The only remaining question is whether the acquisition will be approved by Swiss government authorities. This is my personal opinion, but given the soundness of Bucherer and Rolex as companies, and the history of the Swiss government and the watch industry, it is highly likely that it will be approved. The Swatch Group has also commented in favor of the acquisition. It seems that an acquisition by Rolex, a Swiss company, is preferable for the watch brand than Bucherer falling into the hands of a foreign corporate group.

But retailers' concerns remain

　While this acquisition and business transfer is all good for Bucherer and Rolex, it still raises concerns for authorized Rolex retailers around the world.

　"The fruitful collaboration between Rolex and the other official retailers in its sales network will remain unchanged," Rolex said in a press release.

　However, even if this is the case for the time being, it is unclear how things will develop in the future. This is clear when we look back at the "history of the relationship" between Rolex and its authorized dealers. Therefore, Rolex's authorized dealers are confused by this situation and are terrified of the possibility of "the worst possible outcome" for them.

　The worst-case scenario, of course, would be that Bucherer, now part of the Rolex group, would be placed in a special position among retailers – a Rolex boutique – selling not only CPO Rolexes but also new products, and would see its product allocations reduced, reducing the scale of its Rolex business.

　Rolex has clearly denied this possibility at this point, but with the sudden launch of the Rolex CPO program, Rolex is the No. 1 company in the watch industry that is "allowed to go its own way."

　There is likely to be a lot of speculation and developments surrounding this acquisition in the watch industry. First of all, what will happen if COMCO approves the acquisition? Depending on how things develop, the entire industry could see a sudden change in the distribution, sales, and customer service systems for luxury watches. In any case, we will be keeping a close eye on this matter.