BREAKING NEWS: Rolex buys Bucherer

[superpop]

I have worked for a few top tier manufacturing companies that sell through a distribution model and the only time they really buy a store or group of stores is when the owner wants out and there are no good alternative buyers and they almost never do this in smaller markets. Additionally these are businesses with much larger margins than 35%. These mom and pop AD's typically have pretty good profitability because they tend to own the store or have very favorable long term leases. Rolex is also risking its relationships that is has with it's primary sales channel. If this becomes a trend, you could see a quiet quitting effect from the remaining AD's who will no longer want to invest in the brand for the long term. Rolex will have to be very careful with how they message this to their channel. Just my random thoughts.

[GW44]

Originally Posted by RTG

My guess is that Patek and AP will pull out of Bucherer. For other brands, it could work out great. When Rolex says "maybe in 2-3 years", a lot of people will buy something else. Maybe you would be interested in this fine Carl Bucherer watch while you wait?

AP aren’t sold (new) through Bucherer at all and Patek are only sold via their Tourneau outlets (for now…)

[Midlifegoals]

I’m hopeful that this doesn’t take middle-of-America’s ability to shop for Rolex long term. Would be a shame to see the rest of the AD network go away.

[Fleetlord]

Originally Posted by the dark knight

There's two issues with this line of thinking.

One is Rolex's customer is not the end user, it's the ADs they sell the watches to. They were still unloading their stock and making their money, after that it's the AD's problem. And even in the worst of times ADs weren't really in a position to be rejecting stock from Rolex, so Rolex kept making their money, so who cares? It's the ADs that had to offer discounts (cutting into their profits) or backdooring inventory to the grey market.

Second issue then is the purported "brand erosion" from such state of affairs. Does the current state of affairs look like Rolex brand erosion to anyone? Demand far outstripping supply, Rolex as popular as they ever have been? Doesn't seem like that brief state of affairs in the early to mid 2010s did any long lasting damage to the brand. So I doubt Rolex fears such things.

1) Rolex cares for the same reason Richmont famously bought back dead inventory fro their AD network. They didn’t want it hitting the street at cut rate prices. It makes the brand look trashy. Buying a Rolex from a grey dealer at 20% is trashy for Rolex, that’s why secondhand market values are of great consequence to a brands strength.

2) The luxury market changed with the advances in digital economy. Money and buying power was easier to obtain that than ever. Being expensive alone was no longer the most determining factor in a something being luxurious. It now needs to be exclusive in terms of acquisition and it also needs to hold or appreciate in value as this is now seen as the hallmark of a quality item. Resale is all the rage.

[amh]

Originally Posted by Midlifegoals

I’m hopeful that this doesn’t take middle-of-America’s ability to shop for Rolex long term. Would be a shame to see the rest of the AD network go away.

The "AD network" has been less than helpful for the last 6 years. If they go away I wouldn't shed a tear.

[Nik00]

Huge step!

[the dark knight]

Originally Posted by Fleetlord

1) Rolex cares for the same reason Richmont famously bought back dead inventory fro their AD network. They didn’t want it hitting the street at cut rate prices. It makes the brand look trashy. Buying a Rolex from a grey dealer at 20% is trashy for Rolex, that’s why secondhand market values are of great consequence to a brands strength.

2) The luxury market changed with the advances in digital economy. Money and buying power was easier to obtain that than ever. Being expensive alone was no longer the most determining factor in a something being luxurious. It now needs to be exclusive in terms of acquisition and it also needs to hold or appreciate in value as this is now seen as the hallmark of a quality item. Resale is all the rage.

Do you have any evidence Rolex did what Richemont did? Then not sure why you are bringing it up. You keep saying that it's "trashy", but that appears to be your point of view, not the public's, because again it sure as heck didn't hurt Rolex's brand equity.

[Laostuh]

Hopefully this means Rolex will push their product on prospective buyers who want buy AP or Patek or more coveted pieces of jewelry. I doubt Bucherer/Torneau will be Rolex/Tudor only. That is anti competitive and almost monopoly like. Regulators wouldn't allow it.

[logix1229]

so will i finally be able to walk in and pick up a pepsi gmt?! LOL...if not...a;flkj;ljkdf;lajsdflkjhsadf!!!

[RFC]

A vertical integration between the world’s largest mechanical watch manufacturer and the world’s leading retailer. I can only see Rolex/Tudor’s market share becoming even more dominant at the expense of competing brands. To those of us that look beyond Rolex this is a bad deal as far as diversity of watch manufacturers and choices go. I can’t see this acquisition as having pro competitive effects. If anything Rolex’s prices should increase after controlling the most important retail sales point. This acquisition should raise antitrust concern in the US and the EU.

[Robf52]

Rolex will need to show full support of non-Bucherer AD's. They are saying Bucherer will operate "independently".....we'll see. It looks like half of Bucherer's existing outlets do not currently sell Rolex; my guess is that the Rolex line will expand to all their locations. If I were an existing Rolex non-Bucherer AD I'd be very concerned with the possibility of a new AD competitor vying for local Rolex market share and infringing on their territory/market. Probably lots of current Rolex AD's needing assurances and hand holding.

[Calatrava r]

Originally Posted by RFC

A vertical integration between the world’s largest mechanical watch manufacturer and the world’s leading retailer. I can only see Rolex/Tudor’s market share becoming even more dominant at the expense of competing brands. To those of us that look beyond Rolex this is a bad deal as far as diversity of watch manufacturers and choices go. I can’t see this acquisition as having pro competitive effects. If anything Rolex’s prices should increase after controlling the most important retail sales point. This acquisition should raise antitrust concern in the US and the EU.

I don't think Rolex buying a retail chain raises antitrust concerns in the US or anywhere.

[Rico_Brasole]

Originally Posted by Calatrava r

I don't think Rolex buying a retail chain raises antitrust concerns in the US or anywhere.

Agreed. Specifically in the US we have Pharmacies who own Pharmacy Benefit Managers and Insurance Companies who own Hospitals.

So I think Rolex is okay lol


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[RFC]

Originally Posted by Calatrava r

I don't think Rolex buying a retail chain raises antitrust concerns in the US or anywhere.

I beg to differ but we can do lawyer talk. Vertical integrations are not per se illegal. But still they can be unreasonable. The concern of the antitrust laws is competition, ie, the consumer. Can’t see how this acquisition by a dominant market player fosters competition in any way. You would be right if antitrust compliance doesn’t care about consumers buying expensive watches.

[Cassian739]

My $0.02, and I do M&A for a living.

- Rolex will leave Bucherer standalone for a looooong time and purposely try to keep the appearance of an "arms length" relationship to protect the Rolex brand.
- Timing: Rolex would likely never get another bite at the apple to acquire a retail footprint this large, and who knows who would ultimately end up as the buyer. So even though there are risks and downside, they had to do it. YOLO!
- There is ZERO chance they spent billions of dollars on Bucherer to put the revenue stream at risk by messing with existing relationships with other watch manufactures. If anything, this acquisition should give comfort to other manufacturers that Bucherer will be a stable retail partner for them to sell product for the foreseeable future. A partner that will be very focused on protecting its reputation (see below). Far worse outcome would have been for Bucherer to end up in the hands of Private Equity.
- As a part of Rolex, Bucherer won't be held to short term margin pressures, protect the reputation at all costs is the mantra.
- So Rolex will almost certainly send a direct message to SAs, through Bucherer management, for SAs to stop messing around and playing games with Rolex allocations. No more bundling, forcing you to create a spend history, etc.
- Access to Data. Rolex corporate will now have a direct pipeline into the spending habits and preferences of Watch buyers around the world, across almost every Watch brand. No other watch OEM has that. There is A LOT you can do with that much data.
- financial: yes, being able to sell direct and eliminate the AD markup in certain markets will make Rolex more money. But that's not why they did the deal, it's about controlling the distribution of their product and protecting the Rolex brand. This sends a clear message to AD's that they are not F'n around anymore. In most markets Rolex no longer needs an independent AD. Full stop.

[Etschell]

Originally Posted by superpop

I have worked for a few top tier manufacturing companies that sell through a distribution model and the only time they really buy a store or group of stores is when the owner wants out and there are no good alternative buyers and they almost never do this in smaller markets. Additionally these are businesses with much larger margins than 35%. These mom and pop AD's typically have pretty good profitability because they tend to own the store or have very favorable long term leases. Rolex is also risking its relationships that is has with it's primary sales channel. If this becomes a trend, you could see a quiet quitting effect from the remaining AD's who will no longer want to invest in the brand for the long term. Rolex will have to be very careful with how they message this to their channel. Just my random thoughts.

Rolex does not need ADs. I would gladly buy watches direct from Rolex and not deal with independent sales organizations. Normally it would matter but when someone wants a Rolex there is no substitute good for that buyer.

I have been predicting this for years and am not shocked.

Next will be non transferable warranties. Just you wait.

[Midlifegoals]

Originally Posted by amh

The "AD network" has been less than helpful for the last 6 years. If they go away I wouldn't shed a tear.

I don’t disagree. I suppose my concern is that if the AD network went away, I would have to drive 6-7 hours to simply try on a new model on exhibition. Unless, of course, they decide to slowly replace the current ADs with new Bucherer/Tournaeu locations.

[Phlippe]

I imagine Rolex cares a great deal about the potential market impact the flipped watches into the grey space and the safe queens which are appearing more frequently as the prices drop. As the MFG Rolex knows how many watches were made and likely floating free. The easiest way for them to control after market values of extra inventory is to change the models. We have seen it with the Sub, then the Daytona, which means the GMT is next to be updated. Historically prices go up once discounted. They can also take them out of supply of the CPO if they own the retail inventory, by saying they are to damaged to resell. The interesting play will be if they creat a new watch brand below the Tudor price point. Tudors are no longer affordable first time watches for the young millennial and gen Z watch buyers.

[2loaded]

Originally Posted by APWorldTour

All Tourneaus are now Bucherer.


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Yep,
How is this going to work ?

[Easy E]

Originally Posted by Etschell

Next will be non transferable warranties. Just you wait.

Are non-transferable warranties legal?

[Socalwatchguy]

Originally Posted by Cassian739

My $0.02, and I do M&A for a living.

- Rolex will leave Bucherer standalone for a looooong time and purposely try to keep the appearance of an "arms length" relationship to protect the Rolex brand.
- Timing: Rolex would likely never get another bite at the apple to acquire a retail footprint this large, and who knows who would ultimately end up as the buyer. So even though there are risks and downside, they had to do it. YOLO!
- There is ZERO chance they spent billions of dollars on Bucherer to put the revenue stream at risk by messing with existing relationships with other watch manufactures. If anything, this acquisition should give comfort to other manufacturers that Bucherer will be a stable retail partner for them to sell product for the foreseeable future. A partner that will be very focused on protecting its reputation (see below). Far worse outcome would have been for Bucherer to end up in the hands of Private Equity.
- As a part of Rolex, Bucherer won't be held to short term margin pressures, protect the reputation at all costs is the mantra.
- So Rolex will almost certainly send a direct message to SAs, through Bucherer management, for SAs to stop messing around and playing games with Rolex allocations. No more bundling, forcing you to create a spend history, etc.
- Access to Data. Rolex corporate will now have a direct pipeline into the spending habits and preferences of Watch buyers around the world, across almost every Watch brand. No other watch OEM has that. There is A LOT you can do with that much data.
- financial: yes, being able to sell direct and eliminate the AD markup in certain markets will make Rolex more money. But that's not why they did the deal, it's about controlling the distribution of their product and protecting the Rolex brand. This sends a clear message to AD's that they are not F'n around anymore. In most markets Rolex no longer needs an independent AD. Full stop.

You deserve a cookie. Well said

[Carguy87]

Originally Posted by hellofromthebay

I predict Rolex will eventually sell it. They want to control who acquires them and leave in controls to ensure it stays that way.


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Didn’t think of this angle. Makes a lot of sense and would be a very smart play even if they didn’t want to move into a linear sales model.

[Carguy87]

Originally Posted by Cassian739

My $0.02, and I do M&A for a living.

- Rolex will leave Bucherer standalone for a looooong time and purposely try to keep the appearance of an "arms length" relationship to protect the Rolex brand.
- Timing: Rolex would likely never get another bite at the apple to acquire a retail footprint this large, and who knows who would ultimately end up as the buyer. So even though there are risks and downside, they had to do it. YOLO!
- There is ZERO chance they spent billions of dollars on Bucherer to put the revenue stream at risk by messing with existing relationships with other watch manufactures. If anything, this acquisition should give comfort to other manufacturers that Bucherer will be a stable retail partner for them to sell product for the foreseeable future. A partner that will be very focused on protecting its reputation (see below). Far worse outcome would have been for Bucherer to end up in the hands of Private Equity.
- As a part of Rolex, Bucherer won't be held to short term margin pressures, protect the reputation at all costs is the mantra.
- So Rolex will almost certainly send a direct message to SAs, through Bucherer management, for SAs to stop messing around and playing games with Rolex allocations. No more bundling, forcing you to create a spend history, etc.
- Access to Data. Rolex corporate will now have a direct pipeline into the spending habits and preferences of Watch buyers around the world, across almost every Watch brand. No other watch OEM has that. There is A LOT you can do with that much data.
- financial: yes, being able to sell direct and eliminate the AD markup in certain markets will make Rolex more money. But that's not why they did the deal, it's about controlling the distribution of their product and protecting the Rolex brand. This sends a clear message to AD's that they are not F'n around anymore. In most markets Rolex no longer needs an independent AD. Full stop.

Makes a lot of sense. Especially the access to data point (assuming all those brands decide to continue relationships with Bucherer.)

[Socalwatchguy]

Originally Posted by Carguy87

Makes a lot of sense. Especially the access to data point (assuming all those brands decide to continue relationships with Bucherer.)

Other brands don’t have a choice…
It would take years for these brands to replace the Bucherer distribution system/footprint.


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[gm58]

Would be interesting to see how Patek react, especially now that one of their competitors have acquired their retail partner in some locations! Patek has been closing down some of their ADs to focus on ADs that can give a dedicated space (like what Rolex and Tudor have done). Now with a different owner how will they work?

[Cassian739]

Originally Posted by Socalwatchguy

You deserve a cookie. Well said

Chocolate Chunk please :)

[Fuselierpa]

I am quite happy that my established purchase history is with Tourneau. I know a lot of people badmouth Tourneau but my personal experience always has been great. If access and inventory becomes more scarce at other retailers, I have my foot in the door where I need it.

[Fleetlord]

Originally Posted by the dark knight

Do you have any evidence Rolex did what Richemont did? Then not sure why you are bringing it up. You keep saying that it's "trashy", but that appears to be your point of view, not the public's, because again it sure as heck didn't hurt Rolex's brand equity.

I never said that Rolex bought back inventory, not at all.

The concept is that low resale values hurts brand image.

Richemont countered this by buying back inventory.

Rolex is taking steps they don't revisit the past days of too much Rolex having low resale valuations.

I understand you don't agree with me and don't see the image that Rolex was projecting 10yrs ago as being problematic. That's ok. I don't agree with you and that's great as well.

[Brian Page]

Originally Posted by Cassian739

Chocolate Chunk please :)

Well said....

[77T]

Originally Posted by hellofromthebay

I predict Rolex will eventually sell it. They want to control who acquires them and leave in controls to ensure it stays that way.


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That is possible. But also may be a family choice to diversify


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