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Rolex is once again upending the luxury watch world.
Following moves in the past year to launch its own certified pre-owned service — and boost new watch supply by opening new production facilities — Rolex is now expanding its retail footprint by acquiring Bucherer, one of Europe’s largest watch retailers and owner of the Tourneau chain here in the US.
Bucherer, which Rolex has for over 90 years used as retail partner, has 100 sales outlets globally, with 53 of those being authorized Rolex dealers. Rolex says 48 of those locations also sell Tudor watches, which Rolex owns as well. According to the Tourneau | Bucherer website, the retailer operates 34 locations in the US.
Both Rolex and Bucherer are closely held, private companies that do not disclose financial data and metrics. It has been estimated that in 2021 Rolex made 1.05 million watches and generated $8.8 billion in revenue. Bucherer and Tourneau will keep their respective names and continue to operate as independent businesses, Rolex said. Rolex also said the merger will take effect once regulatory authorities have approved the transaction.
While the move into retail is a surprise for Rolex, perhaps it shouldn’t be, experts said.
“Rolex has such huge demand for their watches that I have long felt it does not make sense that they give 32% of the retail price to a retailer,” industry watcher Eric Wind of Wind Vintage said to Yahoo Finance. “From a business perspective, it only made sense to have stores through which they can try to receive 100% of the retail price of the watch, as well as to develop direct relationships with end customers rather than allowing other retailers to have that relationship.”
Rolex’s move into retail comes with a few headwinds in the industry. Luxury dealer Watches of Switzerland Group reported that first half sales suffered from a “challenging trading environment,” though it noted demand remains strong. Overall Swiss watch exports for the month of July also slipped — the first monthly decline in two years — reflecting weakness in China.
The luxury space as a whole also seems to be challenged as 2023 progresses. LVMH reported second quarter sales that missed estimates, with sales growth stalling — and even dropping in the US.
There’s also evidence that a softening in the retail space may lead to more consolidation. For example: Tapestry (the operator of luxury names Coach and Kate Spade), acquired Capri Holdings in an $8.5 billion deal. Capri Holdings is the name behind Versace, Jimmy Choo, and Michael Kors.
Rolex, meanwhile, seems to have weathered a dip in the secondhand and “gray market” (i.e., unauthorized or third party) prices for watches. Recent price declines in the overall luxury watch market in the past year indicate the market may be correcting.
Perhaps this is why Rolex is keen to acquire Bucherer, though Rolex’s big move into retail is also a sign the watch giant is confident that it can gain size and scale, as well as increase its profitability. It could also be seen as a move to diversify its business beyond Rolex and Tudor, as Bucherer and Tourneau offer a number of other luxury watch brands, in addition to fine jewelry.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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