Rolex to buy Bucherer, owner of Tourneau, in big retail push for luxury watchmaker
Once more, Rolex is revolutionizing the realm of high-end timepieces.
After taking steps last year to introduce its own authorized used service and enhance the availability of new timepieces through the establishment of new manufacturing facilities, Rolex is now broadening its presence in the retail market. The luxury brand has recently acquired Bucherer, a prominent European watch retailer and the proud owner of the renowned Tourneau chain in the United States.
For more than 90 years, Rolex has relied on Bucherer as their trusted retail partner. Bucherer has a widespread presence worldwide with 100 sales outlets, out of which 53 are authorized Rolex dealers. In addition to this, 48 of these locations are also authorized to sell Tudor watches, another brand owned by Rolex. The Tourneau | Bucherer website confirms that Bucherer currently operates 34 stores across the United States.
Rolex and Bucherer are privately owned companies, which means they don't reveal their financial information and measurements. Experts have approximated that Rolex produced around 1.05 million timepieces and earned an impressive revenue of $8.8 billion in 2021. According to Rolex, Bucherer and Tourneau will maintain their individual identities and run as separate entities. The merger between the two will become official once it receives the necessary approval from the regulatory authorities.
The thriving corporate sector in New York City is a force to be reckoned with.
According to specialists, Rolex's venture into the retail industry might come as a shock but when examined closely, it ought not to be.
According to Eric Wind, a well-known industry expert, Rolex watches are in such high demand that he has always found it illogical for Rolex to give retailers 32% of the selling price. He believes that from a business standpoint, it would be more reasonable for Rolex to establish their own stores in order to receive the full retail price and establish direct connections with customers, rather than allowing other retailers to manage those relationships.
Individuals donning facial coverings stroll past a Rolex boutique in a business center located in Bonifacio Global City, Taguig, Metro Manila, Philippines on September 22, 2020. (Photographed by Eloisa Lopez/REUTERS)
Rolex's venture into the world of retail encounters some obstacles in the business. Premium retailer Watches of Switzerland Group revealed that their sales in the first half of the year were affected by a difficult trading climate, but they emphasized that demand for luxury watches is still high. Likewise, Swiss watch exports in July experienced a decline for the first time in two years, reflecting a lack of strength in the Chinese market.
The overall luxury industry is facing difficulties in the ongoing year of 2023. LVMH disclosed their sales figures for the second quarter, which fell short of expected numbers. The sales growth also came to a halt and even declined in the United States.
Furthermore, there are indications suggesting that the retail sector's weakened condition might give rise to increased consolidation. Let's take for instance the case of Tapestry, the company that oversees renowned luxury brands such as Coach and Kate Spade. They recently completed an acquisition of Capri Holdings, a transaction worth a staggering $8.5 billion. Capri Holdings, in turn, is the entity responsible for managing iconic names like Versace, Jimmy Choo, and Michael Kors.
Meanwhile, Rolex appears to have successfully navigated a decline in the prices of secondhand and unofficially sold watches, also known as the "gray market." The recent decrease in prices across the luxury watch industry suggests that the market might be undergoing a correction.
Maybe this is the reason why Rolex is interested in obtaining Bucherer, even though Rolex's significant expansion into retail also indicates that the renowned watch company believes it can expand its operations and profitability. This move may also be viewed as an attempt to broaden its business horizons beyond just Rolex and Tudor, since Bucherer and Tourneau also offer various high-end watch brands, along with exquisite jewelry.
Pras Subramanian works as a correspondent in the Yahoo Finance team. You can keep up with his latest updates by following him on both Twitter and Instagram.
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