Mergers and acquisitions seem to be the theme of summer this year in the realm of luxury goods. The dreamy mood of summer travel all but distracted from the silent power moves made by the likes of French Kering group acquiring perfume house Creed and American Tapestry group purchasing London-based fashion group Capri Holdings. As if to end the season with a cliff-hanging finale, Swiss watchmaking giant Rolex shocked the international horology community by ending its would-be century-long partnership with the family-owned Bucherer in a landmark acquisition of the world’s largest watch dealer.
Rolex and Bucherer both are no strangers to going against the grain since their inception, significantly so in an industry that is so tightly surveilled by its own craftsmen and consumers alike. Rolex founder Hans Wilsdorf and Bucherer founder Carl F. Bucherer found themselves in an exciting point of watchmaking history in the early 1900s, both then young European watchmakers-turned-entrepreneurs who were of the first few in the industry to popularise the wrist watch, revolutionising what it meant to own and covet a watch. Little did either man know that they were about to embark on an enduring partnership that would cross generations and go on to define watchmaking for the world.
Bucherer has over 100 stores worldwide, 53 of which are authorised Rolex dealers and official after-sales services centres as of now. While Rolex has publicly stated that Bucherer will continue to be run independently under its own name with only non-executive Rolex representatives joining the board, anxiety over major changes in the way Rolex will interact with consumers as well as existing relationships with other retail partners have been abounding. In theory, Rolex can now capitalise on Bucherer’s global reach to increase “direct-to-consumer” sales significantly, leaving a much smaller slice of the pie for other watch dealers in light of the decreased incentive for external retail partnerships. Such a move would give the Swiss watchmaker more direct control over movement of its goods, a more integrated relationship with its consumer base and perhaps more importantly, direct influence over who its target audience is and what the “ideal Rolex owner” will look like.
Investment in quality assurance has been of vested interest to the Swiss watchmaker in recent history, most notably in the founding of the industry-shifting Lititz Watch Technicum in Pennsylvania, United States. The prestigious watchmaking school was founded in 2001 in response to a global shortage of watchmakers following the advent of quartz watches in the 1980s with their then unfamiliar electronic movements. Only 14 applicants make it to the freshman cohort of the apprenticeship each year, with more than half of the school’s graduates so far having gone on to continue their careers with Rolex itself.
While Rolex has made it a point to clearly state that the acquisition will in fact not result in major changes in its relationships with other retail partners, watchmaking investors were unable to hold their breath. Share prices of London-listed watch-retail competitor, Watches of Switzerland, plunged by more than a quarter within days of the acquisition’s announcement. Watches of Switzerland’s shares stand at GBX 548.50 as of the writing of this article.
Rolex explains that the acquisition was amicable and perhaps necessary — third-generation chairman, Jorg Bucherer, had decided that it was best to pass on his family’s legacy to a trusted partner in lieu of a lack of fitting successors in the family. Jorg Bucherer is 87 years old this year, the last known living person to have worked with Hans Wilsdorf himself as his father and grandfather did before him.
The acquisition has been described by Rolex as being driven by “a desire to perpetuate the success of Bucherer and preserve the close partnership ties that have linked both companies since 1924,” a strategic takeover which takes into account both the relationships Bucherer enjoys with existing watch and jewellery partners as well as the welfare of all the staff under its employment.
Whether or not the Bucherer-acquisition will truly become a shifting of the tides in the international watch market, watch aficionados can be sure of one thing — the Crown has and will continue to rest comfortably on Rolex’s head for years to come.
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