Rolex’s direct retail stake may shake up a big seller’s market
retail market is fragmented and luxury timepieces are not really essential items. Rolex said the deal was the “best solution not only for its own brands but also for all the watch and jewellery partner brands." But the significance of this transaction—for which no financial details were disclosed—can’t be overstated. Rolex in effect selling direct to consumers for the first time is a seismic shift.
Jean-Philippe Bertschy, an analyst at Vontobel Wealth Management, estimates that Rolex will generate annual sales of over 10 billion Swiss Francs ($11.3 billion) this year; Bucherer will contribute annual sales approaching 2 billion Swiss Francs. Based on Bloomberg data, Rolex’s sales would be close to those of Hermes International. They would also be ahead of Kering SA’s Gucci and LVMH’s Dior.
Yet, Rolex has largely eschewed the dominant strategy in the luxury industry — pushing out the middleman and selling direct to consumers—by choosing instead to distribute watches through partners like Bucherer and WoS. Up until now, the only store it has owned and operated is its Geneva boutique. Rolex said Bucherer would be run as an independent business, and there would be no change in its retail partnerships.
WoS said it had confirmed that there would be no alterations in stock allocations. In the short term, that is likely correct. You can’t buy very many new Rolexes in stores right now anyway—most are on wait lists.
But over time, Rolex may favour its subsidiary over other retailers when determining who gets the estimated 1.2 million units it produces every year. If Bucherer becomes known as the go-to destination for Rolex, it could limit traffic to WoS stores. If fewer customers come looking for a Rolex, there is less opportunity
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