The announcement at the end of August of the acquisition of Bucherer by Rolex rightly sparked numerous comments and analyses. I have even seen explanations that consisted of several dozen points. In any case, when a transaction of this magnitude takes place, we can find plenty of good reasons to explain it. But in the end I have the feeling that we end up mixing the causes and the consequences and that the explanation of why the transaction is much simpler than these long unfolding action plans that some people thought it was good to do. .
I sincerely think that the reason for the acquisition lies, as explained in the press release, on the side of the seller and not the buyer. Bucherer found himself in a situation of uncertainty regarding the future of his capital holding (taking into account the age of Jörg Bucherer and the absence of direct descendants). Rolex intervenes to stop this uncertainty and eliminate any risk that this company, which is one of its very first clients, if not the first, falls into hands that we would describe as hostile (for example a group of luxury) or foreigners.
Many say that Rolex is not a company like any other: it’s true. So why apply reasoning that could apply to others? I have one conviction, it is that Rolex, as the armed wing of the canton of Geneva, intervened essentially so that Bucherer remains in a stable situation with Swiss detention (and even better: the center of gravity moves from Lucerne to Geneva ). And I want to say at this point: period and no need to say much more about the reasons. Rolex is powerful, its legal structure allows it to make acquisitions of this type with a strong political dimension and this action to protect and defend its own interests and Swiss interests is, for me, THE reason for the acquisition. Let there be consequences, so be it. We agree that these consequences create opportunities. But that these consequences become the causes, no, that is not my reading.
For example, I have read many times that the transaction serves to deliver a message to the retailer network. I don’t subscribe to this theory at all. Partly explaining such a transaction by the fact that it conveys a message that is not only known but also well understood by everyone seems strange to me as a reasoning. Do you honestly think that Rolex retailers have not understood that they cannot do without the crown brand? Do you sincerely think that they need a message reaffirming the power of Rolex when today, they cannot change the size of the bulbs without consulting them?
Rolex has worked a lot on its network for many years. I even considered that placing myself on the eve of the transaction was optimal. All the main retailers are in the network, the most powerful, the most dynamic, the most innovative. All. Not one is missing. And not one wants to leave the Rolex adventure.
In fact, the analysis of the more or less direct advantages of the transaction must be done taking into account two parameters: risk management and ethics. And once we consider them, we realize that the status quo scenario is ultimately the most likely one.
Because obviously, a lot of questions arise. What if Bucherer only distributed Tudors and Rolexes? What if Rolex withdrew from part of its network? What if Rolex outrageously favored Bucherer in its deliveries etc.?
The more I think about it, the more I am convinced that nothing is going to change. I think that the autonomy scenario, as presented in the press release, is the most likely. I know that I make people smile or even snicker at this level. How can we think that following such a transaction, the purchased entity remains autonomous, especially in the context of a company as standardized as Rolex?
This is where the two components of risk management and ethics come into play.
Risk management imposed the transaction. There was a risk, the acquisition took place, the risk is no longer. But this same risk management will also impose a logic of risk distribution. The fact of integrating distribution is similar to a logic of accumulation of risks even if there may be a slight shift in cycles. If the market became difficult, Rolex would be weakened in its sales to retailers but also in its sales activity to end customers via Bucherer. In this context, Rolex has no interest in Bucherer growing significantly as an internal client from now on. The best way to protect yourself is to leave operational autonomy to Bucherer so that things evolve naturally. Improving performance will involve other levers including the rationalization of support functions and actions to bring global consistency to processes as Rolex knows how to do.
In addition, autonomy protects Rolex from a subject in which, it is my feeling, the brand does not really want to get involved: the management of the end customer outside of certain particular cases. In a context as explosive as today’s, where we feel tensions and frustration, it is important to maintain a barrier and this barrier is the network of retailers, including Bucherer.
Ethics also confirms the status quo situation. This is not a word spoken lightly. Ethics are at the heart of how Rolex operates. The acquisition of Bucherer means that Rolex needs to be even more demonstrative in this aspect. Quite simply because the retailers who have invested, who have followed all the rules and recommendations of Rolex for ages will not understand that a change in attitude towards them can occur, in particular, through lower deliveries. Rolex for these reasons, because it would be contrary to the strategy that has been applied for several years, because it would be inexplicable in the face of partners who have supported this strategy without blinking, because quite simply it would not be legally possible, do not cannot benefit Bucherer. This would be contrary to the values that the brand has held and it would be incomprehensible. It is therefore the status quo situation that is emerging.
And then, what to think of the external brands that are distributed at Bucherer? Will they still pack their bags? Yes for those who started the movement before the transaction in order to follow the logic of the group to which they belong (I am thinking in particular of Richemont). But the others? Abandon Bucherer, its network, its presence in the United States at a time when the market becomes delicate? It would almost be suicide. So to reassure them, Rolex will present the principle of autonomy. And ethics will require the establishment of a “Chinese wall” as they say in the business community between Bucherer’s operations with the brands on one side and the relations between Rolex and Bucherer on the other. Once again, we can clearly see that risk management and ethics lead to the situation becoming frozen. Finally, the fact that Bucherer is backed by Rolex can paradoxically attract new brands and encourage them to enter into contracts with the retailer. It is after all only an existing movement, you just need to compare the current portfolio of brands present in the Bucherer boutique in Paris to that when the boutique opened. The changes in this portfolio are dramatic.
What I want to convey through these words is that at the end of the day, for me, as an end customer, I am not going to see a big difference between the current situation and the situation in say three years. I will go to Bucherer and I will be welcomed in the same way. I will find brands other than Rolex or Tudor there. I will go to Dubail or Rabat and I will always find Rolex and Tudor there. For me the acquisition is explained above all for political reasons and in order to preserve the sustainability of a relationship. Sustainability is what has always guided Rolex. Movements are perpetual, as is the company’s behavior. I am convinced that the coming years will not contradict my words. In an increasingly complex environment and an uncertain world, the political and protective (I was going to write protectionist) role of Rolex will be reinforced and if we do not take this dimension into account in the analysis of its decisions, we forget then a major parameter.
This is my point of view and my feelings through my perception of what the corporate culture of Rolex is. But I don’t have the truth either and it will in any case be very interesting to observe the impacts of the acquisition both for the two parties involved but also for other players in the industry.