In the immediate aftermath of Rolex’s proposed acquisition of Bucherer, reaction fell into two broad camps.
One group of executives in the watch trade thought they would see little or no change for Rolex, Bucherer, the legions of Rolex official retail partners or consumers, at least in the short- to medium-term; a horizon of around five years.
Another group thought thought it would only be a matter of time before Rolex and Bucherer expanded as advantages became clear for becoming a fully vertically integrated company from the manufacture of components and finished watches right through to retail, after-sales service and even pre-owned watches.
I am beginning to wonder whether a third outcome is in play: that Rolex is actually limiting the power of major multiples and nudging its support in the direction of the most successful family-owned independents.
In reality, Rolex always has every one of its authorized dealers on a tight leash, and has the power to limit or assist any expansion plans.
Acquisitions of any other Rolex retailer (and the same goes for Patek Philippe partners) are far less likely to go ahead unless these banker brands have given them the green light.
Investing millions in new or expanded showrooms is equally unlikely to proceed unless these brands give assurances that they will be represented in the stores and promise allocations of watches to justify the cost.
So, by extension, what message might Rolex be sending with the acquisition of Bucherer?
First, it is clear that two historic Swiss businesses prefer to remain in Swiss ownership.
This is one reason why Watches of Switzerland Group would have found it harder to buy Bucherer (for clarity, we do not know whether it was ever in the running), and why a private equity play never had legs.
In addition, crucially, Rolex immediately acquires the ability to entirely control the size of Bucherer in the future, and maintains its strong influence over Watches of Switzerland Group’s expansion plans.
My hypothesis is that Rolex likes the current size of both major multiples across Europe and the United States, at least as far as their allocations and number of doors are concerned.
Rolex has always wanted a balance between multiples and family-owned independents, and it feels to me right now as if it wants to put a little more lead in the pencils of its indies.
I see this most clearly here in the United States, where independent retailers are suddenly pouring their own money into massive upgrades.
I can reel off more than half a dozen projects that have been announced in recent months.
In California, Geary’s in Beverley Hills and Polacheck Jewelers in Calabasas are building vast new Rolex and Patek Philippe showrooms.
Hing Wa Lee is investing $15 million in its third Rolex-anchored megastore in Los Angeles.
London Jewelers completed side-by-side Rolex and Patek Philippe points of sale in New Jersey.
Long’s Jewelers in Boston completed a two-story Rolex showroom last year and is building another suburban multibrand anchored by The Crown.
Alson Jewelers in Cleveland just broke ground on an 11,000 square foot building that will provide a vastly expanded space for Rolex.
Ben Bridge relocated its historic Seattle flagship to give more space to Rolex in a new showroom.
And I know of more to come that have not yet been made public.
Meanwhile Bucherer is pouring millions of dollars into upgrading and converting older Tourneau stores into Bucherer-branded showrooms, but has been cutting doors, not growing its network.
Watches of Switzerland Group is continuing to expand in the USA, UK and Continental Europe, but the majority of its capital expenditure is going into new monobrand stores for the likes of Tudor, Omega, Breitling and TAG Heuer in addition to levelling up its showroom experience across Goldsmiths, Mappin & Webb and Mayors in Florida.
The evidence may be circumstantial, but this is a trend to keep an eye on in the years ahead.
Will the likes of Bucherer and Watches of Switzerland Group (and I might add Hour Glass in Singapore or Ahmed Seddiqi & Sons in the United Arab Emirates to the mix) be allowed to keep growing their Rolex businesses, or will the independents be prioritized and incentivized to expand faster with the brand?