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Rolex acquires Bucherer: What does this mean for everyone in the watch industry?

Oliver R Müller — Tue, 29 Aug 2023 16:18:31 +0000

Rolex acquires Bucherer: What does this mean for everyone in the watch industry?

Revolution’s watch industry analyst Oliver R. Müller tells you everything to know about this earth-shattering announcement.

Business

By Oliver R Müller

Aug 30, 2023

By now everyone in the luxury watch industry is talking about one thing, and one thing only: Rolex acquiring Bucherer for an undisclosed sum on 25^th August 2023. The announcement was released at 6:00pm CET with a press release that says it all: Rolex acquires Bucherer. It was a move intended to preserve the long-standing partnership between the two companies following the decision made by owner of the retailer Jörg G. Bucherer who has no direct descendents to take over the business. Rolex also states that it will allow Bucherer to operate independently and that the integration will be effective as soon as competition authorities have approved the takeover transaction.

What does this all mean? The world’s biggest watch company has just taken over one of the world’s largest watch retailers. Bucherer, together with Tourneau, accounts for more than 100 points of sales worldwide, and it is also the biggest retail brand in the US. Bucherer has also been a trusted Rolex retailer since 1924 — literally during the time of Hans Wilsdorf, making Jörg Bucherer the last person today to have known and worked with the Rolex founder. Jörg Bucherer will also remain as Honorary President of the Bucherer group. More importantly, this announcement impacts not only the companies involved, but the industry at large. Shortly after this news broke, share prices for Watches of Switzerland fell 30%, then up 10% to close at -20%, showing that what Rolex does always has an impact on everybody else.

To shed some light and more clarity on this subject, Revolution’s resident watch industry analyst Oliver R. Müller takes us through the ins and outs of this deal of the decade.

Rolex is capturing additional power by integrating its most important retail partner

Rolex has announced that it is buying Bucherer — the brand’s most important retail partner worldwide with 100 doors, of which half are selling Rolex and/or Tudor. To qualify this as a strong signal is a euphemism, because it’s basically a radical change of a century-old strategy to keep the retail activities separated from the brand’s core business. In fact, until this recent move Rolex and Patek Philippe could be seen as “anomalies” compared with all other major brands moving toward TDC (direct to consumer strategy cutting out all middlemen), and strongly reducing the number of authorized retailers overall.

The last 30 years have seen a complete change of power going from the distributors (wholesalers) and retailers to the brands. The first major change started around the 1990s with the brands taking over their wholesale and creating subsidiaries all over the world. This allowed the brands to capture margin, develop their presence and better monitor the inventories over the different markets. The second move involved a vertical integration of the retail activities, and some brands had already started in the 2000s to open monobrand activities to get access to the end clients.

Is Rolex’s acquisition of Bucherer a defensive move or a well-thought-through long-term strategy?

To close a deal when buying or merging two companies, you need the perfect timing, and in this case, the Bucherer deal definitely ticks the box. The company had to solve the succession problem of the owner — representing the third generation — being 87 years old and with no children, to ensure the long-term perspective of a very successful business. Mr. Bucherer himself had communicated many times on that matter, saying that the business would be owned by a trust after his death. Even though the company is well managed, Rolex probably sensed that at some point it could do it more efficiently, or that the trust could sell the business and reinvest the proceeds of the sale. It is easily understandable that Rolex didn’t want to bear the risk seeing its number one retailer — generating roughly 8% of the brand’s sales — being bought by a competing company. At the same time, one could question the upside for, say, Richemont to buy a retailer whose business is ~60% based on selling Rolex watches, which represents a cluster risk. Nevertheless, Bucherer represents a fantastic network of points of sales; for instance, in the US — Rolex’s most important market — it acquired the number one retail network with Tourneau.

Jörg G. Bucherer took over as the company’s head in 1977.

Buying a CHF 2B* sales company — even for a cash-laden company such as Rolex — is not a defensive move. Rolex had decided a long time ago to move into retail to control the last mile of the value chain, which is in fact the most important. Retail data is the most important driver to manage your business, because it’s the marker of your real success at any time. You don’t have any clear visibility on which products sell and where you need to shift inventories or propose some sales measures. Unlike what some people are saying, Rolex’s business is not in an automatic mode where the salesclerks are just telling potential customers that there is nothing to sell. Rolex’s product offering is composed of 450 SKU’s and around 50 of them are the hotcakes; some of the others are cross sellers when the client has to acquire another watch rather than the one he/she is really coveting. Rolex’s ambition is to gear up and have mostly sell-through references. And what better way of pushing this strategy than by monitoring your own retail?

The second act of a change in Rolex’s long-term strategy

The move into retailing with the acquisition of Bucherer can be seen as logical following Rolex’s announcement of getting involved with CPO (certified pre-owned) through its retail partner Bucherer. Both measures are a strong signal that the brand is willing to bring some order into a market where loyal long-term clients have had a hard time trying to acquire a watch from Rolex. In recent years, the hype around the brand has brought a lot of clients more motivated by the return on investment in a Daytona or GMT-Master II than the pleasure of wearing them. Some argue that this doesn’t change the outcome for Rolex as in both cases the watches are sold, but it does affect the brand’s equity by frustrating “real” clients who are unable to get their hands on their coveted timepieces. Besides that, the brand is getting bombarded by emails, calls and even sometimes letters from lawyers trying to attack the company on the grounds of unfair product allocations. All these speculative behaviors and product scarcity create frustration and shed bad light on Rolex; and ultimately, they are detrimental to its brand equity.

Rolex will continue to act more proactively against gray-market activities by better controlling the secondary market through its CPO and by better monitoring the primary market through wise product allocations to the different markets and retailers.

Rolex now has their own Certified Pre-Owned Program

Is Rolex’s retail integration detrimental for their remaining authorized distributors?

The next moves to be expected are probably that Rolex will continue to further reduce its POS worldwide, which currently numbers around 1,800. The brand had already initiated the movement by closing some doors in the US and elsewhere, but it can be expected that it will accelerate that process. Logically, it will extend the number of doors within the Bucherer/Tourneau network in the USA, which will collaterally make some existing AD’s redundant. Furthermore, the brand will likely increase the inventory available in its own stores and this would mean that there won’t be enough watches available for the other AD’s. Bigger stores with better product availability and tighter product allocations for the “hotcakes” will naturally help to increase the sales of the brand-owned POS. This will be a further argument to close some doors when they’ll be compared with Rolex’s own boutiques.

Of course, Rolex won’t be willing to, or capable of, shifting its retail 100% to a brand-owned business model. Rather, its approach will also be to rely on strong retail partners. Two of these are retail networks comparable with Bucherer in terms of business size and number of doors: The Hour Glass, a family-owned retail network in Southeast Asia; and Watches of Switzerland (WoS), a listed company. It remains to be seen how this new configuration of the Rolex retail network impacts the business of WoS, but the stockmarket already gave the answer on the day after Rolex’s announcement on 24^th August, with a temporarily drop of 30% of its share price to finish 20% below its previous value. The market valuation lost £300M (~CHF 330M) in one day!

The Hour Glass is one of the world's largest retailers after Watches of Switzerland, Bucherer and Seddiqi & Sons

The investors estimated that WoS bears a cluster risk with a single brand generating almost 60% of its overall sales, and this is not because the management hasn’t tried to diversify the sales mix. But replacing Rolex or adding growth to the other brands to make them significant top-line contributors is easier said than done. Their business with Cartier and Omega has been substantially increased to try to reduce WoS’s dependency on Rolex, but this requires time, and in this case, the company is also competing with strong mono-brand boutiques of both brands.

Key drivers of Rolex’s new retail strategy

Even though it’s not Rolex’s main motivation, capturing the margin given to its retail partners (on average 35%, and ranging from 32% to 40% depending on volume, role and historical relationships and calculated from the suggested minimum retail price) nevertheless represents the staggering amount of CHF 4.65B! Rolex’s yearly sales are estimated** at CHF 9.3B ex-works, which translates into almost CHF 14B sales at retail value and a market share of 29% of the luxury watch market (31% adding Tudor’s increasing sales of CHF 570M in 2022). There is no other luxury brand with a comparable market dominance in its product segment. Rolex’s performance is even more impressive taking into account that it’s a mono-product brand as compared to a brand like Gucci, which is a multi-category luxury brand that achieved €10.4B (CHF 9.9B); and the two figures are not comparable as Gucci partially sells through its own retail.

Rolex is achieving a major step forward toward an improved brand distribution that generates not only an increased bottom line, but also helps to increase the brand’s equity by better controlling its sales and market presence.

And the answer to the cardinal question that everyone has been asking since last Thursday’s announcement? If we take WoS’s market valuation as a comparison before Friday’s correction, and on the assumption that Rolex paid a premium because there was only one owner at Bucherer, we estimate that the transaction was valued at ~CHF 3B taking into account prime real estate. Buying the world’s number one watch and jewelry retailer comes at a price.

*LuxeConsult’s estimate as neither Bucherer nor Rolex publish any figures on their sales.

**The estimates are taken from the Morgan Stanley x LuxeConsult annual report on the Swiss watch market.

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Movement	Self-winding caliber FBN 229.01 with natural escapement; 72-hour power reserve
Functions	Hours, minutes and small seconds
Case	40mm; stainless steel; water resistant to 30m
Dial	Verdant green, with sector track; applied, white rhodium treated gold Arabic numerals and hour markers
Strap	Brown calf leather with Alcantara lining, stainless steel pin buckle; additional Milanese bracelet in stainless steel
Limited Edition	Limited edition of 15 pieces

The post Rolex acquires Bucherer: What does this mean for everyone in the watch industry? appeared first on Revolution Watch.

BREAKING NEWS: Rolex Acquires Bucherer

Revolution — Thu, 24 Aug 2023 16:31:20 +0000

BREAKING NEWS: Rolex Acquires Bucherer

In a move that marks the preservation of a decades-long alliance and the continuation of shared history, Rolex has announced its acquisition of Bucherer.

News

By Revolution

Aug 25, 2023

This acquisition, intended to uphold the strong ties between the two companies, will see Bucherer retaining its name and operating autonomously. However, the final integration into the Rolex group awaits the approval of competition authorities.

The decision to merge comes as a response to Jörg Bucherer’s choice to sell his company’s business due to the absence of direct descendants. As Rolex steps in to acquire the well-established watch retailer, the intentions are clear: To carry forward the legacy of Bucherer’s success and to honor the close partnership that has linked both brands since 1924. The intertwining journey of more than 90 years has witnessed mutual support, fostering growth and accomplishments for both parties.

Today, Rolex stands as a pinnacle in the Swiss luxury watchmaking sector, while Bucherer has emerged as an internationally recognized multi-brand retailer with a global footprint. Its presence spans Switzerland, the United States, England, Germany, France, Denmark, and Austria. With over 100 sales outlets worldwide, 53 of them distributing Rolex and 48 offering Tudor, Bucherer has solidified itself as a key player in the industry. Notably, the retailer also serves as an official after-sales service center for both brands, boasting watch servicing workshops staffed by highly qualified watchmakers trained by the company itself.

A Strategic Move for All Stakeholders

In accordance to an official statement, the Rolex group believes this strategic step benefits not only its own brands but also the partner brands in the industry and the entire Bucherer group workforce. Crucially, Bucherer will maintain its identity and operational independence; the existing management team is said to stay intact. The transition into the Rolex group, however, awaits the green light from competition authorities, ensuring compliance with regulatory standards.

According to a 2017 article from Forbes, the Bucherer group had an estimated turnover of 1.5 billion Swiss francs in 2016, with third-generation owner, Jörg Bucherer’s net worth at a value of 1.75 billion Swiss francs.

Earlier in June, Swiss watch retailer Bucherer unveiled its renovated and rebranded boutique, now known as the “TimeDome.” This impressive 18,848-square-foot boutique made its debut in The Forum Shops At Caesars, Las Vegas. The evolution of the “TimeDome” was sparked by Bucherer’s strategic acquisition of Tourneau for an undisclosed sum in 2018, a move that endowed them with a network of 28 stores across 10 US states and a robust e-commerce presence. As it stands today, the “TimeDome” surpasses the Bucherer TimeMachine flagship store in New York by an impressive 500 square feet. The New York flagship, also part of the Bucherer-Tourneau acquisition, saw its renaissance under the Bucherer name in September 2021.

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ANGELUS x REVOLUTION CHRONODATE "ANGELS' SHARE"

$23,800.00

TECH SPECS

Movement	Self-winding caliber A-500; 60 hours power reserve
Functions	Hours, minutes, small seconds, chronograph and date
Case	42.5mm; titanium; water resistant to 30m
Dial	Salmon (6N gold plated) with gené or frosted area; Super-LumiNova filled Arabic numerals
Strap	Ballistic gray rubber; titanium folding clasp

The post BREAKING NEWS: Rolex Acquires Bucherer appeared first on Revolution Watch.

TAG Heuer is muscling up with two of its strongest watch icons, Carrera and Monaco

Oliver R Müller — Thu, 24 Aug 2023 11:38:21 +0000

TAG Heuer is muscling up with two of its strongest watch icons, Carrera and Monaco

With strategic changes in the offing, the avant-garde watch company must seize every opportunity.

Business

By Oliver R Müller

Aug 24, 2023

Rumor is that changes will take place at the helm of TAG Heuer with CEO Frédéric Arnault moving to another role within the LVMH Group and Julien Tornare — currently the CEO of sister brand Zenith — replacing him in due course. Which makes this a good opportunity to analyze a brand which has repositioned itself in recent years vis-à-vis its main rivals such as Tudor, Breitling and Omega. Morgan Stanley and LuxeConsult estimated that the brand lost half of its luxury watch market share from 2017 to 2022 from 4% to 2%. In comparison, during this same time, Breitling tripled its own market share from 1% to 3% by increasing its sales by a factor of 2.7x and capturing margin by integrating their own retail.

Nevertheless, the brand has recently regained momentum by getting back on its home turf and reinterpreting its two main icons, the Monaco and the Carrera. And it has done a stringent work of cleaning its collections by eliminating some existing SKUs and being careful when launching new collections.

TAG Heuer: a brand with two faces

TAG Heuer has an incredible brand DNA which is bicephalous with Heuer for the tradition and TAG for the innovation. But at the same time this represents a daunting task to balance the product offering from icons to disruptive timepieces. Heuer also has a strong legacy of sportscar chronometry and has established strong historical bonds thanks to Jack Heuer — a marketing genius ahead of his time — in the 1970’s. Signing Steve McQueen and placing the “Monaco” Heuer watch on the film set of “Le Mans” was probably the foundation for this watch to become an icon. Launched just the year before in 1969, the Monaco was the first square cased automatic wristwatch chronograph ever made. A groundbreaking design with a circle inside the square, the Monaco contained all the ingredients to become a design icon.

TAG Heuer Monaco from 1971, worn by actor Steve McQueen in the movie Le Mans

The extraordinary asset of having a product icon is the potential of rejuvenating it with new colors, lay-outs and functions as TAG Heuer has done with the launch of new models linked to the movie “Gran Turismo”. With its vintage looks and very unique case design, the Monaco is just the perfect timepiece to link up with the Gen Z in search of referential timepieces, both vintage and new.

The new TAG Heuer Monaco Racing Blue

The Carrera is the other iconic watch

TAG Heuer might not have as many iconic watches as some of the other leading brands, but nevertheless it has another classic icon with the Carrera, born in 1963… just like the Rolex Daytona and both watches once shared the same base caliber, the Valjoux 72. The Carrera was in fact the continuation of the brand’s chronograph heritage of the 1940 and 1950’s. And the watch is also related to car racing, just as the sister product Monaco, and the Rolex Daytona… and the Omega Speedmaster which had been launched earlier in 1957 with a tachymetric bezel to measure the speed of a car.

The design of the Heuer Carrera has evolved over more than 60 years

But the brand must stay coherent in its strategy of establishing hero products. One thing which TAG Heuer must handle with more discipline is sticking to certain basic rules. One product family equals one product territory but that’s a rule the recent launch of the Carrera Skipper doesn’t fully comply with. A remake of a 1968 model, the Heuer Carrera Skipper ref. 7754 which was affectionately named Skipperera, it stands out in a family of strong auto-inspired timepieces.

TAG Heuer Carrera Skipper

A long story with the racing car world

Heuer’s links with the racing cars go way back, and was followed by a collaboration with the Ferrari team. Their drivers — Niki Lauda and Clay Regazzoni — became brand ambassadors. The timepiece marking Heuer’s entrance to the world of car racing was the Carrera Automatic in 18k gold which is today one of the most sought-after collectors’ pieces. At the same time the team managing the time keeping at the races developed a new device called the Centigraph which was a very innovative electronic timing system.

Yet, the diversification of Heuer into electronical timing systems was an unfortunate mishap as Jack Heuer recalls in his autobiography The Time of My Life. The quartz crisis of the late 1970’s till the beginning of the 1980’s forced Heuer to pull-out from the sports chronometry business which they sold for a bargain price to… Longines. All these paved the way to the common thread of collaborations which relate to sports cars with for instance Porsche.

Choosing Porsche as a partner is a very smart move, because more than just selling cars, the German brand is the epitome of a company managing to create the magical bond between the brand and its clients. The German carmaker is in my humble opinion also the epitome of manufacturing precision or I should say perfection. The potential of this collaboration has yet to be fully exploited as the special editions linked to Porsche still have much room to grow.

TAG Heuer and Porsche: a partnership made in brand building heaven

The interesting comparison between Porsche and TAG Heuer is also the fact that the German carmaker manufactures the most iconic sports car overall, the 911 (sorry for all the Ferraristi reading this, although I must confess that I’m also a huge fan of Ferrari). The 911 is the best example of an ever-evolving base design where nothing changes, but everything evolves and each new version is more accomplished than the one it replaces. And here’s another lesson to be taken from Porsche — for all watch brands and not only TAG Heuer — don’t be afraid to go your own path of innovation.

The die-hard fans of the brand almost quit their love when for instance the brand moved away from air cooled engines for the 911 or launched the four-wheel drive. However, the brand is stronger than ever today and is announcing its major shift to EV by 2030 (80% of its product offering). Which brings us to the smartwatches made by TAG Heuer…

Why smartwatches at TAG Heuer?

I made that lengthy comparison with Porsche because any watch brand today with a similar market positioning as TAG Heuer should investigate, or at least should have investigated around 2010-12 if smartwatches could be a new product category to conquer. The likeliness of smartwatches to stay for the long term is very questionable due to their limited lifetime and hence lack of sustainability. But one thing for sure is that in 2022, 15.8 million traditional Swiss made watches were exported, while more than 90 million smartwatches have been sold during the same period. Of that number, Apple sold more than 40 million.

At TAG Heuer, the former CEO and head of the watch division, industry legend Mr. Jean-Claude Biver, decided that the brand should venture into this new market to avoid missing out on a new Eldorado. Biver decided to partner with two major players from Silicon Valley, Intel and Google, to make sure that the technology would be provided by market leaders and always up to date, as it is common knowledge that technology product life cycles are short in the world of high tech.

The strategy was on combining high value materials with hybrid technology, meaning that they would look like conventional watches with analog time displays with hands, thus justifying the substantial price premium compared with their Asian and American competitors. The first series was quickly sold out due to the cleverness of Biver’s launch campaign during BaselWorld.

But then the wave of success soon stopped, as the potential market for people using smartwatches targets a price level which is closer to something below CHF 500 retail, which is a segment that harmed massively the entry level brands of Swiss watchmaking such as Swatch and Tissot. Even though TAG Heuer is regarded as an avant-garde brand, such a product category is very opex (operating expenses such as salaries or licenses) intense, with huge teams of IT specialists updating permanently the system and looking out for the next bug or breach.

And even though TAG Heuer chose to outsource most of the technology — unlike the very strange choice of Swatch Group to maintain its own OS for Tissot’s smartwatch — the smartwatch venture in general has a marginal impact on the topline (sales), but a major negative impact on the bottom line (the operating margin or EBIT).

Frédéric Arnault has been involved in TAG Heuer product development and marketing since 2017

Refocusing on the brand’s natural territory

The product offering has been refocused on the brand’s “natural ground” or territory by eliminating very expensive ventures into the world of high-end watchmaking. The V4 or the Mikrograph have been certainly extraordinary communication vectors, but also major cost centers with investments going into the eight figures with no tangible positive long-term outcome.

The Carrera Chronograph Tourbillion has been repositioned on a more sustainable price level — thus becoming profitable — unlike when it was first launched, where it was assumed that once you have written off the R&D for the first series, the cost of goods sold is only the manufacturing cost.

A new CEO for new impulses

Meanwhile, Julien Tornare — current CEO of sister brand Zenith — is set to take over the helm of TAG Heuer and based on his track record, we can probably expect a hand-over with minor changes. His 6 years as CEO of Zenith have allowed the brand to stabilize and strengthen its product offering. His predecessors had all tried to kick start the brand, meant to bear a tremendous, unexploited potential, although Zenith has yet to establish itself as a brand that a vast majority of watch aficionados dream of.

The question for Tornare, thus, will be to decide if smartwatches deserve to remain in the collection and if so, how should he navigate the challenges of this ever-changing segment.

What we will probably see at TAG Heuer is an accelerated transition back to the icons such as Carrera and Monaco which are the brand’s “bread and butter” business. To regain lost ground from its main competitors, it will need to show consistency around a clear product offering. The recent product initiatives were very well received and are showing a clear path back to growth. And even in areas where TAG Heuer can’t compete in terms of horological legacy, it still has potential to revive its strong roots in sports chronometry, especially in the field of racing cars.

Julian Tornare is set to take over the helm at TAG Heuer this fall

On the journey to success

Are the recent changes in the product strategy sufficient for the brand to regain the momentum it had definitely lost in recent years? The recent product launches suggest that owners of the brand and its management have understood that stability is a key value to survive in a very competitive market with strong competitors. Pushing icons like Monaco and Carrera, clarifying the product offering and connecting with Gen Z through more contemporary messages are certainly some of the ingredients needed. Re-evaluating its strategy for smartwatches will probably be the next important step to regain the positive momentum the brand had until mid 2010.

And being owned by the luxury industry’s no. 1 – LVMH – which is starting to flex its muscles in the field of watchmaking will certainly help to restart a virtuous circle. As a whole, the group did lose some ground in terms of consolidated watch market share (LVMH watch division plus Bulgari watch division) of 7,9% in 2017 to 6,3% in 2022. But the chairman of LVMH Mr. Bernard Arnault is always known to play on the podium rather than stay in fourth place — just ahead of mono-brand company Patek Philippe with 5% market share. So all things considered, TAG Heuer is definitely an exciting brand to watch in the years ahead.

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FEATURED FROM THE SHOP

Laurent Ferrier

Laurent Ferrier × Revolution Classic Micro-Rotor “Amazonia”

$57,500.00

TECH SPECS

Movement	Self-winding caliber FBN 229.01 with natural escapement; 72-hour power reserve
Functions	Hours, minutes and small seconds
Case	40mm; stainless steel; water resistant to 30m
Dial	Verdant green, with sector track; applied, white rhodium treated gold Arabic numerals and hour markers
Strap	Brown calf leather with Alcantara lining, stainless steel pin buckle; additional Milanese bracelet in stainless steel
Limited Edition	Limited edition of 15 pieces

The post TAG Heuer is muscling up with two of its strongest watch icons, Carrera and Monaco appeared first on Revolution Watch.

As Rolex ascends the luxury pyramid, Tudor reprises its role as protector and creative lab of the group

Oliver R Müller — Wed, 05 Jul 2023 12:00:13 +0000

As Rolex ascends the luxury pyramid, Tudor reprises its role as protector and creative lab of the group

Castling The King: Rolex is not just about sports watches.

Business

By Oliver R Müller

Jul 5, 2023

Rolex’s tendency to keep its distance from the rest of the watch industry is sometimes perceived as arrogance by other brands, but it’s certainly part of the brand’s DNA. The brand is an institution and when its leadership is needed to foster an industry-wide project, such as Watches and Wonders in Geneva, Rolex takes a stance.

By far the number one in the Swiss watch industry with estimated sales* of CHF 9.3B in 2022, which translates to CHF 13.95B in retail value, Rolex is the reference for any other watch brand. Despite being the untouched — and maybe untouchable — market leader, Rolex is investing a lot of money and energy to ensure its supremacy by establishing standards of quality and precision. Product excellence was one of the founding values of the Rolex brand by its founder Hans Wilsdorf who was targeting the front stage of technical innovation and precision in the Swiss watch industry.

Two brands with two distinct missions to fulfil

Most of today’s buyers are too young to remember, but Rolex was not a luxury brand from its inception. I, on the other hand, am actually old enough to remember that when I was 5, my parents decided to move to Bienne — the small Swiss town where Rolex is still manufacturing its movements, and where its big rival, Omega, has its headquarters. We moved into an apartment where we could see a huge factory with a sign that says “Rolex”. Guess what? My parents didn’t know what Rolex was. At the beginning of the 1970s, the brand had a positioning like Longines today — mid-range or accessible luxury, however you want to look at it.

The Bienne manufacture is one of four Rolex manufacturing sites

With the Quartz Crisis (1970-1983) and the pressure put on most Swiss watch brands, a unique opportunity arose for Rolex to climb the ladder of the brand pyramid of the Swiss watch industry. Even though Rolex also tried the quartz path, that experiment was short-lived with an estimated 100,000 Oysterquartz sold over the course of 25 years (1977-2003), which is nothing compared with the brand’s overall sales (est. 1.2 million units in 2022 alone).

Yet Rolex was one of the very few Swiss watch brands that never lost faith in mechanical movements. Even though they did decide to experiment with quartz watches, they never quit the path of “real watchmaking”. That said, Rolex continues to keep its manufacturing capacities of ultra-precise quartz movements and, hypothetically, could at any time launch a high-precision quartz Rolex, a Tudor or… a dedicated third brand. If this happens, it could be another strike from the empire on archrival Swatch Group and Longines, which has a growing fanbase for its V.H.P. (Very High Precision) quartz watches.

Tudor is here to protect Rolex from below

In 1946, Mr. Wilsdorf, who was a marketing wizard far ahead of his time, decided to launch a sister brand with the purpose of offering watches at a more affordable price than Rolex, thus keeping its stringent quality standards. The second purpose — and later the main mission of Tudor — was to protect Rolex from rivals keen to challenge the champion. Notably, Mr. Hayek — the legendary chairman of Swatch Group — adopted the same strategy when he decided to reconquer the watch market starting from the bottom with Swatch, explaining in a Harvard Business Review interview in 1993 that retreating from lower price segments would allow competitors to move up “to the next layer of the cake”.

And that is exactly what Rolex is doing with Tudor and increasingly so. A very smart move was achieving the METAS Master Chronometer certification for the Black Bay Ceramic in 2021, which was intended as a strong signal for Rolex’s main rival Omega, that even its “B” brand can compete at a level beyond the entry range. Rolex is keeping its current double chronometer certification (the movements being COSC certified and the watch head is then internally certified), which lacks an official hallmark comparable with the Master Chronometer — but as we said at the beginning: Rolex plays in a league of its own.

On the other hand, Tudor has been driven by changing strategies since its inception. For a time, it has gone away from its useful purpose of offering an attractive entry into the Rolex world, to being relegated to a sleeping beauty during the decades after Mr. Wilsdorf’s death in 1960. For a time, the people at Rolex were — to put it mildly — not very keen to see Tudor next to their brand. This changed completely with the arrival in 2009 of a new CEO Philippe Peverelli at Tudor with the mission to revive and rejuvenate the brand. Supported by Davide Cerrato as the product director, the pair managed to quickly bring back a positive momentum by launching vintage-inspired models such as the Black Bay collection in 2012.

Tudor's boutiques express a younger, sportier vibe

A lab for new materials and new ways of communication

Rolex’s brand equity is probably one of the strongest in the luxury world and therefore needs to be kept safe. That is where Tudor’s mission starts. Apart from shielding Rolex from competitors trying to move up the cake (this was one of the reasons why it has a logo in the form of a shield), it plays an important role as the de facto testing lab for the group to try new things out. For instance, the use of new materials such as ceramic. Even though Rolex had used it before for its bezel, branded as Cerachrom as far back as 2005, Tudor was the one that made a full-ceramic timepiece.

Tudor Black Bay Ceramic

Tudor is positioned as the more daring younger sibling talking to a younger audience, and launched in 2021 the Black Bay Ceramic, which can be seen both as an experiment with new materials to be potentially used later on by the “A” brand, and an answer to rival Omega’s Dark Side of the Moon.

Tudor Big Block Chronograph Yellow Gold

It is the same with titanium. In 2012, Tudor launched its Pelagos dive watch made of titanium, a material that was only used for the first time in 2022 with the Rolex Oyster Perpetual Deepsea challenge. More recently, the Yacht-Master in RLX titanium brought a fresher look into this product family.

Yacht-Master RLX Titanium

Tudor is also building a younger and fresher image of the brand with light and snazzy campaign videos that are informative but also entertaining — a good way to appeal to Gen Z’s who might hesitate to wear a Rolex because of its institutional image.

Realignment of strategies for both Rolex and Tudor

Despite what certain analysts think, Rolex is not resting on its laurels and the pace of new product launches has tremendously increased since the arrival of Jean-Frédéric Dufour as the new CEO in 2014. Having worked for three decades in various tenures at different watch brands, he immediately identified the growth potential of both brands. In the last decade, Rolex has probably launched more product novelties than it has in the previous three. I remember a time when Rolex aficionados were getting excited by the new version of a Submariner with 1mm increase in case diameter. And, until recently, Rolex hardly communicated about product innovations, considering it part of its mission to continue elevating the brand.

CEO of Rolex, Jean-Frédéric-Dufour

This has totally changed today with the brand introducing whimsical, colorful dials with the “Celebration Dial” Oyster Perpetual and the Day-Date Emoji Puzzle. Both models were launched at Watches and Wonders in March 2023 and certainly prove Rolex’s ambitions to connect to a younger clientele who venerates its product icons such as the Daytona or the Submariner, but also want to see cooler, trendier watches.

Oyster Perpetual Celebration and Day-date Jigsaw

Apart from those “disruptive” designs, Rolex continues improving on small details that make the whole difference. Here are my observations so far.

Focused product management

We are seeing at Rolex a very focused product strategy with a very disciplined way of managing a product collection. The total number of SKU’s is kept at a constant 450 references, which is comparable with Omega, but Rolex’s sales are almost four-fold those of its rival. For every new product launched, there is at least one existing reference being discontinued. This keeps — and even improves — the legibility of the overall product collection.

Increased value proposition

In the last few years, the Rolex product collection has been enhanced with more Rolesium, precious-metal and gem-set watches, which translates to an ever-increasing average retail price which grew by 15% in 5 years* to CHF 11,600. This trend will accelerate in the coming years because the sales mix will be shifting toward higher-priced watches, as indicated by the recent product launches, for example, a new Daytona with a sapphire exhibition caseback — a first for the Oyster Perpetual product line — and a platinum case to highlight that product innovation is coming from the top. The introduction of new Rolesor variations of the GMT-Master II is also a clear sign that the product offering is going up the ladder.

Rolex Oyster Perpetual Deepsea Challange

Luxury rather than sports chic

Far from leaving sports watches behind, Rolex is elevating the game by refining its base designs and offering high-end versions of its bestselling watches. By trying to keep a sound balance between the “bread-and-butter” steel-on-steel watches and more refined variations, the brand avoids getting caught in the dilemma of having to constantly increase the volumes. Having sold an estimated 1.2 million watches last year — which makes it by far the biggest luxury watch brand and the number four Swiss watch exporter by volume, behind entry- and mid-level brands such as Swatch, Tissot and Longines — Rolex is still having a hard time coping with demand.

The long waiting lists on the primary market (six years for a Rolex Daytona) or hefty premiums — up to more than 100% vs. MSRP — for the fast track on the secondary market, are the best indicators of this strong demand. Even though the secondary market has cooled down substantially since March 2022 (e.g. the price of a Daytona came down from CHF 50,000 to CHF 28,000), the overdemand is still tremendous (the Daytona retails for CHF 14,300).

The whole dynamic of moving the brand upward doesn’t take the grip from Rolex and its sound business principles, so you can sense that shifting the two brands up the brand pyramid is done very cautiously. The space left by Rolex when climbing the brand pyramid is immediately covered by Tudor. This synchronization represents certainly a permanent challenge and a threat for the challengers in the first place. Omega, naturally, but also Breitling and TAG Heuer. These brands must constantly adapt their own strategy by launching counter product offensives.

Rolex the sleeping giant has regained a strong momentum and taken back its role of product innovator — but not the loud and disruptive ones — that stems from its DNA.

Tudor reviving icons with vintage-inspired designs

Tudor has experienced a strong revival through vintage-inspired timepieces such as the Black Bay, which made a big splash with each new variation presented in the last few years. It is very interesting to see that the recipes used by Rolex are also applied to Tudor with a compelling logic, such as having a product territory for each family. Diving for the Pelagos, the Black Bay in cross sports, etc. Its structure is, however, questionable with a rather mixed bag within the collection apart from the aforementioned classics which rely strongly on vintage design.

Why the Clair de Rose, which could go unnoticed rebranded under another name? The same goes for the Glamour product family. Apart from probably selling in high quantities to Chinese consumers who have for a long time represented its major market, they rather dilute the collection’s legibility. The Black Bay 31, 36, 39 and 41mm variations, too, look like intruders in its product family.

Rolex Pelagos Titanium

Once it had been decided to reboot Tudor, the brand’s distribution was diversified and could still be viewed in some markets as a new brand. In the US, the brand was relaunched in 2013 after having quit that market in 1996.

The distribution strategy has now shifted to move as a team — not twins, but siblings — and this requires that when a new Rolex boutique opens, a Tudor boutique is also being installed next to it (Rolex doesn’t operate any retail activity, apart from one boutique in Geneva). This is a major shift from its previous attitude of having the two brands clearly separated through distinctive sales channels.

Still room for improvement

On the whole, Tudor’s branding feels a little bit less inspired than Rolex’s, with its conventional approach of using brand ambassadors and a tagline “Born To Dare” which fulfills its purpose of a cool hashtag on any social media, but lacks coherence with the rest of the branding. One could make the argument that a tagline like that doesn’t immediately gel with products such as the vintage-inspired Black Bay. From a brand consistency point of view, if we were to make a comparison with Breitling’s brand pillars comprising purpose-dedicated squads and their respective territories, Tudor’s storytelling needs more coherence, which shouldn’t be a big challenge. After all, the epitome of branding coherence is Rolex! There, everything is perfectly aligned and anyone looking at the brand doesn’t need a PhD in marketing to immediately understand what the brand is about: excellence in manufacturing, and hence precision.

Last but not least, when comparing the number of SKU’s between the two, Tudor’s is around 500, while its sister brand is making 16 times more sales with 450…. There is still room to focus Tudor’s product offering on its strengths.

A unique market positioning and a bright future

Meanwhile, Rolex has a unique competitive positioning with almost one-third market share (29% for Rolex and 2% for Tudor*) of the whole Swiss watch industry. To appreciate that figure, we could add that 96% of the worldwide luxury watch market** (watches with a retail price tag above CHF 1,200) is controlled by Swiss-made or Swiss-owned brands. Even more compelling is the fact that Rolex owns an estimated 40% market share in the USA, which is the number one market for Swiss watches at the moment.

There is no other luxury brand in any other segments of the luxury industry that is as dominant as Rolex in their respective markets. Another comparison that we can draw is with a multi-product brand such as Gucci achieving €10.4 billion, which is marginally more than Rolex’s CHF 9.3 billion, but less if we take into account the fact that Rolex is retailing only through third parties (with the one exception mentioned above). In fact, Morgan Stanley estimates* that Rolex has created CHF 13.95 billion in retail value in 2022 or put the other way round, it doesn’t yet capture a retail margin of CHF 4,65B. Now let’s imagine that Rolex decides to integrate their retail network entirely or partially. What would it mean in terms of profitability and the consequences on the worldwide retail structure?

At Tudor, the potential margin to capture would be CHF 256 million and that would easily justify going into brand-owned retailing. Even though Rolex has decided — at least for the time being — not to capture the retail margin, it is quite easy to estimate that its profitability as a mono-product brand must be staggering, and even more so when you take into account the fact the production is almost fully integrated.

Rolex still has tremendous potential with a market getting more and more polarized and premiumized. The brand is increasingly applying the same rules as any other luxury brand with regular price increases due to its pricing power, and better brand visibility through a broad range of sponsorships across sports and the arts. Rolex is also very good at becoming the exclusive partner in one domain — for example, Formula 1, tennis or golf — by sponsoring all the main events worldwide.

Once the brand has established its superiority, the sexiness, social status and foremost brand equity will keep growing in a virtuous circle. Rolex is delivering a masterclass in proving that a sports-grounded brand can be luxury. When others struggle to establish a bond between their brand and their sponsorship activities, Rolex has achieved just that since the founding of the brand. Sports-chic and increasingly luxurious Rolex will pursue its journey for glory.

*Estimates published in Morgan Stanley’s annual report on the Swiss watch industry market shares “Sixth Annual Swiss Watcher”, in collaboration with LuxeConsult

** Estimates by LuxeConsult in its exclusive report on “The secondary watch market, pre-owned, pre-loved and gray market timepieces”

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Laurent Ferrier

Laurent Ferrier × Revolution Classic Micro-Rotor “Amazonia”

$57,500.00

TECH SPECS

Movement	Self-winding caliber FBN 229.01 with natural escapement; 72-hour power reserve
Functions	Hours, minutes and small seconds
Case	40mm; stainless steel; water resistant to 30m
Dial	Verdant green, with sector track; applied, white rhodium treated gold Arabic numerals and hour markers
Strap	Brown calf leather with Alcantara lining, stainless steel pin buckle; additional Milanese bracelet in stainless steel
Limited Edition	Limited edition of 15 pieces

The post As Rolex ascends the luxury pyramid, Tudor reprises its role as protector and creative lab of the group appeared first on Revolution Watch.

The Rolex Daytona reference 126529LN, celebrating 100 years of Le Mans in style

Felix Scholz — Mon, 12 Jun 2023 06:47:22 +0000

The Rolex Daytona reference 126529LN, celebrating 100 years of Le Mans in style

The surprise release looks set to be the hottest Daytona of 2023.

News

By Felix Scholz

Jun 12, 2023

This year was already shaping up to be an excellent year for the Rolex Daytona, which was a hero of their Watches & Wonders release slate, and the release of the Rolex Daytona Reference 126529LN, a white gold model with some special details, may just be the cherry on the cake.

Version of the Cosmograph Daytona created in honour of the 24 Hours of Le Mans centenary

So why are we getting a new Rolex outside the brand’s typically predictable release schedule? Le Mans. The 100th anniversary of the iconic 24 hours of Le Mans race has just taken place, and Rolex — a brand with deep ties in the world of motorsports, has seen fit to pay tribute.

The Oyster case of the Cosmograph Daytona created in honour of the 24 Hours of Le Mans centenary is fitted with a transparent case back in sapphire

As for the watch, well, it takes as its base the updated models we saw a few months ago for the 60th anniversary of the prestigious model, with an updated case profile and reworked dial with smaller hour markers and narrower registers, lending the watch a more vintage air. These changes are relatively subtle, but the updates made to honour the French endurance race are a little more striking.

On the tachymetric scale, the number “100” is in red ceramic in reference to the 100th anniversary of the 24 Hours of Le Mans

First of all, the reverse panda dial configuration, which, when paired with the black Cerachrom bezel, is a clear nod to coveted vintage pieces. This is the first time in the current catalogue that we’ve seen this particular combination of dial and bezel, which is in and of itself enough to rocket this model to the top of everyone’s most-wanted list, on top of that, the ‘100’ markers on the glossy Cerachrom bezel is picked out in red, to mark the centenary. But more importantly than this, it’s a likely nod to a famous figure in both the history of Le Mans and Rolex — the one and only Paul Newman, who raced in the 1979 Le Mans.

The chronograph hour counter features a 24-hour display instead of the model’s usual 12-hour format

A less obvious change — but one that speaks to the heart of this piece — is on the chronograph hour register. Your typical Daytona tracks up to 12 hours of elapsed time; this one (naturally) can handle 24. This thematic update has required a tweaking of the movement, which sees this watch use a variation of the new calibre 4131 called the 4132. And, in case knowing that this uncommon movement is in reference 126529LN wasn’t enough, you can see it too, through the exhibition caseback — which makes this model and the top-tier platinum model the only exhibition back Daytonas ever made.

Calibre 4132 is exclusive to the version of the Cosmograph Daytona created to celebrate the 24 House of Le Mans centenary

Close-up of the inside of calibre 4132, which contains a gear reduction system enabling the hours of the chronograph function to be used over 24 hours

This surprising new Daytona will already be a hot ticket item, but the addition of unusual and unique design elements elevates this king of chronographs to a whole other level.

Tech Specs

Rolex Cosmograph Daytona reference 126529LN

Movement: Rolex Calibre 4132, automatic, 72 hours of power reserve
Functions: Hours, minutes, seconds, chronograph with 24-hour register
Case: White gold, 40mm, water-resistant to 100M
Dial: Black
Strap: white gold Oyster bracelet
Price: USD 51,400

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FROM THE SHOP

Sold Out

Angelus

ANGELUS x REVOLUTION CHRONODATE "ANGELS' SHARE"

$23,800.00

TECH SPECS

Movement	Self-winding caliber A-500; 60 hours power reserve
Functions	Hours, minutes, small seconds, chronograph and date
Case	42.5mm; titanium; water resistant to 30m
Dial	Salmon (6N gold plated) with gené or frosted area; Super-LumiNova filled Arabic numerals
Strap	Ballistic gray rubber; titanium folding clasp

The post The Rolex Daytona reference 126529LN, celebrating 100 years of Le Mans in style appeared first on Revolution Watch.

VIDEO: Rolex’s Latest at Watches and Wonders 2023

Revolution — Wed, 29 Mar 2023 20:25:19 +0000

Eleonor Picciotto, Editor-at-Large of Revolution, introduces Rolex’s show-stopping new novelties. Placing emphasis on the Daytona series which turns 60 this year, Rolex released Daytonas with transparent case back, enticing ceramic bezel colors and even versions with colorful stone dials. Rolex also released new Sky-Dwellers and a lightweight titanium Yacht-Master. In this video, Eleonor also shows… Continue reading VIDEO: Rolex’s Latest at Watches and Wonders 2023

The post VIDEO: Rolex’s Latest at Watches and Wonders 2023 appeared first on Revolution Watch.

Rolex Archives - Revolution Watch

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