Rolex is reviewing its distribution model for the Chinese market. With the opening of a boutique in Shanghai, the king of Swiss watchmaking has decided to overcome the difficulties encountered by Swiss watch export sales and invest for the first time in the country in the direct management of a physical point of sale.
Is a discreet revolution underway in the Middle Kingdom?
Rolex has announced the opening of a direct-to-consumer boutique in Shanghai next spring. In other words, a first for the brand with the crown.
This decision to review its intermediary distribution strategy would enable the world’s leading watchmaker not only to stand out in a market in crisis, but above all to regain control over its customer experience.
A sign of optimism in a country which, in recent months, has plunged luxury players into doubt.
A first experiment in Shanghai
Rolex’s first directly-operated physical retail outlet is due to open in the HKRI Taikoo Hui Mall, a high-end residential and commercial complex located in the bustling Jing’an district of Shanghai’s West Central Business District. It is in this mall of over 100,000 m² that the Richemont group invested, opening its largest IWC Schaffhausen flagship in 2023.
The store will open under the pavilion of Carl F. Bucherer, the watch retailer acquired by Rolex at the end of August 2023.
Until now, Rolex has relied exclusively on a network of authorized retailers in the Middle Kingdom. After a breakthrough in Hong Kong via Emperor Watch & Jewellery, Rolex began its expansion in China in 1995 in cooperation with Asia’s largest watch retailer, Peace Mark.
Future temple of watchmaking circularity
Thespace dedicated to second-hand Rolexes will undoubtedly be one of the most desirable in this future boutique.
In addition to new watches, Rolex customers will be able to purchase pre-owned models.
The outlet will also feature a dedicated after-sales service area, where customers will be able to benefit from maintenance or repairs without having to make an appointment.
These facilities demonstrate the growing demand in China for more durable, certified second-hand products.
Rolex has the advantage of having made a name for itself in the second-hand market with its Rolex Pre-owned Certified Program. Launched in Europe at the end of 2022 and rolled out in the United States in June 2023, the program enables buyers of second-hand watches at least 3 years old to acquire, from authorized physical and digital points of sale, products that are certified authentic and guaranteed – 2 years after their purchase date – by the brand itself.
Bucking the trend
The initiative is all the more unusual in that the timing is not the most favorable for Swiss watchmakers.
Export sales to China were down 21.6% year-on-year in the first quarter.
Behind this measure, the stakes seem clear for the brand with the crown: regain control over both its distribution and its customer experience.
Indeed, while entrusting its expansion to intermediaries allows the company to accelerate the taking of positions and benefit from a sharp knowledge of a new market, the model can lead to great disparities in customer relations.
On the other hand, while having your own network entails a considerable cost in terms of real estate, it also enables you to personalize your contact with customers and get to know them better, without running the risk of ill-intentioned use of their personal data.
Over the past two years, several Rolex retailers have had their accounts frozen following fraudulent payments.
While the measure currently concerns only one address in Shanghai, it is highly likely that Rolex will be tempted to accelerate the closure of its dealerships in order to open directly managed Carl F. Bucherer boutiques throughout the country.
The former independent retailer has the advantage ofa network of 61 points of sale in China. The outlying regions of Henan and Shanghai are the best equipped, with 17 and 15 stores respectively.
Rumors are circulating that Rolex may eventually close its wholesalers, thereby restoring the exclusivity of its brand image.
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