Auction virgin Daniel Malins travels to Fellows in Birmingham where he gets whipped up the sale room drama and talks to director stephen whittaker about why his business has managed defy the recession and just how the historic house has coped with the explosion of online bidding.
If anyone ever tries to tell you that watch auctions are nothing like they are on TV, then they’d be right. In real life they are much more exciting.
Maybe it was because it was my first watch auction, but I’ve rarely felt such palpable tension and drama in one room as I felt at Fellows at its latest vintage and modern wristwatches auction.
No sooner does Stephen Whittaker, director and auctioneer at Fellows, announce “make no mistake, I will sell at this price” (his favourite phrase) and hover his gavel just above the rostrum, than someone in the hall shoots their hand up in a last-ditch attempt to snatch victory from the jaws of defeat. These are excruciatingly tense scenes for a watch auction virgin, like me, to witness first hand.
To see all the individual components of the Fellows operation come to together for the two-hour auction was fascinating. Whittaker is a consummate professional who barely stops for air during the whole process. If you blink, you’ll miss the lot that you came for, and you’ll certainly miss Whittaker’s subtle momentary intake of oxygen.
To his left are three of his colleagues, who each stare at a computer screen. One screen shows the activity from UK-based website the-salesroom.com, one shows bids from liveauctioneers.com, its American platform, and the third screen displays movement on the Chinese site epailive.com. Although sales predominantly stem from UK buyers, one can see that Fellows has opened its doors to the global watch auction community.
To his right, up in the gallery and overlooking the hall, are the phone team, who seem to have the art of multi-tasking down to a tee. They have to listen to the potential bidder at the other end of the line, ascertain whether that person wants to increase their current bid, and get a clear signal to the auctioneer in the nick of time to make the bid valid, all in the space of about three seconds. What is especially heart-warming is that these phone workers seem genuinely thrilled when the person they’ve been dealing with wins an item.
But what is going on behind the entertaining face of the auction room? How big is the operation and how has Fellows had to evolve in the past few years to keep up with the frightening pace of technology? And, perhaps most importantly, why are auction houses like Fellows continuing to blossom and go from strength to strength when general retail figures of late have made for such uncomfortable reading? For these answers, I had to look no further than the aforementioned Whittaker.
Whittaker has not had what one might call a traditional apprenticeship en route to becoming the managing director of Fellows. Having started out in the army (he served between 1976 and 1985), he then found himself selling tanks (“Yes, proper army tanks” he reassures me) for Vickers Defence Systems. It was the role of cupid that took his career in the direction of watch and jewellery auctions, by virtue of his marriage to Jayne Fellows, the great-great-granddaughter of Fellows founder William Henry Fellows. Since then, Whittaker has not looked back, and 2012 represents his 25th year at the auction house.
“Two years ago we had 23 members of staff; now we’ve got 56 and that’s growing by the month,” says Whittaker. And it’s not hard to see why as my walk around the premises shows the true scale of the Fellows operation. On the marketing side alone the team is six strong, whereas five years ago it involved just one person. The team are all working together to ensure that Fellows’ message is getting out to as many relevant people as possible, both in the trade and on the high street.
As Whittaker tells me, it is not just about the staff numbers involved, but about what the staff are actually doing to ensure that Fellows is at the forefront of change in the structure of modern auctions. Put simply, watch auctions are unrecognisable from what they were 10, or even five, years ago. In the age of the world wide web, tablets and smart phones, new ways of participating and bidding in watch auctions are becoming available that make participating more convenient.
“Two years ago roughly 35% of bids came via the internet; now that figure’s nearer 75% to 80% and I anticipate that the auction market will become even more internet orientated as time goes on,” observes Whittaker. The reasons for this incredible rise in internet participation are fairly transparent. For most people in the modern world, the choice between travelling up (or down) to Birmingham’s Jewellery Quarter in time for an 11am auction, or sitting at their desk, coffee in hand, watching the action unfold on the internet and being one click away from placing a bid, is something of a no-brainer. What Fellows has been so good at is embracing this natural evolution, rather than vainly clinging onto some romanticised concept of how a traditional auction should operate. Business is business, and it appears that everyone is a winner in this new-age model of watch auctions.
Having accepted the shifting patterns in audience participation, it is interesting to establish exactly who this audience is. Is the average bidder a man off the street looking for an affordable quality watch? Are they mainly vintage watch collectors looking to increase their personal portfolio? Or are they watch retailers, who view the auction as strictly business? The answer, as one might suspect, is that it is a mixture of all of the above.
“We will definitely have retailers at our auctions,” confirms Whittaker. “It’s completely dependent on price for them though.” What he means by this is that retailers tend not to let lust or desire blind their decision making in the same way that an individual watch buyer or collector might. Instead, he or she will have a figure in their mind that they value a particular watch at and what price they could buy it at and expect to make money in store. If the bidding goes above this price point, then retailers simply won’t be tempted into upping their bid.
As well as looking at auctions as a way of generally picking up watches that could sell for a mark up, it is sometimes the case that a particular important customer is after a certain timepiece. “Retailers may have a client who has identified a specific watch that they desire,” explains Whittaker. “And so it will be in their interest to come the auction to try to acquire that model.”
Regardless of who is buying the watches at a Fellows auction, and for what reasons, it is clear that things are going well from a business point of view. Fellows’ annual turnover is healthy and getting healthier, rising from roughly £10 million last year to nearer £12 million this year, of which about £3.5 million is from watch sales. Not only is more money rolling in year on year, but an increasingly higher percentage of that money is derived from watch sales.
The reasons behind Fellows’ success in a difficult economic climate and its ability to continue to deliver such strong financial results are numerous, and many have already been touched upon. Firstly, the commission rate that they charge is 17.5%, rather than 25%, which is the norm at most watch auctions. As Whittaker explains: “This means that the sellers are seeing more money from their watches at Fellows, which is only going to encourage repeat custom.”
Secondly, Fellows (and other auction houses) have displayed a shrewd ability to adapt to and embrace new technology. As mentioned earlier, internet buyers now represent about 80% of sales at a Fellows watch auction, so to accept the internet and utilise its audience rather than resist it, is key for any auction house or, indeed, any business in general.
Finally, vintage watches in general have proved themselves to be very sound and safe investments. Watches tend to stand the test of time in terms of holding investment and although a watch generally won’t sell for quite as much as it would if brand new, you can still expect a very fair price for your old timepiece, which serves to encourage members of the public and watch professionals alike to sell watches at auction.
A quick look through the Fellows auction guide, which lists all the watches on sale and their respective estimates, is enough to see just how much money and value there is in the second-hand watch market. The fact that most of the lots tend to sell for higher than their estimated value only goes to reinforce this point.
So auction houses are here to stay, the second-hand watch market is here to stay, and Fellows auction house is certainly here to stay. What started as one man, William Henry Fellows, selling some unwanted bicycles, has evolved and grown into a multi-million pound, modern and slick company. And whilst it is only right to laud the Fellows model, with its modern and progressive approach, there is definitely something about the old-fashioned theatre of the auction room itself and the people in it, that still makes the heart beat that little bit faster, and it is a cardiovascular exercise that I would recommend anyone to undertake at least once. Just don’t blame WatchPro if you lose your retailer’s cool head for figures in the heat of the moment and end up spending all your savings in record time.
This feature was taken from the November issue of WatchPro. To read the magazine online, click here.