THE BIG INTERVIEW: Brian Duffy leads Aurum Holdings to become Britain’s biggest watch and jewellery group

Brian Duffy, chief executive of Aurum Holdings.Brian Duffy, chief executive of Aurum Holdings.

2016 was the year that Aurum Holdings overtook Signet Jewelers’ UK operation to become the biggest watch and jewellery retail group in the country. The investment in prime retail real estate and luxury store environments, designed to attract luxury Swiss watch customers particularly in London, was the single biggest contributor to this surge, but the regions are also now seeing investment in space, staff training and refurbishments as WatchPro discovered in conversation with the group’s CEO Brian Duffy. 

WatchPro bumped into Aurum Holdings CEO Brian Duffy twice in a week in early May: first, at a black tie dinner to present the 2017 collection of watches launched by Rolex at Baselworld to its customers in London; secondly, at the reopening of its Rolex boutique on Bond Street, which is managed by Watches of Switzerland.

Rolex and central London are very, very important to Aurum Holdings, but they are not the only reason why the group overtook Signet Jewelers’ UK operations in 2016. The company shifted gears to push upmarket across the UK in 2016 in the belief that there are customers for luxury Swiss watches across the country. In May, alone, Aurum Holdings has opened monobrand stores for TAG Heuer in Sheffield’s Meadowhall shopping centre and for Breitling in Manchester’s Trafford Centre.

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Aurum Holdings opened a monobrand TAG Heuer boutique in Sheffield's Meadowhall shopping centre this year.

Aurum Holdings opened a monobrand TAG Heuer boutique in Sheffield’s Meadowhall shopping centre this year.

 

A second opening for Breitling inside Manchester's Trafford Centre quickly followed.

A second opening for Breitling inside Manchester’s Trafford Centre quickly followed.

2016 will forever be remembered as the Brexit year. For retailers of luxury watches, this meant a summer when they enjoyed a massive price advantage over all other major markets as the value of the pound slumped following the EU referendum. Tourists that would not typically have shopped for high value Swiss watches could not resist prices that were more than 25% cheaper than in their home countries during the summer holidays.

“Without doubt we and others benefited from the exchange rate after Brexit. Very encouragingly, we had the advantage of the price differential early in the summer. Prices were then adjusted so that the differential has been a lot less since summer, but the momentum has continued. It further underscores the attractiveness of London and the rest of the UK as a place to buy watches. The price difference now is nothing like as great, but the momentum remains super strong,” Mr Duffy explains.

“The other great thing about the year is that we had great success across the board with all brands. Clearly, our biggest partnership is with Rolex, which was phenomenally strong throughout the year. But all of our luxury brands had very nice double digit increases,” he adds.

Aurum Holdings has 46 Rolex agencies across the UK. Signet Jewelers, parent company of H.Samuel and Ernest Jones, has none, having parted company with the brand in 2012. Rolex is the anchor brand for Mappin & Webb, Goldsmiths and Watches of Switzerland boutiques across the UK, and has a halo effect across other luxury watches and fine jewellery.

Both Aurum and Signet ended their 2017 financial year on January 31, and both recorded growth when all retail brands are added up. Aurum Holdings sales rose 23% to £565 million, while Signet Jewelers’ retailers totalled £489 million (+3.2% growth), the first time they have slipped behind Aurum.

Signet versus Aurum holdings graph

Aurum’s strength in luxury watches led to an increase in sales of 36%. Its portfolio of prime London locations also outperformed the rest of the country. “London [including Heathrow] outperformed the rest of the UK although all regions were positive with some excellent growth levels achieved in the major shopping centres of Bullring, Trafford, Meadowhall, Bluewater etc. Price increases do not seem to have deterred the UK consumer,” Mr Duffy revealed.

“Throughout the country we have done very well. We have made other investments in terms of Rolex presentations and other brands in our stores. Whenever we do those, we get a very good response in business terms. Regionally, we are super-strong. We love the fact that nationwide we have 46 agencies for Rolex. We have really invested in developing around 30 of our top Goldsmiths stores into a new category that we call Goldsmiths Luxury. They always were getting the same sort of attention as a Mappin & Webb and a Watches of Switzerland, but now we have made it even more clear and we are creating a Luxury Goldsmiths network around the country as a group of stores in their own right,” Mr Duffy adds.

In total, Aurum Holdings has 50 luxury stores across the UK, including all Watches of Switzerland, all Mappin & Webb and around 30 Goldsmiths. “That is now what we call a Luxury Network. It is important that the network is nationwide,” Mr Duffy adds.

There is no immediate plan to rebrand the 30 upmarket Goldsmiths stores as Goldsmiths Luxury, but the environment and the product selection will be distinctive. “Customers will know it without it being 100% in their face. They will know it by the brands that we are offering. It is Rolex, it is Cartier, IWC, Omega, Breitling, TAG. They will know if from the products.  We have had a great success with Mappin & Webb as a diamond jewellery brand. We have now put that into Goldmsiths Luxury stores. In addition, the level of training, staffing, hospitality and everything is all of a luxury standard, and more or less the same standard that we are delivering here in our London stores. That is a nationwide plan,” Mr Duffy outlines.

The decision not to go full bore with the launch of a separate Goldsmiths Luxury retail brand may have been influenced by a miss-timed attempt to create an entry level retail brand under the Boutique.Goldsmiths name, which was given its own distinct identity. Boutique.Goldsmiths stocked fashion and lifestyle watches alongside affordable branded jewellery. But the cost of maintaining these stores in expensive shopping centre locations, coupled with shoppers increasingly heading online for lower priced jewellery and watches, led to the closure or reassignment of around a dozen Boutique.Goldsmiths stores earlier this year.

“There is a natural migration online to that category. People know the brands, they know the products. They are typically younger customers that are much more comfortable buying online. We have a fantastic proposition in that category, which is Watch Shop,” Mr Duffy says

The retail portfolio is in constant flux as Aurum Holdings attempts to ensure it has the right offering for every customer, irrespective of how and where they want to shop. Increasingly, that means offering every brand online as part of an omnichannel strategy. “We have brought Cartier, IWC, Hublot online. This year we have had great success online. Towards the end of the year, we were trading up +50% online (for the full year growth online was 22%; totalling £80 million, or 14% of group turnover). I have no doubt that it is going to be a big part of the future — no doubt at all. At some point in the future, and I mean the near future, I think that everything will go online,” Mr Duffy predicts.

Aurum Holdings has no greater insight into the future plans of its biggest brand, Rolex, than all other Rolex agencies in the UK, but Mr Duffy does speculate that the time is approaching when the brand will allow customers to complete the purchase of their watches online. “That would be my prediction. That is something that will be inevitable at some point,” he says.

The digital side of the business will complement rather than compete with physical stores, in Mr Duffy’s opinion. “The most important relationship is the one between the customer and the salesperson, and that is much better done face-to-face. We very much see online and digital communication as just supporting the fundamental of stores and personal interaction. The main point is that we want to respond to whatever the customer needs; their lifestyle, their wishes. If they want to be communicated to digitally, we will be there. If they want to shop in an airport, we will be there. We want to be in position wherever they are and however they want to interact and hopefully shop,” he describes.

A thorny issue for all retailers of luxury Swiss watches in the UK is how far these brands are prepared to sell directly to consumers, either online or from their own boutiques. A particular frustration is when watch brands hold their most exclusive limited editions for their own boutiques. Even when retailers like Watches of Switzerland and The Watch Gallery invest in opening monobrand boutiques on behalf of watch brands, they are not automatically given access to the most desirable pieces.

That has not stopped Aurum Holdings investing in opening these franchised boutiques for Rolex, Breitling and TAG Heuer. “If brands want a mixture of presentation between multibrand stores and monobrand, then that is something that we can help them with. As far as the customer is concerned, it is very important that when they come into one of our monobrand boutiques, they feel they are in a fully branded environment. Clearly, therefore, you need to have the best products available to them,” Mr Duffy asserts.

The Rolex boutique on London's Bond Street is run by Watches of Switzerland.

The Rolex boutique on London’s Bond Street is run by Watches of Switzerland.

Monobrand may be growing, but Aurum Holdings remains a strong advocate of multibrand retail environments, although Mr Duffy does think that there will be fewer brands in most stores. “I really believe in the correct presentation of multibrand. There has been a big evolution of the category. You used to see a lot of brands, a lot of watches, in a small space. These brands are now so big, so powerful, so aspirational, that you really have to present each brand correctly,” he says.

Aurum Holdings is already into the second quarter of its 2018 financial year, and is expecting more modest growth, despite more tourists forecast to head to the UK this summer. “We are planning growth for FY18 although at a lower level as we come up against post currency devaluation period at the end of June,” Mr Duffy says. “We know that there are more tourists coming over this summer and we know they intend to be shopping more. We are very much ready for that, and we are very confident about the year ahead,” he adds.

And could the business be sold this year? WatchPro asks as rumours continue to circulate that private equity owners Apollo Global Management is looking for an exit.

“It carries on as I have indicated. We have taken advice, sounded out the market. There will be a change at some point. As soon as there is further news on that we will let people know. I do think that Apollo has been a fantastic shareholder and partner for us. They have been very much behind our strategy and have been very supportive in every respect. But what they do has a beginning and end to it; and given that we are heading towards the end of their timeframe, it will be a very positive thing when we make that change. Who knows, maybe new shareholders may even accelerate what has already been a very impressive investment programme,” Mr Duffy clarifies.

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