It is 10 years since Citizen Watch Company bought American watchmaker Bulova, and three years since Frederique Constant and Alpina were acquired, but it is only now that the business is operating in the UK as a single group, leveraging its scale, experience, expertise and financial muscle with a portfolio spanning price points from under £100 to over £8000. However the group’s greatest assets are the depth of its partnerships with thousands of retailers in UK as WatchPro’s Rob Corder discovered on a tour of the company’s new headquarters with group managing director of Citizen Watch UK, Mark Robinson.
WatchPro: Tell me about your new UK headquarters. How does it change the way you work with your partners with all of the Citizen watch brands — Citizen, Frederique Constant, Bulova, Alpina — under one roof?
Mark Robinson: It is extremely exciting for us. If I look back, we purchased Bulova nearly 10 years ago in 2008, but it operated as a standalone brand. Now that we have moved to a multibrand strategy as a global company, we have decided to bring all the brands together within Citizen subsidiaries around the world. The UK is one of the first operations to bring all the brands together, which is an accolade to the UK business and everybody who works here. The company has the faith, confidence and trust to house all of its brands under one roof.
WP: Is it a vote of confidence in the management, specifically in your management?
MR: I have been here for 20 years, and we are very proud of the stable long serving team we have built up. We have around 400 years of history working for Citizen among the team that works here. We are proud of that and it is important to the business.
It is one of the reasons that we developed this office in the way that we have. We want people to come, we want people to be motivated. At the same time we want to give people facilities that enhance their working lives. We have facilities that the staff in this building can use, and also our colleagues in our nearby distribution centre who are encouraged to visit and use the facilities as well.
WatchPro: Will you keep two buildings: the office and the distribution centre?
MR: Yes. We reconfigured this building and we are reconfiguring the distribution centre as well. We have built out a structure to house our Swiss brands, and we have reconfigured it ready for this year when we brought in the Bulova brands as well, which include Bulova, Caravelle and Harley Davidson. To house everything under one roof from a distribution, sales and marketing, accountancy, IT, etc, perspective, is part of the beauty of the business now.
WatchPro: You have built this office in a way that I would imagine they do in a Californian tech company with a well-equipped gymnasium; a games room with pool table, air hockey and table football; and a big open café. Is that all part of a grand plan to help people network?
MR: It is part of a plan to have elements that can be used for business and also make it a social environment. It also forms part of our corporate and social responsibility standpoint when you think of wellbeing in the workplace. The gym, in particular, is part of helping people take a healthy body, healthy mind approach. And it is used: early in the morning, lunchtime and after work. We also have a social committee that organises events for the company and planned charity events in which proceeds go towards our chosen charity Crossroads, which provides respite for carers.
WatchPro: Is that anything to do with being in Wokingham, a fairly quiet Berkshire town. Does it make it difficult to recruit when you are not in London, or even Reading?
MR: It is tough to recruit because of the nature of the businesses around us in Reading and Bracknell; we are very much in IT-land. But, once we hire people, they tend to stay because we do invest in our people, that is part of our mantra. That could mean external training courses, internal courses or even sending them over to Switzerland to increase their skill base. We have a philosophy to promote from within. We have people who have started out in the field on a merchandising or sales team, and have worked their way up to senior positions.
WatchPro: How have you incorporated the needs and demands of your retail partners into the way you have developed your new multi-brand operation and infrastructure?
MR: Our Headquarters in Japan has made significant investment in the business here in the UK. HQ has seen the opportunity in the UK and seen what we have achieved, and that has encouraged them to bring all the brands together under one roof. They also know that we need to invest more and will continue to invest more.
We have our state-of-the-art IT equipment and IT software over in our distribution centre, , which we installed two years ago. That means we can receive orders directly from our retailers electronically. It never touches anybody’s screen on the way through to the warehouse. The idea is that we speed up the way we work so that you can place an order at 3pm and it will arrive the next day without anybody manually getting involved. That allows for greater customer service and satisfaction.
We also have a B2B system for our customers that they can log into for requesting watch services. They can find out the status of any watches that are in for service and updated throughout the process by email communications.
WatchPro: That sort of just-in-time stock management and automation of the process is so valuable to retailers. How long have Citizen’s partners been hooked into that system and, more importantly, what have Bulova, Frederique Constant and Alpina customers been working with before you integrated them into the Citizen system?
MR: I can’t speak about how things worked before because the brands were managed by a distributor, but what I can say is that by bringing the brands together, it brings all of the operational strengths and capabilities that we have to those brands and our partners. Whereas before things like stock levels or availability across the range might have been an issue, now we have a very healthy stock level across all our brands, and that gives our customers much greater confidence.
WatchPro: I can imagine retailers breathing a sigh of relief that they can now work with one organisation, one B2B system, and one warehouse for several complementary brands. That must bring a lot of comfort, which Citizen Watch UK will want to turn into rising sales for all brands.
MR: You are right that we are now a one-stop-shop. That is the way we want to position ourselves. We want to offer our retailers a full line service, which could be Swiss brands, Citizen, Bulova, Caravelle and Harley Davidson. We now have a watch for every occasion and every customer. The beauty of bringing all the brands under one roof is that we have the capabilities of Citizen as a group, and also we become a multi-brand partner for our retailers.
WatchPro: Are you finding that your retail partners are open to working with all of the group brands now? And do you see them moving up through your product lines with a view to selling at higher and higher price points?
MR: We see a mixture. There are certain retailers that take all of our brands, and we have new retailers that have only operated in the luxury Swiss sphere with Frederique Constant in the past. Plus we have customers of Citizen that are now open to conversations about our Swiss brands and we have partners that want to work only with those Swiss brands. Before we might have been limited by the price points and the brands within the stable. The market is changing and I think it makes a huge amount of sense for us to operate in more categories. Hence, our acquisition of Frederique Constant group gave us a very strong step into the luxury market.
WatchPro: For every successful business, the idea is almost always ridiculously simple, it is the execution that is the difficult bit. I am trying to understand how much of an improvement in execution retailers will feel with the new brand you have acquired, and particularly following Citizen’s move to this new premises?
MR: We have a template with Citizen and we will bring that to the new brands within our portfolio. In addition, we bring financial stability, and when I look at Frederique Constant, Alpina and Bulova, we have economies of scale and the financial strength to invest in the brands.
We also have the advantage of working with our immediate parent company, the US operation. We belong to Citizen Watch Company of America, which controls the UK, US, Canada, Mexico and the Caribbean. I report into Jeffrey Cohen, President of Citizen Watch Company of America, we all work together and that, in itself, brings a huge benefit to the UK. There is a sharing of resources, and sharing of assets. We can do things together that we could not do alone.
WatchPro: You have been careful not to talk about the former distribution arrangements for Frederique Constant in the UK, and I understand the reasons for that. However, it is a simple fact that shifting from a distributor to a direct-to-market model from Citizen as a principal has stripped out an entire layer of middlemen. Does that benefit retailers in any financial way?
MR: It is more about relationships. We have significant relationships, and it is how we mutually grow the brands and the business between us. We have been excited and encouraged by the reaction from our partners now that the brands are under one roof. Confidence is a big factor, particularly on the investment side to elevate these brands. We have incredible brands that need more visibility and marketing behind them to take them to where they should be in the marketplace.
WatchPro: It isn’t just the strength of the brands, there are some great watches being made by those companies.
MR: Precisely, if you look at the reaction to Frederique Constant collections; the range of in-house movements they have developed, the connected watches, the value for money at key price points that is a core principle of Citizen, you see that Frederique Constant and Alpina are incredible brands. They do not have the awareness in the market that our other brands do, so that is our job to get that up. We have grown distribution with key partners and sales are already starting to benefit from that increased distribution.
WatchPro: How much have you grown distribution for the new brands so far?
MR: We have doubled the distribution for Frederique Constant since October last year. We have gone from around 30-40 doors to over 80 doors. That is working with the right partners in the right locations to give the brand the visibility we need, and also working with those retailers to ensure that the sell through is there.
WatchPro: I guess you are selling in door by door with independents, but also door by door with the multiples in every city where getting additional space is so much harder for higher end Swiss watches.
MR: Correct. But because of the way retail is changing, you do not need all of the distribution architecture that was previously required. It is all about having the right distribution and the right visibility because it is a significant investment on both sides. We have a target that we want to achieve, which we hit in year one. We have a stretch target in year two, which I am confident that we will achieve. Again, we are not looking for a huge growth in distribution, we are focused on increasing sell through, and that will come from our above the line and below the line marketing activity.
WatchPro: What do you provide to your retailers to help them sell? Do you create all the digital assets they can use on their own social media and other promotions?
MR: It is important for a brand to have a whole multitude of assets available to retailers, and that has been one of our key strengths, whether that is lifestyle photography, wrist photography or video. All of that matters to our retailers, and it is important that they embrace these opportunities and utilise all the assets that we have available. That is one of the beauties of working on a global basis. As a subsidiary we have a huge amount of assets supplied to us from New York, Switzerland and Japan. We can think global and act local.
WatchPro: It sounds like Citizen as a group is doing a huge amount of work to help your retailers. What do you expect in return from them?
MR: It is all about working in partnership. A lot of our retailers are looking to us to supply an awful lot more than was the case previously. A lot of that is a reaction to the digital world in which we now live. They are actively encouraging suppliers to be the marketing machines for them. They crave assets so that they can use them within their digital activities
WatchPro: To what extent do you feel that the workload is shared fairly and equally between Citizen and your retailers? I do hear brands complaining they are doing everything for some retailers, and that they would expect those retailers to work more effectively on their own sales and marketing activities in conjunction with the principals.
MR: Everything that we do is about partnerships. That is not a cliché, it is how we operate as a business. From a brand point of view, it is our responsibility to provide resources to retailers. We take great pride and pay great attention to the assets that we provide. The retailer has multiple brands to look after, and it is their responsibility to promote what they are doing for their customers across those brands. So, the onus is on us to supply the right materials. I don’t disagree that our retailers could do more, but we are one of many brands that they work with. We will always be seeking far more air time, but part of that is down to relationships, and we have fantastic relationships.
WatchPro: I wonder if you agree that expectations have changed in the past decade. Retailers have always been kings of their domains: understanding their customers and their markets. It feels like in more recent years, brands are having to go beyond just providing assets, advice and training, they are being asked to do all of the selling for their retailers as well.
MR: There is a point there, we could all do more, but we work with a large number of partners and what we do as a company is for the benefit of all our partners. What retailers do on a local basis and for themselves is down to each retailer, and obviously we look to support where we can.
WatchPro: To put it another way: you must want to work with the most successful retailers, and those are the ones that understand sales and marketing, investing in their people, in their store environments, in digital, in social media. Does that not naturally mean you don’t want to work with retailers that do not make this sort of investment?
MR: Not everybody operates at the same level, and it is our job to understand the needs of all customers and working resourcefully with each of them. Maybe some need more help than others, and if there is anything we can do for our retailers, we will do it. We go to the nth degree, no matter what size retailer, each customer is important to us.
We have looked at our distribution over time, and some of it has gone away naturally, but with each of brands we are re-shaping the distribution from what it was previously to what it is today. Some of it is natural, and some of it is to do with certain brands and retailers going in different directions and having different priorities.
WatchPro: What does that mean in terms of numbers? You said that you’ve already doubled the number of Frederique Constant doors. I assume you have a long way to go to develop Alpina, which is from a low base. Bulova I am interested, and Citizen is the key one. Will you have as many doors in the future?
MR: If anything, we will be reducing the doors for Citizen. There is a natural direction because we are seeing some doors close, and some distribution is fading away as we go forward. Bulova we will look to increase; Frederique Constant we will continue to increase; and Alpina we will increase. Our focus last year was with Frederique Constant, and most of this year will be the same, but we are formulating a plan for Alpina at the moment.
WatchPro: Most retailers today want to move up the price ladder. The volume of watches sold continues to fall in the UK, so everybody wants to compensate with higher average transaction values. How is that affecting Citizen as a group in terms of product development, and how is it affecting your partners?
MR: You can’t shy away from the fact that footfall on the high street is down. We saw that again over Easter. It is natural for all our retailers to want to raise the average selling price. The beauty of the group is that now we can offer brands now that we were not able to do before. Frederique Constant has an average selling price of around £1000. Bulova has a slightly higher selling price than Citizen.
As retail is adapting, we are not moving away from the normal brand positions for each brands. What we can do is tune the collections so that they are in line with what our retailers need.
WatchPro: The GfK data shows month after month of falling sales volumes in the sub-£500 price category. What, if anything, do you think it will take to reverse that?
MR: They say we follow trends, and one of the trends we follow is the US, which is showing growth. Retail is starting to rebound. What we see in the overall wrist market, which includes watches, fitness bands, connected watches, is an underlying growth trend. If we think about what people are wearing, there is probably more interest in wristwear than in the past. That could be Fitbit, Apple, traditional, smart, or connected. If you add all the elements together, the volume of wristwear is on the increase. Our job is to encourage ownership, maybe multi-ownership, so there is definitely an opportunity out there.
The GfK data may be showing that the under £500, even the under £1000 market is challenging, but I think there is a huge opportunity out there and there can be a turning point within that market as consumers change their wristwear. The interest has already been rekindled in wristwear, and we need to capitalise on that.
That said, some of our smart technology, whether in Frederique Constant or Alpina is there to offer the consumer a more traditional choice but with the functionality and the features that an audience is looking for today..
WatchPro: Are retailers embracing connected watches? All I hear is griping about lower margins, faster obsolescence and products that don’t sell.
MR: It is hard to know where the market will settle. . There have been a lot of brands making noises about connected and smart watches over the past three to four years, but over that period of time I think there has been a hesitation from brands to go full steam in that direction. From our company’s point of view, we have been monitoring the market to see what ultimately drives the consumer. . We see opportunities with Frederique Constant and Alpina. Within Citizen, we had a smartwatch three years ago, but for us I think the traditional watch market is still the greatest opportunity.
WatchPro: Do you speak strategically about a post-Apple Watch customer?
MR: I think that comes down to multi-ownership. Our consumer research suggests people will have multiple watches. That might be a sports watch, a dress watch, an everyday watch. That in itself is an opportunity.
WatchPro: Citizen doesn’t currently sell direct to consumer online, but Frederique Constant does [out of Switzerland]. What is your direction of travel on that? Do you see yourself selling direct by e-commerce?
MR: Not in the short term. With the distribution we have and the number of partners, there is no distinct need on either the Citizen or Bulova side. We still believe people want to touch and feel watches. They can buy online from one of our retail partners or from their shops, so we do not see a need for us to sell direct online.
WatchPro: You have a showroom in Tokyo that sells all of the Citizen Group brands together under one roof. Are there any plans for something similar in the UK?
MR: No, not a multi-brand store. We have a Citizen store on Times Square in Manhattan, but there are no plans for one in the UK.