Above: The executive team at the 2016 WatchPro Awards, where Michael Spiers was a finalist for the Luxury Watch Retailer of the Year Award. From left to right: Adam Spiers, James Walker and Michael Cox.
Devon & Cornwall have a combined population of just over 1.6 million, and welcome around half a million tourists each year. It is a stomping ground that Michael Spiers knows, loves and profits from as Rob Corder discovered on a visit to the company’s luxury truro boutique.
There has been constant talk about high-spending tourists causing a surge in demand for luxury watches in the UK in 2016, but there are stories within stories when it comes to sales across the country.
Central London has been red hot, with the total value of sales across all price points up by 20.6% for the whole of 2016, according to retail analyst GfK. But outside the capital, the total value of sales actually fell last year by 2.8%.
The distortion was almost entirely down to luxury watch sales in prime areas of London (including the city’s airport duty free shops) registering massive growth, while sales of lower-priced watches in the regions struggled.
However, London retailers were not alone in tempting both domestic and tourist customers into their shops to buy expensive watches. Michael Spiers, which operates four boutiques in Devon, Somerset and Cornwall, has also enjoyed a stellar year.
Sales in its previous financial year, which ended in March 2016, were up 16%, and this year is looking equally strong. “We are currently running 15% up since March, with three months to go until the end of the [financial] year. I think we are forecasting continued growth and end up about 11% up year on year by the end of the financial year. If we keep doing what we do best, we will continue to grow,” says Adam Spiers, son of the eponymous company’s founder Michael Spiers, and current director for the family business. “We have invested heavily in shop refits in all our stores so far. Truro will be the final one, and that has delivered dramatic growth,” he adds.
Luxury watches have been by far the fastest growing segment for the firm. A decade ago, watches accounted for around 20% of turnover, but this year that has just increased to over 50%, Mr Spiers revealed.
The addition of Rolex and, most recently, Patek Philippe to the company’s watch portfolio has been transformational, he adds.
Location is everything to retailers, but Michael Spiers lacks obvious advantages enjoyed by prime London, Edinburgh or even Bath shops.
Plymouth, Truro, Exeter and Taunton would not be considered affluence hot spots. The South West certainly attracts plenty of tourists, but they are not typically the jet set from China and the Middle East that have turbocharged London’s growth.
James Walker, group manager at Michael Spiers, concedes that the region has a bit of a bargain family holiday reputation, but insists that the image is woefully out of date. “The Truro story is different to Plymouth, Exeter and Taunton. Truro is more affected by the tourist market throughout the summer months. In the past 10-15 years, Cornwall has changed dramatically. Traditionally it was a bucket and spade kind of holiday destination, but there is another level to Cornwall. Now we are getting known for things Rick Stein restaurants, the Tate gallery in St Ives and the Eden project; places like that attract another type of clientele,” he explains. “Hotels have been developed and built to satisfy that level of customer.”
There are plenty of young and successful local business owners – many of them running the new generation of hotels and restaurants. There is also an older cohort of wealthy people who have retired to the South West or have second homes in the area.
“A lot of people who retire or have second homes here might have worked in the City and sold their mansion house in London. They moved down and live in lovely relaxed luxury. People sell a £2m house and buy one for half that amount down here,” describes Mr Spiers. An area called Watergate Bay on the North Cornwall coast is known locally at Chelsea on Sea, he jokes. A quick glance at a website created for the surfers’ paradise shows promotions for polo on the beach followed by a Spanish tapas meal.
A trip to Michael Spiers to check out the latest watch collection has become a regular part of a visit to Cornwall for come customers, says Mr Walker, where the company’s staff welcome them like members of the family. “One of the lovely things to me is that customers tell their friends back home that we are their local jeweller because they get an experience of service here that they don’t get in London. They walk through the door of the Truro shop and they’re recognised,” he adds.
Plymouth is different. Its population of almost 300,000 is almost half that of the whole of Devon, and it is home to many of the region’s entrepreneurs. “We see a lot of business people; they run their own companies here and spend their money here. There are a lot of owner-managed businesses,” Mr Spiers explains.
Michael Spiers is a barometer of regional economic success. When local companies have a good year – typically a good holiday season – sales rise in the summer thanks to the tourists, and then again ahead of Christmas as the local business owners treat themselves.
Securing the best watch brands has been important. It took many years of painstaking lobbying (and the closure of a Goldsmiths store in Exeter) before Michael Spiers secured the Rolex agency for all four of its shops. Patek Philippe was just as tough to land, and has been present in just the Truro store for the past five years.
In the Truro store, Rolex and Patek Philippe are given pride of place with large shop in shop zones that have the obligatory branded walls, cabinets and furniture. They are comfortable and welcoming areas where the team serves champagne and coffee to put customers at ease, while they speak to resident expert Ben Franklin, who Mr Spiers describes as an encyclopaedia of watch knowledge.
Omega, TAG Heuer and Gucci jewellery also have a large displays, but the rest of the shop has Michael Spiers’ own furniture and cabinets stocking brands including Tissot, Tudor and Breitling.
Installing the branded shop in shops is not cheap, and hands over a certain level of sovereignty to the watch brands, but Mr Spiers says it is an investment that has really paid off. “We have spent a phenomenal amount in shop fits, redoing windows, investing in the business so that we can give our customers the ultimate experience. We have to thank our brands for pushing us to keep raising our game. It is bloody hard work and bloody expensive, but it is worth it,” he tells WatchPro.
“The brands are so key. In Exeter we had to fight to get Rolex, but once we had it we realised we needed a bigger store. Once we had the bigger store, we had to bring in other brands, and the success came from there. The brands push us to make these investments, but they are not wrong. They know what works,” Mr Spiers adds.
The influence of the big brands goes further than just store design. They bring the right sort of customers into Michael Spiers and they arrive with certain expectations. “The initial thing is that that they will recognise Rolex; they will recognise Patek Philippe and other brands and they will immediately make a judgment and an assumption about the shop. If you are selling Rolex and Patek Philippe, they will expect a certain quality,” Mr Walker says. “But from that point on, it is all about us delivering the right experience.”
The company’s success in 2016 has been helped by the weakness of sterling making luxury watches cheaper for tourists than in other parts of the world, but Mr Spiers says the impact has been negligible. “We were 23% less expensive before the price increases [by all major brands] and now we are about 10-13% less expensive than Europe. But it is not a massive part of our business. Our local business is so important to us. The majority of our business is local. We have to make the everyday experience better and better,” he suggests.
The in store team is central to that experience, and Mr Spiers has a simple theory when it comes to hiring the right people. “We employ loveliness. When we hire people, if they are lovely, we will give then a go. It sounds like a cliche but we want lovely people,” he explains.
Continuing growth in the future is likely to be less about opening new physical stores, and more to do with increasing the number of units sold in existing stores, and increasing the average transaction value for each sale. That will require great staff, the right brands, great interior and window design, and more. “It’s a little bit of everything. It is the one percents that you put together and they add up to 10%,” Mr Spiers says.
Michael Spiers constantly evaluates its line up of watch brands, and will look at new options every year at Baselworld, but its main focus will be on selling more expensive pieces from its current brands.
“We are always guided by the brands. But equally, as a buying team when we go to Basel, we will quite often sit in front of a brand and they’ll present something and we will just go, we have got to try that. We do go out on a limb,” describes Mr Walker.
Taking a punt with a new brand or limited editions from its existing partners is a way of standing out from rivals. “We are in competition with the multiples, so we do like to pick things that will give us a point of difference. For instance, in Plymouth where we have Omega in our Plymouth store and you also have Omega in Fraser Hart, we want customers to be able to look in our Omega window and see a few watches that they’re not going to see in Fraser Hart. Fraser are less likely to go out on that limb,” Mr Walker suggests.
One part of the business that may expand is online, an area that the team admits has been below par until now. “Our online business and social media is an area where we do intend to invest and grow. We have been working on the new website for the past six months, and that will ultimately be transactional, although it won’t be transactional when it first goes live,” Mr Walker says.