Harry Brown is a hard man to pin down for an interview, which is hardly surprising as he is overseeing one of the fastest-growing watch and jewellery empires in the UK right now. Turnover at Chisholm Hunter has surged from around £16 million in 2012 to over £36 million last year — growth that has come from intelligent acquisition of key retail locations both North of the border in the company’s Scottish homeland, and also as far South as Bluewater in Kent. WatchPro’s editor Rob Corder finally caught up with the restless entrepreneur on a recent trip to see his new flagship store in Edinburgh’s Princes Street.
WatchPro: You acquired Chisholm Hunter in 1993. What were you doing before that?
Harry Brown: I have been in business for 30 years, so my first store opened in 1987. I was a teaboy before opening my first store, working for a chain and then they made me a manager at the age of 20. But I always wanted to start my own business. I left school at 16, and it took me quite a while to open my first store in the Argyll Arcade, and then we bought Chisholm Hunter, which was my second store and became the trading name. We grew from there.
WatchPro: Would you say you have been foremost a jeweller, rather than a watch retailer over the years, and how has that changed to the present day?
HB: I would say we have been selling mostly diamonds in Glasgow’s Argyll Arcade. We own six stores in the Arcade, including what is currently the Omega store in the entrance to Buchanan Street. In total we have 24 stores, three trading as Barclays Diamonds, and we are trading at around £36 million this year for 2017 to 2018, which ends in March. EBITDA across the portfolio is expected to come in at around £4.5 million, which is an increase of 34% over last year. It has been an encouraging year for us.
Chisholm Hunter is the fastest growing chain over the past four years. The onus we have put on customer experience has been key to that. My passion is really to develop a great team, and I am privileged to work with such great people. Some of my managers have been with me for 27 years. On average, our managers have been with me for 10 years. That gives you an insight into the culture.
WatchPro: Do you see the impact of your best managers when you look across your portfolios — with the best managers delivering above average performance?
HB: They are all stars. It is easy to criticise somebody when things are not going well, but I prefer to focus on what people can do well and develop their skills. By next year, we hope to have 90% of our people passing their JET qualification. I was not much use at school, but I was always interested in getting qualified in the jewellery trade, whether that is business qualifications or gemology. I am interested in gemstones, I am interested in watches, I am interested in the relationship our customers have with watches and jewellery. People have such incredible feelings about watches. I have people coming in with watches that will cost hundreds of pounds to repair, but are worth much less. They don’t care how much it costs to fix because the watch is so special to them; it might have been passed down through the generations.
We have that emotional tie that makes this industry unique and very special. We have to give a service that ties into that emotion. It would be easy to look at what we sell as commodities that could be sold on the internet — and are sold on the internet — but it is an emotional purchase.
WatchPro: How important is your team to the development of Chisholm Hunter, and how important are the brands that you work with?
HB: It is always a lot more difficult to build a business from scratch when you are using your own money and starting from zero. But we have funded the JET courses and gemmology courses. We have trained watch specialists, diamond setters. Watchmakers are Swatch Group and Richemont Group accredited, and we are building up that side of things. It has helped the business to have that in house expertise, it is a point of difference for us because not every jeweller focuses on developing its people in that way.
I like a quote from ‘Stormin’ Norman Schwarzkopf [US general who led coalition forces in the Desert Storm campaign to liberate Kuwait in 1991], who was once asked why he was so successful. He said it was like a bacon and egg sandwich; he said the chicken is a participant, the pig is committed. I like to think that we are committed to drive this business and the team is committed.
We are working on a number of shop fits at the moment to improve our profile. Livingstone is happening in the next few weeks; Manchester just opened. In the Arcade the old Rolex store is being worked on. You will continue to see this kind of investment in new stores and upgrading our existing stores. As we have opened shops in new cities, it has been very difficult to attract certain watch brands because they have long standing relationships with other retailers.
WatchPro: It sounds like you are focused as much on real estate as you are on jewellery and watches.
HB: You do have to have bricks and mortar, and it has to be credible. I am in the people business, I am in the jewellery and watch business, I am in the real estate business. These are things I can control. There are things that are a lot more difficult like getting certain watch brands when they are currently working with businesses in their fifth or sixth generation of their partnerships.
I am not criticising any of these watch brands, it is great that they show this loyalty to their existing partners. If we had 20 Rolex agencies, we would be delighted that they show that sort of loyalty. These are fabulous companies.
So, we are not so much in real estate, we are in bricks and mortar. When you see our Edinburgh store, you will see how much hard work and focus and energy we have put into it. It takes a lot of hard work on the back end just to make the finances work to create a site like that.
WatchPro: Is Edinburgh a lease or do you own it?
HB: We bought it. We bought the building, it is a Georgian building, and then we ripped it out, installed a lift. It was a mess when we bought it and it is stunning now.
WatchPro: Going through this sort of expansion must make a lot of demands on your cash. Do you carry a lot of debt?
HB: We do have debt, but we are very comfortable with the level that we carry. The banks are very comfortable with the level of debt as well. We have properties that we bought 20 years ago, and if you think about the change in value of properties over 20 years it will give you an idea. We have properties that we have owned for that length of time that we owe nothing on and that have quadrupled in value.
That has been part of our experience, that we take a very long term view. We are not an internet start-up that goes from zero to being worth millions overnight. It has been a long, slow, hard slog.
WatchPro: Your growth in recent years is even more impressive. Doubling turnover from one million to two million is hard enough, but doubling from 15 million to 30 million is another order of magnitude of difficulty on your balance sheet, your P&L, your cash flow.
HB: Yes. We feel that we set very high standards and expectations for our customers. I think we deliver a certain look and feel in Chisholm Hunter stores. We give the same passion and close attention to detail that you might associate with a small family-owned business with one or two shops. We manage to deliver that same commitment across 24 stores. People are not just going through the motions, they are committed.
WatchPro: I am also aware of the many things that businesses have to get right in order for the company as a whole to succeed, and getting a family-owned business to scale is far from easy.
HB: The generational thing is interesting. I have two sons working in the business, but the company has to be run as a meritocracy, not in a way that promotes the family above other people doing a better job. There are some companies that have taken the decision to put the son or daughter in charge because they are the son and daughter. I am not sure that works, it has to be the person who is most able. Also, as a shareholder in the business, I want the best-qualified people in charge.
My job is mainly to listen to my people and find out what we are doing wrong. No matter how hard we try, there are always going to be things we can do to improve. There are a lot of things I am going to do this year that will push that forward bigger and better. I see it as a really important part of our formula for success that our people are contributing ideas on how to improve the business. We have 300 people, and sometimes people can suggest fantastic things that will improve the way we do things. I am always open to those ideas as long as they are credible and not stretching us too far financially.
I do the same with brands. We had a discussion with Parmigiani and now we have launched with them. They are not an established big brand, but we are going to make it work.
We own more than half of our properties, and that allows us to take a long term view of our development. It gives us a nice steady base to build upon. We can talk to brands that are on the way up, and work with them, and I think that is really important for the future of the jewellery and watch business. They don’t have to be a Rolex or a Patek to get into the door with us.
WatchPro: Chisholm Hunter seems to be almost unique in your willingness to invest in brands that other businesses would see as too risky. Brands like Parmigiani, Vacheron Constantin, Blancpain and Breguet have fantastic watches, incredible people and histories, but they are not household names outside of the watch enthusiast community.
HB: We will work with these guys over the long term; that is really important. In five or ten years, who knows how the landscape will change. We do not rely on watch brands when we open a new store.
WatchPro: What is the typical mix between watch and jewellery business in your stores?
HB: It depends on the location and what other stores around us have. Diamonds can be as little as 40% of sales, or as much as 60%, it just depends what brands we can secure. Brands like Rado, Longines and Tissot are fabulous, and we have them in most of our stores. Montblanc is a fantastic brand. The name may not be so well-known to customers, but when they are shown the quality of the watch they can buy for their money, they are open to buying them. You do need well-trained staff to get these stories across.
Don’t get me wrong, given the chance we would love to work with Rolex, Patek and Cartier, but we are where we are.
WatchPro: Why not Cartier? You are such a strong partner with Richemont and you have the expertise to sell both their jewellery and watches.
HB: Hopefully in time we will.
WatchPro: You must be one of the biggest multibrand retail partners of Swatch Group.
HB: I have always found them great to deal with. We have worked really hard together. We used to have Omega in three or four shops, but we lost it because the shops were not right at the time, and the decision was probably the right one. We have learned and changed since that time. I respect other people’s decisions; I might not always agree, but I like to think we learn from our mistakes.
WatchPro: Turnover for the whole of Swatch Group in the UK in 2016-17 was £81 million, compared to £142 million for Patek Philippe and £268 million for Rolex. That makes the single brand of Rolex more than three times the whole of Swatch Group in this country. Does that not seem strange?
HB: They are very bright people and I am sure they know what they are doing. They are a huge company with a very long term view and can be very strategic. When I look at the watches, at the movements, they are amazing for the prices.
WatchPro: I wonder why they are not working with more retailers and bigger retailers, particularly outside of London.
HB: We are keen to work with the strongest brands, and to make a success of all the brands we work with. It is great when guys like you come up to Scotland for interviews like this that show there is a lot going on outside of London. That must attract attention that there is more going on outside of London.
I was in a meeting with one of the watch agencies, who said: “Oh, you are from the provinces”. But I guess when you are in London you can understand how you think like that.
WatchPro: What do you see as the key challenges in the coming year or two?
HB: With Brexit around the corner, there will be challenges and opportunities. As Warren Buffet says, when the tide goes out you can see who has been swimming without pants. As a company we do not focus on the competition, but rather on what we can do and we continually reinvent ourselves and react to the needs of our customers. The way I see it is that the customers are in control. I am not the boss of this business, our customers are. They pay my wages and everybody in the company’s wages.
I don’t know where this will lead us, but the team will work tirelessly to improve our reputation within the trade and with customers.
WatchPro: When you say Brexit is a challenge that might expose people when the tide goes out, are you saying that you expect new opportunities to come up as a result of other people’s difficulties?
HB: I think it will create opportunities for everybody. If things get a lot tougher, the strongest businesses will struggle less than the weaker ones. So, if some businesses disappear or cut their stock by half, that might be an opportunity for stronger businesses to capitalise.
WatchPro: What are you hearing from customers right now? The results from Christmas, particularly looking at Ernest Jones and H. Samuel, were not great. Customers are not a great deal poorer, but they appear to be behaving differently when it comes to discretionary purchases like watches and jewellery.
HB: I think they are more considered. They will pre-shop by visiting websites and finding out about products. It would be embarrassing if they knew more than shop floor salespeople, and that can easily happen these days. Buying a watch or a diamond ring is an emotional purchase.
I look at restaurants. You can go into one restaurant and it is empty. You will hear them blaming the recession, Brexit, you name it. Next door you need to book a table two weeks ahead. Why is that?
WatchPro: I am interested in how you have assembled the list of brands you work with, which is quite unlike most of your closest competitors like Fraser Hart, Beaverbrooks or Ernest Jones.
HB: When you look at the brands we stock, we are proud to be selling them and we would not want to get rid of any of them. Business is cyclical, so you do not know which brands will be successful in five to 10 years’ time. We have an open mind, and if we see a product we really like, we approach them to see if we can get them. We are prepared to have a go and take a long term view, albeit within the constraints of our own cash flow. If you have a stock turn of 0.3 on a brand, it is a strain on your finances.
WatchPro: A lot of retailers are editing their portfolios; where they might have stocked 10 brands in the past, they are now stocking five, and giving more prominence in their stores to those brands. You appear to be prepared to go in the other direction, which is to take on more brands.
HB: Yes, I think we are open to discussions and we are open to working with different watchmakers.
WatchPro: Who would you describe as your biggest or direct competitors?
HB: The way I see it is that we are competitors with everybody in shopping malls, whether people are going in to buy trainers, visit the Apple Store or buy a watch. I don’t think we are directly head-to-head with anybody. We want our competitors to do well, and we want to do well. A great environment is where we are all doing well.
WatchPro: How are you doing with Vacheron Constantin?
HB: Vacheron is a fabulous watchmaker, that sells to people who know about watches. Not enough people know, but the watches and the brand are fantastic. And they are bringing out the FiftySix next week in Edinburgh that have starting prices of around £10,000. The Chinese have a phrase for Vacheron, which translates as something like the best of the best. And we know that Edinburgh is the second biggest tourist city after London for Chinese tourists.
WatchPro: How have you seen the retail landscape for luxury watches change in recent years? Have you seen a significant impact from digital and ecommerce?
HB: People are moving towards the web, which is why we have spent a fortune on our website on a recent upgrade. It has seen significant growth since its update. The number of visits to our website has grown by 63% and conversion rates recently have been up on average of 60% in the months since the new website has been put in place. In terms of online sales for Chisholm Hunter I believe that we are only scratching the surface so we will continue to invest accordingly in order to maximise this potential.
However, I feel that people will always come into one of our boutiques due to the luxury experience they receive. Our online store serves a purpose in this instance also as it gives customers an opportunity to browse before coming in store. The number of store direction requests received online has increased 400% year on year again giving an indication of the further benefits of a functional website.
Of course mega watch brands have a great deal of power due to their market scale. It is uncommon that a multiple doesn’t have any of the major watch brands across store. With that said, we are doing very well with the brands we have and most importantly the Chisholm Hunter branded jewellery.
WatchPro: What are your key priorities this year?
HB: This year sees us carrying out three major shop-fitting exercises and a major new store is imminent. If you look at our three story boutique in Princess Street, and our new renovated site in the Arndale you will get an indication of the quality we will be looking for in these ventures.
Next year will see us open in Scotland’s most expensive retail location, Buchannan Street. Rents are soaring here due to the international recognition that this street is getting as the number one shopping destination in not only Glasgow but in Scotland as a whole. If you want to be in Scotland, you need to be on Buchanan Street.
The Buchanan Street store is on a corner that leads in to the Argyle Arcade and it is roughly 3000 square feet. It will give us the opportunity to hold year-round events out of trading hours, something that the Argyle Arcade itself struggles with this due to security issues. The Arcade itself closes at 6pm, but because we will have an entrance onto Buchanan Street, we will be able to bring in guests in the evening. I feel that this opening will see us occupy the best watch and jewellery sites in Edinburgh and Glasgow.
There are also two more confirmed stores in the years to come – part of the 10-year plan. Excitingly we are now in negotiations with some more prestige watch brands who are attracted to our luxury profile.
Lastly, I would like to add Chisholm Hunter will be promoting an active involvement in local charities in a store by store basis with all stores this year encouraged to find a registered charity they hold close to them and raise money on its behalf.