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MGS distribution update: A growing family

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Change is a concept Steve Brydon and his team at MGS will be au fait with at the moment. The recent buyout of the distribution company from holding group Steerwell has created a seismic shift within the company that will bring with it new brands and fresh challenges.

Leading the group through this new stage of its evolution is Brydon, a man who knows his fashion watches. Think of an internationally known fashion brand and Brydon has more likely than not been invoved in its import, distribution and consequent growth as a watch brand in the UK.

His involvement in this market is set to continue with MGS after the buyout, but as with any large and extended family, the dynamics are often complicated. In this case, Brydon claims the changes are positive for all parties.

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During its 35-year history the Steerwell Group has welcomed a number of fashion and luxury watch brands into its fold. Until recently, nestling under the Steerwell umbrella were companies Swico, which distributed Raymond Weil and TW Steel, and MGS, which started six years ago as a joint venture between Steerwell and Movado Group, a watch manufacturer and distributor based in the US.

Within that MGS joint venture is a plethora of brand favourites – Hugo Boss Black and Orange, Juicy Couture, Lacoste and Tommy Hilfiger. “The joint venture has run very well for six years,” says Brydon. “In that time we increased the turnover of MGS by 166%. It was a nice partnership, the Movado Group are nice people to deal with. We were doing a good job with it and we had great product, and that’s an irresistible combination really.”

It was a set up that had certainly caught the attention of Movado Group International, which decided to buy MGS in a deal that was completed in early April.

Steerwell and Swico chairman Keith Sheppard was keen to remain at the table following the changes and as such asked Movado Group International for a 10% stake in the new business. The buyer agreed to these terms, a decision that Brydon is pleased with. “From my point of view, Keith is highly valued and very experienced,” says Brydon. “He’s a very safe pair of hands and it’s great to have someone like that involved and as a sounding board for ideas.”

Sheppard’s continuing non-executive involvement with MGS is not the only remaining link between the new company and Steerwell as both continue to operate from the same Haselmere office. On a business basis, however, the groups now operate entirely separately, with MGS still including all the brands it previously distributed, with only Raymond Weil falling away as it sets up its own UK subsidiary.

Despite these major changes, Brydon says little has changed operationally. “Nothing really on a day-to-day basis has changed,” he says. “For the retailers that support our brands there will be little or no change – they’ll have the same sales team and so on.”

So if little has changed, why the need for the shift? “We had a very successful MGS business with a successful business model, backed by the Swico and MGS relationship and Swico’s 35-year reputation,” explains Brydon. “I think Movado Group International knew they had a great partner and wanted to make sure they owned it. They thought, ‘let’s not change the way MGS is and the way it operates, because that’s very successful for us’, and so that’s what’s happening. The only real day-to-day change we’ve had here is the introduction of Movado Group International’s SAP accounting system.”

Although it appears to be business as usual, the buyout by Movado Group International has brought with it a couple more brands for the MGS distribution portfolio. As well as the group’s mother brand Movado, Movado Group International owns Ebel, Concord and ESQ, as well as licensed watch brands Coach, Hugo Boss, Juicy Couture, Lacoste, Tommy Hilfiger and Scuderia Ferrari.

The group’s UK subsidiary Movado Group International UK, which predominantly focuses on Ebel in the UK, has been overseeing the launch of the Movado brand into the market through a deal with Ernest Jones that has taken a year to secure. Both brands now sit in the remit of MGS.

CAREERING FORWARD
For Brydon himself, who started his watch career on the road as a Boss rep for the North 14 years ago, the buyout has involved a change in job title from sales and marketing director of MGS to commercial director.

Brydon worked his way up the ranks gradually to a brand manager, remaining with Boss under Swico until six years ago when the MGS joint venture was born. At that time he became sales director across Boss, Tommy Hilfiger, Lacoste and Juicy Couture, before taking on the marketing for those brands too.

Now, as the new arrangement moves forward, Brydon’s brand family is extending and the initial signs are strong. Since November, the Movado brand has been trialled in 25 Ernest Jones stores. At BaselWorld 2013, it was agreed that, based on initial success, the brand will be sold in up to 100 of its doors by the end of the year.

Although new to the UK, both the Movado brand and Coach have impressive credentials in the US. Talking about Movado, which retails in the US for between US$500 and US$1,500 (£330 to £990), Brydon says: “The brand is relatively unknown in the UK and Europe but it’s gigantic in the States. It has a 35% market share, so one in three watches sold in the States within those price points is a Movado. I’m sure that it was part of their purchase rationale [of MGS] to think, we have this great brand, we now need to make the march into Europe with it and we’ve got a great partner that will do it well and do it nicely.”

BRAND ARRIVALS
BaselWorld 2013 marked the official launch of new MGS licensed brand Scuderia Ferrari. “I think Scuderia Ferrari was a great signing for Movado,” says Brydon. “I think it’s in the top three of the most recognisable brand names in the world so it was just a case of matching a product and a price to that brand name. The rest of the collateral is really good so we don’t have to do too much work with that, it stands out on its own. The results from Basel prove it.”
There are two Ferrari watch brand licenses. While Hublot holds the Ferrari watch brand licence for pieces starting at approximately £10,000, which are ideal for Ferrari owners, the majority of timepieces under the Scuderia Ferrari brand, the licence owned by Movado, have price points of between £75 and £400, making it an attainable purchase for Ferrari fans.

Meanwhile, Movado brand Coach will be officially launched in the UK by MGS in the autumn. Based on the successful introduction of Coach at BaselWorld 2013, Brydon expects it to go into the market in September with an impressive 200 doors. It is another popular US name, with affordable price points ranging from £125 to £350.
Now that the dust has settled on the buyout, the future is all about expansion for Brydon and his team. “Tommy [Hilfiger] is expanding, Lacoste is expanding, so we are going to need to develop and take on more staff to keep the momentum moving forward and really establish ourselves,” says Brydon. “The market climate is ripe for growth.”

With the addition of the new brands to his distribution portfolio, Brydon and his team have a lot of work ahead of them. However, the line up is particularly strong at a time when mid-market fashion brands are thriving.

“Branding – whether for watches or jewellery – has changed our industry beyond all recognition in the last five or six years,” says Brydon. “A lot of young people – and I’m talking about anyone under 35 – have grown up with branded names like Hugo Boss and Armani, so that’s what they know and understand and what they believe in. So those brands have market advantages, particularly because they don’t just sell watches. At the start that was almost perceived as a negative but actually it is the opposite because they can generate the marketing budget, whether it be from fragrances, shoes or clothes, and all those marketing budgets go behind promoting that one branded name so when you’ve got 15 different product lines it’s far easier to grow bigger quicker than it necessarily is when you’re a watch brand and you’ve got one product line.”

While the watch industry has become more comfortable and familiar with branding and its power over the past few years, Brydon believes the benefits are now starting to emerge, particularly for mid-range fashion brands. “I think these brands are performing very well at the moment, which is helped by the transition we’re seeing.,” he says. “There has been quite a big change in the industry in the style of shops, which these fashion brands are really working in. The obvious example would be Boutique.Goldsmiths, which is targeting that fashion customer. All of the retail groups now have a fashion offer and Boutique.Goldsmiths is an example of one of the groups that has really gone after that market. There’s also a number of very good independents out there that are doing a similar job.”

It is a change that Brydon welcomes. “It can’t happen quickly enough for us,” he says. “It’s definitely the way the market is going and you can see with one or two of our competitors that they’re not prepared to wait for that so they’re starting to do it themselves, to create that branded environment and to allow more space for those branded offers. I think that trend of a mid-price fashion offer will get stronger and stronger. The fact that some top-end Swiss brands are reducing distribution or creating their own retail [concepts] is probably making that happen even quicker than it would have done.”

Every family knows that things can’t stay the same forever, they have to evolve and develop and sometimes go their separate ways, moving into the next stage of growth. For MGS Distribution that time is now and Brydon believes the company has found the ideal partner in Movado Group International. With its new partnership and additions to its brand portfolio that come with a proven track record in America, MGS is marching forward.

This article originally appeared in the June 2013 issue of WatchPro. To read a digital version of the magazine in full online, click here.

 

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