It is a common misconception that Richard Mille Europe is a wholly owned subsidiary of the watchmaker, but it is in fact a joint venture between the brand and distributor Redgrave Luxury. Daniel Malins talks to Redgrave founder and chief executive Peter Harrison about a more intimate distribution model.
The tried and tested traditional watch distribution model has never really been questioned, but there is one distributor in the industry swimming against the tide by working as a collaborator, rather than just a contractor.
Traditionally a distributor will meet with a brand it is interested in, hold talks and then ultimately hammer out the details of the contract. This will involve agreements on things like what percentage of the budget must be spent on marketing and PR and the initial taking on of a predetermined amount of stock.
On paper, the benefits of this model are fairly clear and irrefutable. If I’m an independent Swiss watch brand, then by working with a UK distributor the prospect of opening multiple accounts in Great Britain – and having sufficient support for this retail network in the UK – suddenly becomes very real. I’ve not had to relocate, set up new offices or take on new staff, all of which can represent huge barriers to entry. Instead, the distributor does all the hard work for me. They, in return, can expect a healthy return on their investment if the brand takes off.
All fairly simple, but ultimately the two companies operate as separate entities with individual goals to achieve from the partnership. While this works, can it be improved upon?
One man who believes there is a better answer out there is Peter Harrison.
“I’ve been in the luxury watch business since 1990 and I had worked for a small UK plc firm that was distributing watches,” recounts Harrison. “I just thought the future of watch distribution lay outside the traditional distributor as we know it. I felt it was not going to survive much longer in its existing format because of larger groups coming in, buying smaller brands and integrating the distribution throughout their existing network.”
The next step into this new world for Harrison was to set up his own company called Redgrave Luxury in 2006 and come at things with a completely fresh collaborative approach, part of which was entering into a joint venture with watchmaker Richard Mille that led to it becoming the sole distributor for the brand in Europe, the Middle East and Africa.
The partnership with Richard Mille was an easy choice for Redgrave Luxury as Harrison and the watchmaker’s eponymous leader have been friends for 20 years.
“When Richard started his watch brand in 2001 we discussed various opportunities on how to combine our experience and eventually settled on the concept of joint venture distribution,” says Harrison. “This enables the manufacturer to hold an investment in the distribution while the company grows and in the meantime day-to-day issues are being managed by my team in London. We have always agreed on the direction the joint venture has taken and we are delighted to have contributed so strongly to the brand’s international expansion.’’
The brand has delivered growth of 111% since going into business with Redgrave Luxury, and Harrison believes that this success has been made possible because of the unusually close relationship between the two companies.
“The joint venture means that we sit down and talk to the manufacturer about what their vision is – whether it’s for the next 15 or 20 years – and how we’re going to open stores together,” Harrison explains. “Crucially, we discuss how we’re going to reinvest the traditional revenues that might normally be stripped out by your standard distributor.”
Harrison believes that one of the problems with standard distributors, as he calls them, is that they present an edit of a watch brand rather than the full experience.
“They pick up on a trend and see the brand only through the eyes of a domestic market,” he says. “For a lot of brands it was frustrating to work in this way because the distributor couldn’t see beyond their own views. Therefore when you visited a retailer, you would see that distributor’s image of what that brand should look like, rather than the brand’s own image of what they should look like, which is incredibly frustrating. My feelings were that this type of watch distributor wouldn’t last very long. The question was how one could exist as a distributor in a new world.”
As we have mentioned, Redgrave Luxury’s plot for survival was to intrinsically bind itself to the success or failure of the brand, to wrap his company up so tight in the fortunes of Richard Mille’s that there was no option but to succeed.
This means no cutting back on marketing spend to boost margins and absolutely no option to just ditch the brand if the market gets a bit tough – basically, doing what is needed to ensure the brand thrives, not making a quick buck. “It could be following the strategy of much narrower and selective distribution to keep the brand exclusive, or it could be to open new stores and mono-brand stores,” Harrison says. “In that way it’s considerably less frustrating for the manufacturer to see that the margins made by the distributor are reinvested back into the brand and the distribution rather than stripped out and invested in the distributor’s new Bentley.”
Such a close collaboration calls for an intimate working relationship, so how often do the watchmaker and the distributor speak? “Richard and I talk every 72 hours or so,” says Harrison. “It depends on the market and which market we need to focus on.”
This extraordinarily close relationship between distributor and manufacturer not only leads to financial and investment benefits for the watch brand, it also cultivates a culture of long-term thinking that is, Harrison believes, in stark contrast to the short-term visions that he feels are inevitable with traditional distributors.
Harrison gives a couple of examples of long-term plans that Redgrave Luxury has executed on behalf of Richard Mille. “As a distributor, we have secured the rights to be the timing partner for the Yas Marina circuit in Abu Dhabi, we formed the Richard Mille Polo Team, and we’re the Official Timing Partner of Manchester City Football Club,” he lists. “It’s highly unlikely that you’ll ever meet a distributor who engages in these sorts of partnerships. A distributor often isn’t prepared to invest long term and then, as a result, the manufacturer isn’t minded to give long-term distribution contracts. They’d normally offer a two- or three-year rolling distribution contract, which in turn disincentivises the distributor to invest.”
In other words, a mutually destructive culture is established that discourages long-term planning by the distributor as well as the manufacturer.
Harrison considers Redgrave Luxury’s partnership with Richard Mille as an almost perpetual exercise. “I see my venture with Richard as going way beyond my retirement, and I’m only in my 40s,” forecasts Harrison. “So it gives me a long-term view of the brand and, in turn, they can rely on me.”
But it is not only the benefits of a cosy relationship between distributor and brand that Harrison feels is threatening the traditional distribution model. He believes that large luxury groups will make a major impact. “You might have a large French luxury goods group, for example, coming along and buying a small brand and then the next thing you have to do is extract that small brand’s existing relationship with 20 distributors around the world,” he says.
With all this long-term thinking and strategising, a natural question to ask Harrison is what the future holds for both Richard Mille and for Redgrave Luxury. Is Richard Mille looking to grow its retail operation in EMEA? It currently has four points of sale in the UK at Prestons Wilmslow, Harrods, Kronometry 1999 and Marcus.
“We are currently looking for a location for another standalone monobrand store for Richard Mille, which we may be quite close to,” he says. “We’ve already opened four stores and we’ll open another four by the end of this year. The future of Richard Mille lies in monobrand boutiques in the main, so that will be our focus for the next few years – finding the right locations and opening our own stores.”
And what of Redgrave Luxury’s expansion plans? “Numerous people and brands ask us to help them, but it’s very difficult to find a company that is complementary to the Richard Mille brand,” Harrison observes.
“It might not even be a watch brand. The only other brand we do at the moment is a hybrid telephone brand called Celsius X VI II. It is a French company that combines watchmaking technology and mobile phones.”
The Celsius X VI II phones are serious bits of kit, with price tags hitting €77,000 (£50,670) for a quartz model and €250,000 (£164,530) for a flying tourbillon. They say variety is the spice of life, and Harrison clearly believes that Celsius X VI II is a brand that ticks the key box of being compatible with Richard Mille.
Searching for new brands to work with is “on the agenda” as Harrison puts it, so we can expect to see his portfolio grow in the not too distant future.
But to what extent will the Harrison model of watch distribution catch on outside of Redgrave Luxury? It would be ignorant of the facts to suggest that the old, conventional method of distribution is not still the dominant force in the UK and beyond. The most successful multi-brand distributors continue to add and take away brands from their portfolios on a seemingly annual basis, and yet they continue to be profitable and grow as a business.
In this light, is Harrison’s joint venture model an almost romantic vision of blissful collaboration between a brand and a distributor both striving for the same goals? The success of the joint venture partnership with Richard Mille’s suggests this might be an overly cynical way to view it.
Inevitably, time will be the judge of Harrison’s theories, but for now diligent planning and a long-term vision gives Redgrave Luxury every chance of delivering continued and increasing performance beyond the present and well into the future. Harrison may even retire a happy man, if Richard Mille’s not taking up too much of his golf course time that is.
This article originally appeared in the April 2013 issue of WatchPro. To read a digital version of the magazine in full online, click here.
