Rox (UK) Limited was incorporated in February, 2001, as a single store trader of mid-market jewellery in Glasgow’s Argyll Arcade. 17 years later, co-founders Kyron Keogh and Grant Mitchell have created a five door network stretching from Aberdeen to Leeds and selling prestige watches including Audemars Piguet, Chopard, Hublot, Zenith, Bremont, Tudor and, from this month, TAG Heuer. What will the addition of one of Britain’s favourite watch brands do for the business? Rob Corder sat with Rox’s owners to find out.
The first time WatchPro met the Rox team in Glasgow’s Argyll Arcade was in 2011. The store was spectacular then, and remains so to this day, with its gleaming white-tiled ground floor bouncing light off the facets of its diamond jewellery, while upstairs people kick-back in the stylish Thrill Room with a glass of Moët & Chandon champagne as they pore over engagement or wedding rings.
Watches at the time were at the value end of the market. If memory serves, the most prestigious brand in the business was Tissot.
Co-founders Kyron Keogh and Grant Mitchell were happy to be considered the enfants terrible of the Arcade, which houses generations-old veterans including Laings and Chisholm Hunter pushing watches from top end Swiss businesses such as Rolex, Patek Philippe and the Richemont Group. The big multiples are there too.
The ambitious entrepreneurs knew that to stand out in the Arcade, they would need to be different; not hard, they thought when the majority of jewellers were still trading from shops with shag pile carpet, oak furniture and cushions in the windows.
Since 2011, which was the tenth anniversary of Rox, the company has created a retail brand that is both distinct from its competitors, and also consistently applied across product, people, store design, marketing, in fact everything you can see, feel, touch and taste. Even the choice of champagne in every Rox Thrill Room is a carefully considered element of the Rox brand.
Rox is now present in Glasgow, Edinburgh, Aberdeen, Leeds and Newcastle. The majority of turnover still comes from jewellery, but the watch portfolio has grown dramatically and shifted upmarket.
Working with LVMH has been key; a relationship that began five years ago when Rox landed the Hublot agency.
Hublot at the time had very little profile in the UK, but Rox has made it a success in Scotland thanks to the energy they put into introducing it to their customers at regular parties and other events. “We started with Hublot just over five years ago and, when we took it on, it was seen as a bit of a footballers’ watch. It did not have the horological heritage, and it never pretended to have it,” recalls Rox co-managing director Kyron Keogh. “Hublot is about the Art of Fusion, the fusion of different materials, ceramic, Kevlar, rubber, carbon fibre; materials that have never been seen in a watch before,” he adds in a timely return to a Hublot-approved script.
The events are key, and it is one of the reasons that Rox always installs a Thrill Room at its boutiques. “We can turn the space into a branded party for any watchmaker. We don’t need to have shop-in-shop furniture because we turn this room into a branded space,” explains co-managing director Grant Mitchell.
“We hold events every month at least, usually branded events like showing the Tudor watches that have launched at Baselworld; Bremont Adventurer Club night; Hublot Golf, Hublot Ferarri. We have great relationships with a lot of the luxury car showrooms up here. We have a McClaren dealer up here, Rolls Royce, Bentley … these are the guys we need to be working with,” Mr Keogh explains.
Hublot’s success with Rox caught the eye of Jean-Claude Biver, TAG Heuer CEO and President of LVMH Watch Division, and opened the door to taking on LVMH stablemate Zenith last year and, from March this year, to the ultimate prize of TAG Heuer.
“So, we started with Hublot five years ago, launched Zenith last year and now I am pleased to announce that we are going to be working with TAG Heuer this year, which is one of the top five brands in the UK. We will be launching it in Newcastle at the beginning of March,” Mr Keogh reveals. “That brings us firmly within the LVMH family now. It is a group that we have real synergies with as a retailer. We understand their way of working. We love their approach, their innovation, their combination of tradition as well as the future,” he adds.
The modern LVMH and Rox do seem like kindred spirits. Having met and interviewed Mr Biver, WatchPro knows the energy and enthusiasm he brings to the group, and his plans are obviously exciting the Rox team. “Under the auspices of Guy Sémon [general director at TAG Heuer], who is an absolute genius, you have the materials and design of Hublot; you have the technology with Zenith; you even have smart technology with TAG. It makes LVMH a real force to be reckoned with,” Mr Keogh describes.
Rox attracts a younger customer than some of the venerable jewellers it competes with in the Argyll Arcade, and TAG Heuer is the perfect watch for people wanting their first significant Swiss watch. “We do attract the younger consumer as a brand. 50% of our business is engagement rings and bridal, so we work all the time with those younger consumers. There has always been the need for us to offer that cool starting watch from the Swiss universe, which is TAG Heuer. It is the first watch people really treasure and aspire to own when they are young,” Mr Keogh adds.
TAG Heuer is on a roll in the UK right now. Its sponsorship of the Manchester United, the Premier League and the London Marathon, is making it a household name associated with youth, energy and prestige. “I think TAG is enjoying success all over the world, but the UK is very much a market that loves its brands and the locations we are in are very strong branded locations,” Mr Mitchell suggests.
TAG Heuer will initially only be sold by Rox in Newcastle, but the business certainly hopes it will not remain the sole store with the brand. Glasgow is the number one location for the group in terms of turnover, but there are a number of retailers in the Argyll Arcade offering TAG, including a new franchised boutique owned by Laings, so it is not an automatic next step.
Securing agencies for Swiss watches is a constant battle, which Rox — and all other retailers — have to approach on a city-by-city basis. But the business is not afraid to open without the big watch brands, and is confident that the Rox name is strong enough to pull in customers, even if the shop sells only jewellery. The group’s shop in Edinburgh sells only Hublot alongside its jewellery and in Leeds city centre there are no watches at all alongside the diamonds. The two stores have around the same turnover.
Rox has not enjoyed uninterrupted growth. When the group opened its store in Aberdeen, capital of the oil industry in Scotland, the oil price was well over $100 per barrel and the city was booming. The oil price crash in 2014 to $50 and as low as $30 in 2016, has caused a localised recession that has hurt group turnover and profits. “Aberdeen has been hard. It was a phenomenal store when it opened, but sales there have followed the oil price, which fell for years. Now the oil price has picked up, business is coming back,” Mr Keogh reveals.
Aberdeen has also been a drag on operating profits, which topped £500,000 in 2014-15, but were less than half that in the following two years. Borrowing to pay for a rapid expansion of the store network at the same time has also weighed on profits.
“We opened three stores in 18 months four years ago. It takes time for that to work through. It was all self-funded so we had quite a lot of debt,” Mr Mitchell explains. “We are getting to a stage now where the debt is coming down and we are ready to get going again. If Aberdeen had kept going the way it started then our profits would have been fantastic. That is another reason why we want to spread our risk with stores across other parts of the country,” he adds.
Rox has the infrastructure, skills and brand strength to be a far larger national multiple, and the founders feel ready to expand. “Our overhead infrastructure cost is set up for more shops. We need more scale. We set the business up to serve multiple stores, and we are now in a very good position to expand. Every time we open a store it is operationally profitable. We need to share the cost of our head office overhead across more shops,” Mr Mitchell continues.
Rox has been trying to open in the North West of England for two years, but has not found the right opportunity. “We need to be in Manchester. There are so many good things going on in Manchester at the moment. It is a real economic success story right now,” suggests Mr Keogh. “We need to finish off the North. I think Liverpool is somewhere we need to look at and then we can start looking further South. Manchester would square the circle for us. We could do a jewellery store in Manchester to get a foot in the door and then see what other opportunities come up.”
The strength of Rox’s jewellery offering, including its own branded collections, gives the business the flexibility of opening jewellery-only stores, as it has in Leeds, and then seeing whether any watch brands want to come on board. “The business is now at the stage where the stores with just jewellery are working really well, with or without watches. If we get the watch brands, it is an added bonus,” says Mr Mitchell.
Jewellery is also more profitable, and ties up less cash. “The watch brands tie up capital, and the return on investment is not as good as with jewellery. We are still a young business, we are not sitting here with pots of cash; far from it,” Mr Keogh states.
The business is clearly ambitious for growth, and while some entrepreneurs would focus on acquiring shops in target cities, Rox feels it has a model that can grow organically, with or without the blessing of Swiss watch brands. “For us to open a store, we just need the staff, the stock the shop fit. If we bought another business, we would probably need to do a full refit, training the staff and give it the Rox personality, so it is questionable what value the acquisition brings,” Mr Keogh says. “Starting from scratch is normally the best way forward,” Mr Mitchell agrees.
It is notable looking at the interiors of various Rox stores that they don’t have rows of branded shop-in-shops for the Swiss watchmakers they stock. This is a conscious choice that allows the company to maintain its own identity in a way that retail partners of Rolex and Patek Philippe cannot.
“We are very protective of our own environment. If we were any other jeweller the brands probably would have insisted on four or five shop-in-shops in this space, but we have been able to protect the Rox identity. When we do an event we can turn our Thrill Room into a Zenith space, a Hublot space. We can turn it into any boutique. If a brand wanted more visibility then we would consider adding monobrand to the side of one of our stores, but the main space would be Rox. It would need to be connected to our store, otherwise we would push traffic away from us,” Mr Keogh explains.
That is not to say that Rox would turn down the opportunity to work with Rolex and Patek Philippe, and sign up to whatever terms and conditions that would require. The owners are well aware that the top two brands in the world would transform their fortunes. “We don’t have Rolex and Patek in our business, and that is why we are not super-profitable. If we had six stores with Rolex in them all, we would be a different proposition. That is why we are restless because we have to keep moving forward,” Mr Keogh insists.