Beaverbrooks acquired two Fraser Hart stores, both Rolex doors, in Milton Keynes and Croydon before the pandemic in 2019 and has spent almost two years developing a brand new concept for the stores, which reopen in July under the name of Loupe.
Rolex, Omega, Hublot and Zenith will be anchor brands at the Milton Keynes flagship, along with fine jewellery including specially designed Loupe collections, which will all be 18ct gold, with diamonds, with prices up to five figures that will complement the Swiss watches in store.
Ahead of the Loupe openings, Anna Blackburn, managing director, and Mark Adlestone, chairman, of Beaverbrooks, met Rob Corder to discuss the project.
WatchPro: Before we get into your exciting news, could you give us an update on how Beaverbrooks has been performing over the past year. I know your financial year runs to the end of February, so it was almost entirely overshadowed by covid. How have you managed and adapted?
Anna Blackburn: The starting point is to note that 2019 was our centenary, so we had our most successful year in history in terms of revenue and profits. Also, culturally, it was an amazing year.
We came into 2020 off the back of that centenary and really excited about the year ahead and then covid hit.
Mark Adlestone: We were just about to hold our annual conference to celebrate that year, but that conference has been pushed back and back four times now. Hopefully it will happen in September, by which time we will not have been together as a company since the start of the pandemic. That will be a time for a big celebration.
Anna Blackburn: After the high of the centenary we were hit with the ultimate low at the start of the pandemic and we made the decision, slightly ahead of the government’s order, to close all our stores. Myself and Simon Smith, our retail director, visited a number of stores at that time and we could just sense that people were getting concerned. We could see what was coming so we decided to move immediately to shut our doors.
Mark Adlestone: When Anna called to say we would have to close our stores, I simply could not believe it. I said the world’s gone mad. But we did what we had to do, including closing down our online business at the beginning for 19 days. The narrative around that at the time was that everybody was ordered to stay at home or risk killing their grandmas. There was a lot of pressure and guilt being applied.
Anna Blackburn: What ultimately led to the decision to close both the stores and ecommerce was that our people in the warehouse told us that they felt unsafe. From the very early stages, we committed to three key objectives. First was around the safety of our people and our customers. Second was about protecting jobs and incomes as much as possible. The third was to do with protecting the wider business, making sure that everything we were doing in the short term to fight fires did not distract us from life after the pandemic where we want to come out as strong as possible.
That first weekend, after we shut all stores and ecommerce, it felt like a bereavement. After more than 100 years of Beaverbrooks, we had to completely stop trading.
Mark Adlestone: It was an existential moment that hit us really badly, and I have to say I was staggered at how some businesses just managed to continue trading straight through.
Anna Blackburn: We very quickly looked at what we needed to do differently to make everything safe and within 17 days we reconfigured our offices, shops and warehouses. The senior management team did all of that together to get everything prepared for when we were able to reopen ecommerce and stores.
Our premise, and remember this was in the very first days of the pandemic, was that we would make everything safe enough for if it were our own families working. There was no better way to do that than do the work ourselves and that gave our teams confidence.
By the time we reopened in April, we were so good operationally that our people wanted to come back and start giving back to the business.
WATCHPRO: Beaverbrooks is renowned for being a great employer and altruistic organisation in terms of community engagement and charity. Do you think that helped you during the pandemic?
Anna Blackburn: We have heard so many times from our teams that they wanted to give back to the company because of the way they felt supported during the pandemic. That has greatly contributed to our performance.
Mark Adlestone: We are delighted to have won the Best Companies to Work For award for large companies, with between 250 and 2,000 employees, across all sectors this year. It was amazing to have won that in the year we have just been through, and an incredible vindication of the way our people feel about it, the way we communicated with them, the way we supported them financially.
And it was not just financially. It was more about the communication. They compared themselves with people working at other companies, who did not get that support, and appreciated what it means to be part of Beaverbrooks.
Anna Blackburn: Every time there was a new announcement from government, we made a video and spoke about what that announcement meant to us at Beaverbrooks and what the impact is for our team. We aimed to simplify what were often complicated messages and that gave them confidence.
WATCHPRO: In those early days when you were gearing up to reopen ecommerce and then your stores, how much did you know about your customers when you were not able to greet them in stores? Do you have the same depth and volume of customer data as authorised dealers for brands like Rolex and Patek Philippe where they have huge waiting lists of people just dying to hear they can buy watches? Customers are highly motivated to get on those lists so they will give up all sorts of information.
Anna Blackburn: We have something called the Beaverbrooks Club, which is basically our CRM, and we have such a high volume of customers on there and we were constantly updating them on what was happening with our stores and how they could shop online.
Mark Adlestone: To answer your question directly, it is different. It is not as personal, but it is still very good.
WATCHPRO: I wrote a lot about clienteling in the second half of last year, where retailers would reach out pretty much one to one with customers by phone or Whatsapp to talk about watches or whatever and ultimately try to sell them something. I do know of very large chains, particularly in the United States, where they effectively retrained their shop floor teams to become clienteling specialists during the pandemic, and have continued with it since stores reopened.
Anna Blackburn: We actually did that during the pandemic to a degree. We had a number of our store colleagues who were supporting our mail order and customer service teams. We did not do it to the degree you are talking about, but there is room to look at that; absolutely.
WATCHPRO: You were obviously operating in a very different way while stores were closed, but were there also changes to the types of items customers were buying online and through mail order?
Anna Blackburn: We saw an increase in gifting, we saw an increased demand for Swiss watches. People had more disposable income because of cancelled holidays, not going out, not commuting and still getting paid. We have seen that surplus in cash and we have seen them spending it on treating themselves and treating loved ones. Our average selling prices have gone up across the board.
WATCHPRO: What about from a product category perspective. Did you, for example, increase watch sales but struggle more with jewellery?
Anna Blackburn: It has been a roller coaster. Initially diamonds were good but then bridal reduced because weddings were being cancelled. Engagements were continuing but bridal dropped off, particularly wedding rings. Since reopening in April, we have seen a doubling of wedding rings over 2019, which was the biggest year we had ever had.
Mark Adlestone: Footfall is still not back up to 2019 levels, but we are performing better than in 2019 because we have higher average transaction values and a better conversion rate. People come because they want to buy. There is more of a commitment from customers.
Online, our performance has continued to be really strong. You would expect that up until the reopening in April. We thought there would be a drop off after that, but it is still up, and even beating 2020’s online figures when all 72 of our stores were closed. That has amazed us.
WATCHPRO: We have spoken in the past about how Beaverbrooks is under-represented in central London. That now looks like a distinct advantage when you look at West End stores paying exorbitant rents and rates at a time when there are no high spending tourists in town and we are seeing smaller towns and cities come back to life more quickly because of domestic demand.
Mark Adlestone: Over previous years we have spoken about that but we have accepted that we are not a central London presence, and may have missed out on the post-Brexit boom. But we are strongest in the domestic market. There is a lot of money being spent in the provinces, and we are benefiting from that.
WATCHPRO: Have you managed to maintain your charity programmes and fundraising through the pandemic. That must have been more difficult with people having to work from home and other restrictions.
Mark Adlestone: Last year, as soon as the pandemic struck, we decided as trustees of our charitable work that we would increase the number of meetings to discuss our plans from every two months to every two weeks. We continue to do that.
Last year we ended up donating £1.7 million to around 250 different charities. We are really proud of that.
WATCHPRO: On the subject of numbers. Are you able to share what your full financial year results were for 2020-21?
Mark Adlestone: Turnover for the year was down 17% [from £143 million to £119 million], which we think is an amazing achievement given that our stores were closed for six months of the year. That is because, when our stores were open, they were particularly strong, and our ecommerce business grew so rapidly.
When it comes to operating profit, there is a story behind how we got to this figure because it is better than you might expect. The year before we were at £17.4 million and the most recent year, which ended in February, we will have done £15.6 million [down 8%].
That does include significant government support in the form of furlough, business rates relief and grants.
We took the support on offer to support our people, which is what the government devised these schemes for. We have made no redundancies, we were furloughing people but topping up their salaries; we did all sorts of things.
Anna Blackburn: We both believe that we did what government wanted us to do. We have strengthened our business and as a result we will be paying significantly more in taxes down the line.
Mark Adlestone: We had 72 stores that had to close while other retailers, which were deemed essential and stayed open, still took government support even though business was booming for them.
We asked ourselves the questions and feel very comfortable with our decisions because we were closed for six months, and that was the government support was there for.
WATCHPRO: What would your operating profit have been if it had not been improved by the support schemes?
Mark Adlestone: I do know, but I would prefer not to share that.
WATCHPRO: Did you discuss paying back any of the financial support such as the furlough money as we have seen other retailers do?
Mark Adlestone: We did discuss it between ourselves and with our managers and the resounding consensus was that we should keep it. If we had been able to open our shops, that would have been different, but we were closed for six months and our staff were on furlough. It is a good question when you are looking at £15.6 million in profit, but we are comfortable with our decision.
Anna Blackburn: When you look at the investments we have been making in our business this year, it is questionable whether we would have had the confidence to continue with that without the support.
Mark Adlestone: At one stage, if we had thought we could get through the year at break even, we would have been thrilled. We thought we would struggle, even with government support.
I will give you one figure, which will be a new thing you will see when our accounts are published, which is a calculation of how much money we have generated for the treasury by virtue of trading throughout this pandemic year, measured against how much money we have accepted through the various support schemes.
That figure is going to end up at around £11 million.
It clearly would have been higher if we had not accepted money from the government, but I wanted to show that by continuing to run our business the best possible way we made a huge net contribution. The financial support was accepted for the purpose that the government intended, i.e. covering our costs during the six months that our stores were forced to be closed.
The support enabled us to protect jobs and we are proud to say we have not made a single redundancy. It is an interesting moral dilemma, but we are very comfortable with where we stand.
WATCHPRO: Are there any deferments in your 2021 accounts that will hit the current financial year such as delayed tax bills or rent arrears?
Mark Adlestone: With landlords, Anna did a brilliant job speaking to our landlords, and all of the savings she secured fell into the figures we are talking about. For the rest of the year, we have assumed that we will not be able to secure those same savings so they will be back to normal. The only deferment is the VAT payment, which we are paying for the period up to March 2020 and we have until December 2021 to clear those. But that is only a cash flow issue, not a profit and loss issue.
The only thing that will affect profit and loss is business rates relief, which is still continuing.
Our cash flow during this period was impacted, as you know, by buying the two Fraser Hart stores. We had a loan facility in place for that, but we managed not to use it so we are now very cash positive. It has jumped up hugely since April 12.
WATCHPRO: Did all of your stores reopen, or have you trimmed a few that were not viable?
Anna Blackburn: They all reopened and any stores that may decide to close in the future will not be due to covid. No redundancies, no store closures and we actually increased our ecommerce team significantly. It is a really positive story.
WATCHPRO: Since you bought up the subject of the Fraser Hart stores you acquired, I think we should learn what you are doing with them so the time has come to talk about creation of the new Loupe store identity.
Anna Blackburn: This has been a huge project because it is not like buying a brand and then tweaking it. We have had to think about every single aspect of creating the concept from the bottom up.
We started with the Fraser Hart stores we bought in Milton Keynes and Croydon, which are both in locations where we already have very successful Beaverbrooks showrooms. To open alongside those meant we needed a different identity, which we saw as a great opportunity.
When we started to do our research about where we wanted Loupe to fit and what it would stand for, we sought the advice of an external brand consultant. You know that we have hundreds of years’ of Beaverbrooks around our board table, but to create something new and different we knew we would need to be pushed and challenged.
The brand consultant and our team worked collaboratively to work out what we wanted the concept to deliver. With some of the Swiss watch brands at the core of it, there is so much heritage and tradition, but we wanted to balance that with something lighter and more modern around the luxury. That led us in a direction that is very different from what is currently out there in the market.
Mark Adlestone: When it came to the name, we looked at a number of options. One choice would have been to go with the family name of Adlestone’s, because that has history and we have used it in the past. But the process we went through made us realise we had the opportunity to do something really different.
Looking at the marketplace, jewellers often use family names because of the tradition and heritage. We decided to go completely the other way with Loupe.
Anna Blackburn: When you see a new Beaverbrooks store in Milton Keynes and Loupe in the same MK:Centre shopping mall, they will be very different. You would not know they are part of the same business.
Even though we are very proud that Loupe is part of the Beaverbrooks family, we are not going to advertise the fact to consumers. They will not see a distinctive link.
WATCHPRO: So you rejected the temptation to go with a family name above the door, but how did you settle on the name Loupe?
Anna Blackburn: I thought that was going to be the easy bit, but it turned out to be one of the hardest and latest decisions we made. We wanted something that was short, distinct and easy to work with. Anybody in our industry knows that a loupe is just as important in jewellery and watchmaking, which is important to us because they are used to truly appreciate fine watches and jewellery. Not everybody knows what a loupe is. But if you know you know, and if you don’t it gives us an opportunity to get into a story about it.
WATCHPRO: What will the in store experience be like? Have you gone the route of, say, Bucherer, which has branded boutiques within their showrooms for the likes of Rolex, Omega and Cartier, but their multibrand areas are very much their own look and feel without the furniture that brands love to install? Or, will we see mostly branded areas for watches and more of your own look when it comes to jewellery?
Anna Blackburn: We see a huge opportunity to work with the watch brands and respect everything they stand for so we are using branded furniture for the watches. But a significant part of the store is about the Loupe jewellery brand we have created.
We are incredibly excited about this jewellery and how we have created a brand around it. Every piece we create has Loupe engraved or given an 18ct Loupe tag. It is all 18ct gold, all diamonds. No silver, no 9ct, which is a big statement. It is at a different level. The average selling price for Loupe jewellery will be at least three or four times higher than at Beaverbrooks. We will have pieces selling for £12,000, £15,000. That is not what the typical Beaverbrooks customer is looking for.
Mark Adlestone: This jewellery is an important point of difference for Loupe. We have curated a fabulous range that we are focusing on as much as we are on the watch brands. We don’t always feel everybody has jewellery of a sufficient quality to match the watch brands they are selling.
Anna Blackburn: The key for us as a business is to deliver a modern luxury watch and jewellery boutique that delights customers every time they come in.
We do not have a huge number of watch brands. In Milton Keynes we have Rolex, Omega, Hublot and Zenith. It is intentionally tightly curated so that we can give those luxury watch brands the right amount of space while maintaining the balance with our jewellery.
It will be experiential. The products will have room around them. There is a feeling of space.
Mark Adlestone: It is a very different experience to Beaverbrooks, which we are relocating in Milton Keynes so it will be about 75 metres from Loupe and will be a different world. We are incredibly excited about how that new Beaverbrooks store will look when it reopens in September. Both Loupe and Beaverbrooks will be exceptional.
WATCHPRO: You will have Omega in both?
Anna Blackburn: That is the one crossover watch brand but we will give the brand a slightly different focus in both stores, so we will have a slightly higher end product selection in Loupe.
WATCHPRO: You not only have two Rolex-anchored stores under the Loupe name, you are also getting tighter with Tudor, I understand, with a monobrand boutique opening in Sheffield this year.
Mark Adlestone: That isn’t public yet, but it is true. We have also got another TAG Heuer boutique opening this month in Metro.
WATCHPRO: Some people may not know that you also own Whittles in Preston, which is a third Rolex account. Is that going to change to become Loupe?
Anna Blackburn: Not for now and we do not have any plans for that to change.
Mark Adlestone: What we can say is that Whittles will be fully integrated into all of our systems at the beginning of next year.
You might not be aware that we increased our ownership in Whittles from 49% to 95% last November when Joanna [Valentine] retired. Rose [Wilson] is now the manager there and has a lovely team. So it is now wholly owned by Beaverbrooks and we will be integrating into the group’s systems, but it will continue as Whittles.
WATCHPRO: One of the issues of operating Beaverbrooks and Loupe as independent businesses is that you do not get the halo effect of Beaverbrooks being an authorised dealer for the brand. That means you don’t get the Rolex branding that is so powerful on the home page of every authorised dealer.
Mark Adlestone: That is because Beaverbrooks is not an authorised dealer of Rolex.
WATCHPRO: Could you not have been if you had simply converted the Fraser Hart stores into Beaverbrooks stores with Rolex as the anchor brand?
Anna Blackburn: Let’s look at the ecommerce side, because we are creating an entirely new ecommerce player for the sector under the Loupe brand. Of course that will feature Rolex and all the watch brands. In a sense it is not relevant, because you can only sell Rolex in stores.
Mark Adlestone: Even without being able to sell Rolex online, we still anticipate that the Loupe ecommerce business will be a significant addition to the two stores.
WATCHPRO: What I am driving at is that Rolex has the power to elevate and almost define a retail brand, and would have had a powerful effect on Beaverbrooks if it had the Rolex crown.
Anna Blackburn: We believe we have the best of both worlds going forwards. Beaverbrooks, with 72 stores, is massively powerful in the part of the market in which we operate. Having Loupe as a brand with Rolex gives us an additional brand and different customers we will appeal to. That massively strengthens us as an organisation.