With the US watch retail business cautiously optimistic for 2023, Rob Corder talks to Jeff Hess, CEO of Duber Time, Hess Fine Art, Old Northeast Jewelers and a Breitling boutique in Tampa about getting it right.
WATCHPRO: I would like to talk about the success of your Breitling boutique in Tampa, which was one of the first in the United States to open using the new franchise model and industrial loft apartment design. How has that project worked out for you?
JEFF HESS: We opened the store around three years ago, just before the pandemic and soon after Georges Kern took over as CEO. It is a standalone boutique using the new design concept. As you know, they changed from something that was seen as quite masculine to a more cosy and friendly style.
Our Breitling boutique is located in Tampa’s upscale International Plaza and Bay Street mall, home to nearly 200 stores and 15 restaurants including Neiman Marcus, Nordstrom, Tiffany & Co., Burberry, Gucci, Mayors and Louis Vuitton.
We opened the 1,200 square foot space in 2019, and it has been extraordinary. The success seems to be down to a combination of the boutique design and the direction that Georges Kern has brought in, along with the expertise of the experienced Breitling team that we deal with in the USA.
When you combine the strength of the luxury watch market right now in the United States with the journey that Breitling is taking us on, plus our aggressive marketing and advertising, it has added up to an astounding performance at our Tampa boutique.
The designs are amazing and the sales are stunning. From what we have been told, for six months of the year, we are the number one Breitling boutique in the USA.
WATCHPRO: From just 1,200 square feet that is extraordinary. You must be one of the most productive stores from a revenue per square foot perspective in the country.
JEFF HESS: It is insane. Last winter, we had a one million dollar month. The boutique does well for the mall, it does well for Tampa and it is certainly an incredible performer among the group of horology businesses we have.
WATCHPRO: Are there other watch brands in the mall that are enjoying similar performance? In other words, is it Breitling, or is it the market that is responsible?
JEFF HESS: There are a few other monobrands, like a Montblanc store, which does well, but likely nothing near the numbers that our Breitling boutique does. We are right next to a David Yurman showroom, which is a good spot in the mall, so it is a combination of our great staff, advertising, fantastic product and the direction that Breitling is taking.
Breitling is, without a doubt, one of the most attentive and true partnership-oriented associations we have ever had.
WATCHPRO: How much do you attribute the success to those different factors: your people, the product, marketing and the repositioning of Breitling?
JEFF HESS: As noted, the majority of our success is because of the new direction that Breitling is taking, but I also put our very best people from our other businesses into the store and told them they would be selling only Breitling from now on, and they have done an incredible job. I would say we have one of the best sales teams in Tampa Bay.
Everybody on our team is a horologist, not just a salesperson. They understand Breitling, its history, its watches and its direction.
WATCHPRO: You mentioned that your advertising and marketing have been important. How much of that is down to you as a local retailer, and how much is Breitling with its centralized social media accounts, global brand ambassadors and other initiatives? I am a huge believer that business is not just about doing one thing well, it is about doing 20-30 things right consistently over time.
JEFF HESS: You are absolutely correct. It would be impossible to pinpoint one thing because there is so much that goes into the equation. Breitling has a plan that is well thought out and we adhere to it, following it religiously. But without a doubt the number one thing is the inclusiveness of the brand today. It is able to be right up there as a leading luxury brand while at the same time being accessible to a broad range of customers.
WATCHPRO: When Georges Kern first took over, he was asked a lot about moving the brand away from an image of masculinity, verging on misogyny, with its marketing and store design. You say it has become a lot more inclusive, but when I look at the product line up and the new store concept, it still feels pretty masculine to me with a bachelor pad vibe.
JEFF HESS: It is absolutely a masculine atmosphere, but it is much more welcoming, almost comforting.
WATCHPRO: I think I could describe you as a veteran of the watch industry who has worked with a huge number of brands across your career. Have you ever experienced anything like the success you are seeing with your Breitling boutique right now?
JEFF HESS: You are right, I have worked with almost every brand and group as an authorized dealer with the exception of Rolex and Patek Philippe. Breitling is, without a doubt, one of the most attentive and true partnership-oriented associations we have ever had.
WATCHPRO: That is a notable statement in an era when I hear so many retailers complain about the way brands treat them by competing for their customers, keeping the hottest watches for their own boutiques or ecommerce stores and cutting back on marketing support. It sounds like your experience with Breitling is different.
JEFF HESS: A lot of the brands talk about being your partner and then go ahead and do all of the things you have mentioned. They are not really there to help you. This isn’t every brand, but it is quite common.
Breitling does not hold back the goods unless there is such huge demand for certain SKUs that they cannot supply enough. But they have a great team that helps with advertising and promotions; they have a great team that helps with after sales service. Everything they do is partner-oriented.
WATCHPRO: I took a spin around the main multibrand and monobrand boutiques in central Manhattan a few weeks ago, including the recently refurbished and reopened Breitling boutique, and it struck me how many watches it has on display compared to other luxury watch brands like Rolex, Patek Philippe and Richard Mille. But Breitling is making its extensive range accessible and available. These feel like different approaches from the various brands. Is Breitling’s availability working?
JEFF HESS: I am not seeing it that way. A lot of the most popular SKUs have waiting lists now. I have watches that have been bought and paid for, but we are still waiting for them. Thank goodness, Breitling has been ahead of the curve and has been able to supply watches on time, but there are many SKUs that we cannot get right now.
WATCHPRO: Two possibly related stories out of Breitling in the past couple of years have been about appealing to a younger audience than some of the more traditional Swiss watchmakers, and also presenting the brand as a sustainable choice with initiatives like recycled packaging, watch straps made from ocean plastics and using lab-grown diamonds. Are those messages cutting through?
JEFF HESS: There was some early push back with the packaging offer, but we hear barely a whimper any more about that, and it makes a lot of sense, not only for younger customers but for everybody.
A lot of companies used to go overboard with these eight or ten pound lavish watch boxes that were hugely wasteful and often got lost while the star of the show was the watch.
The new sustainable boxes are less expensive and better for the planet, so I think Mr Kern was right on target. We now find people applaud the decision.
WATCHPRO: We all remember the implosion of Baselworld and then the delayed transition from SIHH to Watches and Wonders due to covid. Many brands, including Breitling, said that global mega trade fairs were a thing of the past. Mr Kern launched Breitling Summits instead, which pop up around the world for more select presentations to press and partners. I personally think Breitling should be part of Watches and Wonders because I think the global show makes a powerful statement about Swiss watchmaking and is a convenient way to see many brands in a short period of time. What is your view?
JEFF HESS: I cannot speak for Breitling, but there is a part of me that misses Baselworld and Watches and Wonders.
I have been going to them for 25 years. But, at the end of the day, a lot of Americans stopped going and it had become a big time and money waster. I think Breitling made the right decision at the time and I really do not know if they will ever return to the big shows.
WATCHPRO: Having had so much success with your first Breitling boutique, do you have any plans to open more?
JEFF HESS: I would love to have another Breitling boutique, but the cities around us in Florida already have them.
We were approached a few years ago to open the first Grand Seiko boutique in America. We didn’t do it for myriad reasons, mainly that the malls pushed back on this, not understanding the difference between Grand Seiko and Seiko, but we have been talking to a number of other well-known brands about opening in the Tampa Bay area.
For now, however, we just want to focus on this Breitling boutique and our two retail stores and ensure they remain successful.
WATCHPRO: Broadening the conversation from Breitling to your other businesses in new, pre-owned and vintage watches, what has your experience been since we last spoke a couple of years ago? Has the market been as strong for you as it has for businesses with the blockbuster brands?
JEFF HESS: The market has changed dramatically for the better. There has been some consolidation going on. I see a lot of the big brands are circling the wagons and moving away from independent retailers a bit.
That does not always please us, but we understand it.
Overall, the brands are making better watches. Demand is up, discounting has gone, which used to be a big problem.
WATCHPRO: It seems that the US economy is doing better than Europe or Asia, and you see that in the strength of the dollar, but at the same time inflation is very high, interest rates are up sharply and that is leading to a squeeze on businesses and households. Do you think that is going to cool demand in this holiday season and into next year?
JEFF HESS: We have seen hardly any drop off of demand for brand-new watches, with the possible exception of Rolex, which was an unusual situation over the past two years.
I say that, even though I am not an authorized dealer for Rolex, but we do a lot of vintage.
As far as the brands are concerned, we have not seen any lessening of demand. If anything, it has increased. That may be specific to the Florida market, but it is certainly what we are seeing here.
Carl F. Bucherer is on fire, as is Bell & Ross
WATCHPRO: Speaking of pre-owned and vintage. We have had a rollercoaster year or two with prices surging to a peak around the end of March for the most desirable watches, and falling sharply since. How would you describe that period and what is going on?
JEFF HESS: I am unique in many ways. Both of our retail stores have very strong vintage and pre-owned Rolex and Patek Philippe businesses. They both do very well.
Additionally, we are one of the top sellers online in the nation on a couple of the biggest platforms with vintage Patek Philippe and Rolex. I say that just to explain that we really have our finger on the pulse and I can tell you that we all knew things were out of control back in 2020-21.
Rolex was not shipping because of factory shutdowns caused by covid. Demand was incredible because of the free money being printed, pent-up demand and lack of alternative ways to spend money on holidays and nights out.
That was unsustainable, and we all knew that, so everybody was cautious about watches that were selling for over retail.
Those watches certainly did plummet quickly. But the good news for now is that all of the entry level pre-owned Rolexes have bottomed out and started to go up again.
That is across the board with almost every steel and two-tone model. I am also seeing some firming up with gold watches for men, but women’s watches are still a little tepid.
I still have people coming into my stores everyday with Rolexes they expect to flip for over retail and we have to break the news to them that they are not selling for those prices anymore.
WATCHPRO: If things have firmed up, it is for most Rolex models at, or around, the retail price level, not the three-, four- or five-times over retail prices we once saw. Do you think we will see those sort of crazy prices again or has sanity returned?
JEFF HESS: All I can talk about is Florida and our online sales. I still have people coming into my stores everyday with Rolexes they expect to flip for over retail and we have to break the news to them that they are not selling for those prices anymore.
It is more sane now. But, as far as brand new Rolexes go, the resale value is still strong. When I spoke about bottoming-out, I was talking about pre-owned from 1995 to 2018 manufacture. Brand new prices have firmed up a little bit.
WATCHPRO: I am sure everybody will agree that the likes of Patek Philippe, Rolex and AP are going to be fine, even if we hit a hard recession, but what about group brands like IWC, Panerai, TAG Heuer, Cartier and Omega — brands where demand is not running ahead of supply — how do you see them faring over the coming year? If demand cools and they keep pumping out watches, we could be back into the cycle of oversupply being dumped on the gray market and undermining prices across the board.
JEFF HESS: We have seen this happen about every five years, and we end up with oversupply that leaks onto the secondary market, but I really don’t see it happening this time because covid clipped everybody’s wings a little bit.
I believe watch businesses are cognizant that there is going to be a bit of a downturn, but my opinion is that we are going to achieve the soft landing that everybody is hoping for in the US and I do not think we will see the sort of over-production we have seen in previous downturns.
Finding and retaining really good watchmakers is next to impossible, particularly as the big brands poach them from me as quickly as I train them.
WATCHPRO: Another phenomenon it feels to me we are living through is that the pandemic accelerated a trend towards more people taking an interest in a greater number of watch brands. We see this most obviously in the demand for low volume artisan independents who have orders stacked up for years ahead. I wonder whether that phenomenon has also impacted the types of German brands you distribute such as Mühle Glashütte and Meistersinger?
JEFF HESS: One hundred and ten percent.
My mantra with the brands I distribute has been the same for some time. Mühle is one of the best-kept secrets in the watch industry and people are finally catching onto that fact. It is a sixth-generation manufacturer, making watches as fast as they can but we have waiting lists on a number of them.
Same with Meistersinger, which is a very luxurious watchmaker that appeals to a younger demographic. More and more young guys now have collections of 15 to 20 watches and are discovering brands like Meistersinger.
WATCHPRO: I don’t think I have ever heard you being so optimistic across everything you do.
JEFF HESS: Perhaps that is why I think we are going to have a soft landing. My whole life and business is devoted to horology and we operate across many sectors and provide multiple services. Typically there are at least a couple of things we do that are more of a battle, but everything is firing now, which is keeping me optimistic.
WATCHPRO: How many people do you employ across all of your businesses right now?
JEFF HESS: We have around 42 employees, and every single one of them is involved in the horology business in one way or another.
WATCHPRO: Do you struggle to recruit right now in such a tight labor market?
JEFF HESS: Absolutely. The job market is red hot. Unemployment is down to 3.7%, and finding great salespeople that know about watches is difficult.
Finding and retaining really good watchmakers is next to impossible, particularly as the big brands poach them from me as quickly as I train them.
