Edinburgh’s Hamilton & Inches was visited by The Queen in 2016 as it celebrated its 150th anniversary. But the jeweller is far from stuck in the past and, under the leadership of its new chief executive Victoria Houghton and chairman Peter Lederer, has a plan to more than double turnover to £20 million from sales of fine watches and jewellery, crystal and silverware. How is the venerable institution preparing itself for the future? WatchPro’s Rob Corder travelled to Scotland to find out.
WatchPro: Set the scene for us a little with a run through the history of Hamilton & Inches and how it has led up to what we see today.
Peter Lederer: You will know that we celebrated our 150th anniversary in 2016 and we were honoured to welcome Her Majesty The Queen and Prince Philip here to mark the occasion. Hamilton & Inches was first granted a Royal Warrant more than 120 years ago, appointed “His Majesty’s Clockmaker and Keeper and Dresser of His Majesty’s Clocks, Watches and Pendulums in Palaces and Houses in his Ancient Kingdom of Scotland.” Although the original title no longer remains, in 2010 Hamilton & Inches was appointed “Silversmiths and Clock Specialists to her Majesty The Queen.”
But the key today is how we balance 150 years of tradition and heritage with the need to be current for today’s market. Getting ahead of that, we need to be clear about future trends and where we see Hamilton & Inches developing as a business. Even a year feels like a long time at the moment, but it is our job to look into the future and make plans.
There is a group of people that have been here for over 30 years looking after watches and creating beautiful pieces of silver. We need to protect that reputation and build on it. In today’s market, things are moving very quickly. If we look at watches, for example, customers know so much more before they come into the store than they did a few years ago. They probably know as much about the ranges as the teams here.
Where we see the market moving, and what we need to do when it comes to prestige watches from the likes of Patek Philippe or Rolex, is to find a way to surprise and delight the customer when they come in. I have spent my career in hospitality thinking about how we surprise a customer. In my old business, if every customer left a hotel having spent more than they thought they were going to spend, but feeling it was worth every penny, they would do it again soon. Then we would have cracked it.
Our genuine aim is to make sure that customers love every minute of the experience, the relationship and the ongoing relationship. Of course people are spending more and more online, but at the luxury end of the market we need to make the experience so special that people are happy to come into store again and again.
You might buy a Ford Fiesta online, but I do not think you are going to buy a Porsche or Ferrari online. You are going to want that relationship and the whole experience. We need to make long term relationships important so that when a special edition rare Patek Philippe comes in, the customer has a relationship so they get a call to take a look.
WatchPro: How has your experience in the luxury hotel business informed how you approach the chairmanship of Hamilton & Inches?
Peter Lederer: I ran Gleneagles for 25 years and chairman for another six years, so 31 years altogether. I moved it from being a seven month per year seasonal golf hotel when I joined to the global brand it is today. The new owners who came in after I left have taken it to another level. That is what good owners do, and it is the same job we have to do here. We have great owners with a real passion and love for the business. But the word business is important; we have to be successful, we have to grow and make a return for our shareholders.
Victoria Houghton: People come to us because we have very experienced staff. As Peter said, many of our customers start their journey online and come in knowing a lot about what they want to buy. They choose to come here because there is a very strong sense of trust with our team. We want to build on that trust and preserve the amazing heritage we have, but also become more current and appeal to a wider demographic.
Peter Lederer: One of the beauties of this business is that we have appeal to people throughout their lives. Somebody might first come in with their father after graduation and buy their first Rolex. Those people will hopefully become customers for life. The next time we see them might be when a daughter is coming in for an engagement ring or wedding band. A 25th wedding anniversary in the family might mean a Patek Philippe watch being bought for a wonderful wife. We are here for a lifetime of celebrations.
WatchPro: That style of selling is so crucial when you are talking about rare and difficult items to get hold of like the most popular Rolex and Patek Philippe models. Customers also need to know these days that they need to build a great relationship with their trusted jeweller or they will never get the call when these watches come in.
Victoria Houghton: It sets you apart from the competition when you are able to offer customers something unique that they cannot get anywhere else. With our workshops upstairs, that is a unique experience where people can come in and have something bespoke made in-house with our craftspeople. We are so used to things being factory-made that coming here to see how things are made is really special.
Peter Lederer: We also give people the chance to commission pieces like a candelabra that nobody else in the world has. Whatever they dream of, we can make it.
Victoria Houghton: That type of bespoke service is growing in the luxury market.
WatchPro: There have been some significant changes to the management of Hamilton & Inches in the past few years, and is that also true of the ownership? How are things structured?
Peter Lederer: A few shareholders have come and gone, but basically the ownership has been the same for the past 20 years. The main shareholder is very passionate about Edinburgh and this business. That gives us stability but we are also very ambitious to move forward.
All businesses have to find ways to move up a curve, and also need to be on the lookout for the next upward curve to keep growing. If you don’t find the next curve, you can easily find yourself going down the other side. The lifespan of those curves has got shorter and shorter in today’s world. You can feel like you are going up quickly but very quickly find yourself on a plateau and then decline if you are not constantly developing and innovating.
If I go back to when I started business with Gleneagles in the 1980s, you had a 10 year run at a growth curve before you needed to do anything. Now it is just two to three years before you have to come up with something new.
WatchPro: Readers will be interested to know about that ownership because they probably assume that a venerable jeweller like Hamilton & Inches has been in the same family for generations.
Victoria Houghton: Going back over 150 years it was Robert Kirk Inches and his uncle James Hamilton in 1866 who established the business and it remained in the Hamilton and Inches families for a very long time. It is still privately-owned and there has only been one brief period when it was owned by Asprey. There were members of the Inches family involved right up until the 1990s. Deidre Inches worked with Stephen Paterson who became managing director in 2010 and chief executive in 2016 but spent 40 years in the business in total, starting as a trainee at the age of 17. He was originally hired by Ian Inches, Deirdre’s father.
WatchPro: So now there is a fresh, young, vibrant new management team at the helm.
Peter Lederer: I have been chairman since 2011 and on the board since 2009.
Victoria Houghton: I was approached to join the board as a non-executive director last year and joined in June.
WatchPro: What is your background, Victoria?
Victoria Houghton: I have been in 20 years in buying and retail, starting in the Marks & Spencer’s graduate buying scheme, which is a fantastic foundation in buying and merchandising. I had a stint overseas in Thailand working in product design, mainly in silver jewellery, and that was where my love of gemology started and I came back to the UK as a buyer for accessories and jewellery.
My next venture was instigating a franchise to take Next overseas to Romania. I have four profitable stores over there. I have been in buying, merchandising, sourcing, designing and running my own retail business — the whole 360 degrees — and that is why I was asked to join the board here to drive Hamilton & Inches forward.
We have this amazing foundation as a company. We have to preserve that heritage but become more current for today’s market.
WatchPro: What is the plan from both an immediate point of view and over the longer term?
Victoria Houghton: Immediately, we are looking at investing in the store team’s skillset. To provide the luxury experience we need to have the right staff and properly trained staff because if customers have that positive experience, they will stay with us and word of mouth will spread to family and friends.
We are also investing in our craftsmen. We had a new jeweller start on Monday. We are also working with a new PR and marketing agency. Everything is about growing on top of our existing success, so we are growing with Patek Philippe and growing with Rolex.
We have just submitted a planning application to change the front of the building with a new façade. This is a beautiful Grade I listed building, which we must preserve and keep as part of the customer experience when they come into the store, but we want to also introduce a more current, contemporary feel.
WatchPro: How will that look to customers coming to the store in the future?
Victoria Houghton: Right now you cannot see out of the store from within, which means people cannot see into the store from outside. We are aware that makes us a little bit intimidating and unapproachable, and we recognise that in today’s luxury world, we need to be accessible.
The way we are addressing that is by going to a curved glass frontage that will allow everybody to see into this beautiful store space. We are also looking at repositioning the brand and our typography that takes us back to an earlier design from the 1980s. Everything about the changes is designed to make us more accessible to a wider demographic.
In terms of the way we lay out the store, the front will be much more of a jewellery space, which will include a big launch later this year for Scottish gold jewellery — jewellery made from gold mined in Scotland. That jewellery area will lead into our crystal and silver, and then from there into the watch area where we have Patek Philippe and Rolex areas and we will also present our own Hamilton & Inches watch brand that we launched last year. We are doubling the space we devote to Patek Philippe.
Patek Philippe and Rolex will be largest in terms of space, but we are excited about the development of our own Hamilton & Inches watches, and we also offer Bremont, Tudor and Urban Jurgensen here.
Along with the refurbishment, we also have plans to hold more events here for watch enthusiasts and collectors. For example, Urban Jurgensen’s CEO Soren Petersen is coming over in May for an intimate dinner with our customers.
We want to make Hamilton & Inches more of a hub for watch lovers. We want them coming in at weekends just to chat about watches with our own experts and visiting leaders from the industry. We will give it a real lifestyle feel. Come in, use our wi-fi, have a coffee, chat about watches.
WatchPro: It sounds like you are addressing an issue with an ageing customer base. Is that fair?
Victoria Houghton: We do not want to alienate any of our current customers, they are very important to us. But we do want to appeal to a wider demographic. Peter’s experience teaches us that luxury is nothing to do with age.
Peter Lederer: Luxury to the millennial generation is different to their parents or grandparents. It can mean finding peace, quiet and space to shop on a phone.
Victoria Houghton: Mobile phones are incredibly important now, so we are investing in our website to make it efficient and slick on mobiles. Rolex and Patek are very strong on this now. Although their watches cannot be bought online, they recognise that mobiles are a window onto the world. If a mobile site does not impress straightaway, you lose people immediately so making it a slick experience is crucial to appeal to the wider clientele we keep talking about.
WatchPro: The world changes at an ever-faster pace, and Edinburgh is a prime example. The city is improving in terms of infrastructure and travel options. It is aiming to increase tourism with extra flights from places like China. It is also getting more competitive for jewellery and watch stores with Chisholm Hunter, Laings and Rox all opening major destination stores.
Peter Lederer: I chaired the Scottish Tourism Board for nine years and I always think that any boost you get when there is a surge in visitors from certain countries should be treated as a bonus, not the basis for a business model. It is really the cream, but the cake has to be very good. If the cream comes in, great, but do not rely on it. The opportunity for Hamilton & Inches is not just Edinburgh, it is the whole of Scotland. When we are talking about world-leading brands like Patek Philippe and Rolex, we can target people all over the country. We need to communicate with them in the way they want, and to make them an offer that appeals to them. Some will want to come to events, others are very private and only want one-on-one meetings in a private room.
Victoria Houghton: That privacy can be important to some customers, which is why we are also putting in two private viewing rooms at the back of the store beyond the Rolex room as part of the refurbishment. That space could be used for a conversation about bridal jewellery or a new watch.
WatchPro: I agree that the number of visitors from certain countries can rise and fall, but there are certain trends that are only going in one direction like the expansion of the middle and upper classes in places like China or India.
Peter Lederer: You are right, and that growth is phenomenal. My old business was owned by [drinks giant] Diageo, which is one of the global experts on how to tap into a growing middle class across the world. They know that the growth is not just China, it is a phenomenon in many parts of the world. What is important for cities like Edinburgh is that they have a long term view and do not overcook things in a rush to appeal to a certain group. If the quality is not right, they will come once and never again. If we get it right, they will come back again and again and recommend Edinburgh to everybody back home. That is what we want.
Transport has to be great in the city, we look forward to construction at the airport completing, we need the streets to be clean, tidy and safe. Service has to be top notch. One bad experience can end up being the story of a whole trip to visit Edinburgh, so we all have a role to play to keep quality going up.
Hamilton & Inches is part of the story. The more people travel, the more their expectations are raised because they have experiences all over the world that are better than they have at home.
WatchPro: One of the challenges with such a global audience and the way global businesses like watch companies operate is that they can make shops look the same the world over. A Rolex shop in shop is designed to be consistent whether it is in Leeds or Los Angeles. How does Hamilton & Inches keep its authenticity so that people know they are coming here and getting an experience they will not get anywhere else?
Peter Lederer: That is one of the reasons that the silver items we make in our own workshops are so important, and one of the reasons we encourage customers to come here and visit the workshops to see where things are made. The development of jewellery using Scottish gold is another example. For people to have something bespoke made in Scottish gold is an amazing experience.
Victoria Houghton: I would agree with the point of your question, which is that there is nothing worse than going to a high street that only has chains so you could be in Leeds, Edinburgh or London and the shops are the same. People are getting tired of that, which is why what we have here is so special.
WatchPro: We know there are rules and guidelines for anybody working with Rolex or Patek Philippe, which is why I am encouraged to see that they won’t be dominating the whole experience here.
Victoria Houghton: Those brands are fully aware that what we have here is very special, and they do not want to take it over and undermine its uniqueness.
WatchPro: Many authorised dealers for Rolex build their entire businesses around the brand because it defines the level of luxury for a store and is magnetic for footfall. Here at Hamilton & Inches it feels like a more balanced approach where other watch brands, the jewellery, crystal and silver are all important parts of the story.
Peter Lederer: Balance is really important. Rolex and Patek Philippe are very important brands for us, and we have great relationships with them. New relationships, like we are building with Urban Jurgensen, are also very important because they are different. We can learn from them and they can learn from us.
WatchPro: Urban Jurgensen is an interesting story because I know these independents that make just a few hundred watches per year find it incredibly difficult to get listed with great retailers like H&I. What was your thinking for working with Urban Jurgensen, and do you expect to work with other similar-sized independents?
Victoria Houghton: We don’t intend to bring in lots of different brands. Our anchor brands continue to be Rolex and Patek Philippe. Urban Jurgensen was brought on six months ago because we wanted to represent more of a niche brand to complement our other offerings.
Peter Lederer: I am a big believer that the luxury end of the industry needs to work together for a common purpose. We want to take a brand like Urban Jurgensen and see how working together with Hamilton & Inches we can make two plus two equal five or seven. Together, we can achieve much more than either brand working on its own. It is the same with Rolex. We do a lot for Rolex and Rolex does a lot for us.
WatchPro: Was the desire to stock a brand like Urban Jurgensen driven at all by customers who might already have Rolexes and Pateks in their collections and are looking for something new and exclusive? And does the fact that there is so much more opportunity for independent brands to be noticed online and in the world of social media make them less of a risk?
Peter Lederer: In my old world of hospitality, there is some push-back. People are tired of always seeing the same old brands on the high street. All too often people wake up in uniform hotels rooms and do not know where they are, which brand it is. They all look the same. Hotels that have come up with something different have been very successful.
WatchPro: Have you ever considered opening retail space for Hamilton & Inches in any of the luxury hotels in Scotland?
Victoria Houghton: We have a partnership with the Balmoral Hotel. We have three cabinets of our jewellery and we have made a special charm that is unique to them. We also plan to offer our own H&I watches there too. But we not plan to have a retail unit there. The priority is to get this store spot on, and then see what other opportunities come from that.
WatchPro: Looking at the wider watch world. How do you feel about brands — Patek Philippe and Rolex not withstanding — looking at selling direct to consumers online?
Peter Lederer: There are some things in life that should always be special. I would not want to buy a Porsche online, I want the whole experience. I might want to customise a car and research it online, but then I would want to go to a dealer and have a relationship with them.
I was a long term customer of a certain carmaker, but I fell out with them because a special edition came out and they never picked up the phone to tell me, even though they knew I was looking for special editions because they hold their value. That was poor relationship management. I was looking to buy something special but they did not keep in touch.
WatchPro: That is a huge issue for the watch industry right now. There are more customers chasing certain models and special editions than there are watches and that is leading to tensions.
Victoria Houghton: The relationships between us as retailers and our customers is key to that and our staff are great at building those relationships. On the ecommerce side, we feel we need to provide as much information as possible but encourage people to come into our store to complete the transaction or, even, put their name on a waiting list. If they have to wait 12 months, we will look to see what else they might like to buy.
WatchPro: How do you deal with the challenge of people walking into stores and asking for a new Pepsi or Daytona that have such long waiting lists?
Victoria Houghton: We try to interest them in other models. That is the best way to deal with it. Most people are aware that certain models are very scarce, but there are some who are surprised if it is their first foray into buying a luxury watch.
There is also the pre-owned market, and that is a good way to get into the watch collecting world for a certain demographic.
WatchPro: Do you have a pre-owned watch business?
Victoria Houghton: Yes, we launched it last year and it has been successful. We think there is an opportunity to grow in that area. It came around from trade-ins and we are seeing how it goes. It is a good way to welcome a new watch enthusiast to Hamilton & Inches.
Peter Lederer: If I was going to buy a used watch, I would need it to come from somebody I trust, and that is where we come in. I would have no problem buying a watch knowing that Hamilton & Inches had serviced, cleaned and authenticated it.
Victoria Houghton: Another investment for the business is that we are putting in a Rolex accredited watch workshop downstairs. That will add to the kudos of buying here because customers will know they can have it serviced at the place they bought it.
WatchPro: You have a stated aim of doubling the company’s turnover from around £10 million to £20 million. You say there are no immediate plans to open new shops, so that means making more money per square foot in this shop, and you can only do that by selling more items or items at higher average prices. Which will it be?
Victoria Houghton: Both. There are definitely opportunities for both. We know we can sell more watches and we know we can increase average selling prices.
Peter Lederer: The same is true for silverware, jewellery, Scottish gold jewellery. Over the next 3-5 years, if we managed to tick-off all the opportunities, we would be very happy. Once we have done that, then we might look at places like Glasgow or London. Or the market will have moved on and other ideas will emerge. I am a great believer that we must build on a very solid foundation.
WatchPro: Tell me a little more about the jewellery business. Is it mainly bridal?
Victoria Houghton: No, we have a real mix. There is an opportunity to grow the bridal market, it is an area with huge potential. We are very conscious that if customers come to us for an engagement ring, they are also likely to stick with us for wedding bands, cufflinks and maybe watches.
Scottish gold jewellery is new for us. We are launching it as a bespoke, limited collection that will become heirlooms of the future. People see the value of this jewellery as an investment that can be passed down through the generations.
We have a strong following for Fope and Georg Jensen jewellery and we have our own silver jewellery that we design in-house and we are always refreshing those collections. Another step is to move into more fine jewellery in the future. We have four jewellery designers here for bespoke designs and from next year when we have more Scottish-mined gold, we will do more of that.
WatchPro: Where is that Scottish gold coming from? Is it being commercially mined?
Victoria Houghton: It is the first commercially mined gold in Scotland. It comes from from the Cononish Gold Mine located in Tyndrum, Rannoch Moor. At the moment they have only done test drills, which have yielded small quantities. From next year they move to proper mining, and that is when we expect larger quantities. We are one of just two retailers to be working with the first commercially mined gold from Scotland, with a dedicated Scottish Gold collection launching later in the year.
WatchPro: How does your turnover break down between watches, jewellery and gifts?
Victoria Houghton: Watches account for around half our turnover. Jewellery is about one third, and we think there is massive potential for growth.
WatchPro: Has the increased competition from Laings relocating to its huge store almost opposite you and Chisholm Hunter opening a vast shop just around the corner from here on Prince’s Street made a considerable difference?
Peter Lederer: We have not seen an effect on sales, but it has affected our mindset. It is always good to look at competition and work out how we stay ahead. But we are very different and we do not see ourselves in direct competition.
WatchPro: I wondered whether it might have had a positive effect. Glasgow was always seen as more of a destination city for luxury watches, but now Edinburgh has all the major brands represented by Laings, Chisholm Hunter, Rox and Hamilton & Inches.
Peter Lederer: I think it has made a difference. It raises people’s expectations and confidence they will find what they are looking to buy.