Everybody knows that the market for fashion and lifestyle watches priced at under £500 has been shrinking every year since the Michael Kors phenomenon in 2014. But Movado Group UK has been bucking the trend of sliding sales through a focus on bestsellers from Hugo Boss and Tommy Hilfiger, and continuous investment in fresh brands like MVMT and Lacoste. Securing prime locations at major jeweller multiples and department stores has been crucial to an unbroken run of 26 quarters of growth as Rob Corder discovered when he met the company’s UK general manager Steve Brydon.
WatchPro: The sub-£500 price point been getting tougher and tougher since 2014. How are Movado’s brands doing?
Steve Brydon: It could be argued that sales at the Kors level [in 2014] was unsustainable. We carried on doing our own thing in the background and have notched up 26 consecutive quarters of growth. We have Boss, which is the number one fashion brand now. We have Tommy Hilfiger coming up on the rails as the fastest growing brand under £500 and the second fastest growing brand in the entire UK watch industry. Lacoste is good for us too.
We did not go as heavily as other brands into the connected watch space. We put our toe in the water and were able to offer it, but we did not transfer massive marketing bucks to it and it looks now as if Apple has won that battle.
We have concentrated on the core values of our brands — the design of the watches and on executing as well as we possibly can. We are good at marketing our brands and invest heavily in it, whether that be shop-in-shops, which we are spending more and more on, or coop campaigns with our main retailers. Gone are the days when you could just sell watches to retailers that that was that. You have to be working in partnership, promoting those watches to customers, and we have to be sophisticated enough so that we can come up with different approaches for different brands and different customers.
WatchPro: The focus is very much on sell-through rather than sell-in.
Steve Brydon: It has to be. We have to make sure each collection is clean, that each retailer has the right products in stock. If [American actress] Zendaya is your Tommy Hilfiger ambassador, then we need to make sure that Zendaya watches are front and centre of a store’s image because she is part of a high profile global campaign across all Tommy’s product categories. We have to make sure our watches are part of that global story, and it works very well with us.
We have to watch for changes in the market because how we advertise to customers for a brand like Tommy has been transformed. Print has largely gone. That does not mean that the great print titles are irrelevant. WatchPro is a great example of a magazine title that everybody reads online. Coming into London on a train today, there was barely a person on my carriage that was not staring at a mobile phone or tablet screen.
WatchPro: How do you use global and local social media, celebrities and influencers?
Steve Brydon: Our marketing falls into two main categories. There is stuff we do to make sure we are telling stories within stores. For us, while the web is important and is around 30% of all sales now, we must not forget that 70% of sales are still made in stores. We have to protect and nurture that business because it also gives us great visibility on the high street and shopping centres.
WatchPro: Do you have any stats on how effective those in-store promotion can be?
Steve Brydon: We are in the process of rolling out Hugo Lacoste and Tommy shop-in-shops in H. Samuel. East London shopping Centre Westfield Stratford is up and running and doing really well, as is Arndale in Manchester. We opened one in Milton Keynes two weeks ago and there was a huge increase in sales for Tommy in the first week.
It undoubtedly works, and H. Samuel likes how the activity attracts younger customers, millennial customers. The right shop-in-shop can contribute to keeping stores open, which in the current market conditions is a big deal. They are great for us because we can tell the brand story in a much grander way. We can run movies, etc. through those installations.
We are in a fortunate place because, as a global business, we have the cash flow to invest. There is no denying the market is difficult at the moment, but we are seeing growth for a lot of our brands and we see the current climate as an opportunity to grow market share.
WatchPro: If you have been growing for 26 consecutive quarters, you must have been winning considerable percentages of market share from your competitors.
Steve Brydon: We are. We study GfK a lot and find it very valuable because we have to understand the impact of what we are doing and our competitors are doing. We need to always react to that. The market as a whole under £500 is roughly 12% down year-on-year at the moment. That would be a much sharper decline if it were not for some of our most successful brands. Our hottest brands are not just growing, they are growing at 40, 50, 60%.
In addition, we have jewellery from many of our brands, which is an opportunity to grow them even more. We try to portray a lifestyle image, rather than a fashion brand image. Once we add jewellery, that will push us further forward. Tommy jewellery is being added at the moment, which is very successful. It is a great incremental, add-on-sale; and a relatively easy add-on from what our retailers report.
We help retailers with this. So, when you see Tommy photography, it will always include a watch and bracelet or some other jewellery. The new Boss jewellery collection is being finalised right now. We expect to launch it in spring next year. That is really exciting because it is such a big brand. If we see the same level of turnover as we do with Tommy jewellery, compared to the brand’s watches, Boss jewellery will be very successful.
WatchPro: Are you doing men’s and women’s jewellery for Boss?
Steve Brydon: It is both. We need to make sure that women’s jewellery is designed by women, for women. It needs to be feminine. The men’s jewellery will be designed specifically for men. It is relatively easy for us to get this moving because of being part of the global Movado Group organisation. They have done much of the leg work on other brands and we can tailor that for our market.
We trialed jewellery a little over the past two years with gift sets containing a watch and a bracelet, for example. We have sold over 15,000 units of those sets, so we know the demand is there. Adding jewellery also gives us more to promote and sell through the shop-in-shops we are rolling out.
WatchPro: Are you seeing a trend for gender neutral watches and jewellery?
Steve Brydon: We are seeing a little of that, but in general we still sell smaller watches to ladies and men tend to want something more technical. The market for men’s dress watches is weaker, but where we offer something in the sport-lux area such as chronographs and GMTs, we are seeing strength not only from our brands, but also from our competitors.
WatchPro: One of the hottest watch trends this decade has been Scandi-style minimalism. How is that trend performing now?
Steve Brydon: I do not see the overall value of sales for that type of watch going down, but we are seeing shifts in market share between brands. Historically there were two or three brands in that area, now there are quite a few more chasing the same customers. We have two ourselves with Hugo Boss and Mvmt. [Editor’s note: Olivia Burton, which Movado Group acquired in 2017, is run independently from the other Movado Group UK brands.]
Movado bought Mvmt last year and we are just now launching it into the UK. It went live in John Lewis, Ernest Jones and H. Samuel in June, and we are very confident with the brand. We know it is already a $70 million plus brand worldwide, but it is entirely online because that is how it was built by its founders in Los Angeles.
The job we have to do is convert Mvmt into a retail brand because its customers have not just stopped going to shopping centres. We need to get our execution right. The product is great, the story is great, the imagery is really strong.
WatchPro: Mvmt is one of those brands born and bred online and on social media.
Steve Brydon: Yes. You see the difference when you go to their headquarters. Most UK operations are strongly sales-led and the majority of staff are in sales, visual merchandising and customer service. At Mvmt, the vast majority of its people are experts in marketing. In the short time Movado has owned Mvmt, we have learned a lot from them. They have made us realise that the collateral we need for our brands online and on social media needs to be better. They do it superbly.
We have already added two people to our marketing team since Movado bought Mvmt in order to make sure that we capitalise on the expertise they bring to us. Some of the stuff we are doing with our PR agency is now around improving our storytelling online and on social media, rather than focusing on getting coverage in traditional media.
WatchPro: It is an interesting story that you are taking one of the myriad brands that have grown up selling direct via ecommerce and social media, and turning it into a wholesale brand for the UK. How are your retail partners reacting?
Steve Brydon: Something like 75% of the entire turnover of the UK watch industry is in the hands of 10 brands. 90% of turnover is from 20 brands. The opportunity for up-and-coming brands has been shrinking for five years and will continue to shrink. That does not mean there are not retailers out there looking for something new, but it is very easy stick with the old stalwarts because they are known quantities.
Many of the most successful retailers have grown on the back of new brands, whether that was Daniel Wellington in its day or Olivia Burton more recently. Some retailers invested early and strongly and have done very well as a result. Our role in the UK with Mvmt is to make sure that we position it correctly, we do not try to go too fast, even if we could. We do not want to over-distribute it because we want sustainable and profitable growth for ourselves and our partners.
WatchPro: Does Movado Group UK sell direct to consumer at all?
Steve Brydon: We do, yes. It tends to be more of a storytelling exercise for us and is a tiny percentage of our business. Any brands that do not have their own web presence comes across as odd to customers. Invariably, our retailers tell us, almost every sale they make is to a customer that has already done their research online. If somebody is coming online to research, it is our job to make sure we are telling the right story and telling it well.
WatchPro: Why is it such a small percentage of your sales? I would have thought you have the power to make sure that if somebody was Googling for a Tommy watch in the UK, they find your Tommy site before they find the ecommerce site of one of your retailers.
Steve Brydon: Our long term objective is directed by the knowledge that we need healthy retailers. They support us and we will support them. If your brand is not visible in the key accounts, it is very difficult to break into the market. Could I recoup and keep all of the coop funding we give to retailers and spend it promoting our own ecommerce efforts? Theoretically, I could, but it would be suicide to do that and I would not want to.
I might make a slightly higher margin selling a watch myself than I would if a retailer sold it, but the most important thing is the longevity of our brands and that requires visibility. We are one of the last companies to still have a major visual merchandising team of 11 people. Every one of our partners’ stores is visited at least every six weeks. Our biggest stores are visited every two weeks to make sure that the execution is as good as we can make it. That is a massive investment from our side.
WatchPro: The UK retail landscape is changing. Department stores are closing, Signet store sales are down. Signet and Goldsmiths are closing stores. How do you maintain growth when your retail partners are changing so much?
Steve Brydon: The retail landscape, with rents and business rates, is very tough at the moment, and it is not going away. From a department store point of view, the past two years has been as much in flux as I have ever seen it across all of them: John Lewis, Debenhams, House of Fraser, there have been dramatic changes. But the ones that have stayed open have become stronger. The big one was House of Fraser, which has watch concessions run by Fossil Group. We were one of the few suppliers that had managed to be present at those concessions and it does hurt when you lose those points of sale. My view is that by the end of this year, the remaining House of Fraser stores that have watch concessions will come back stronger again.
WatchPro: Footfall is down whether you are talking about high streets, shopping centres of out of town retail parks.
Steve Brydon: Yes, but in almost every case where you see brick and mortar store sales declining, you will see the same stores’ ecommerce sales increasing. The turnover with any particular retailer will not necessarily have gone down, it will just have moved. We need to make sure that our marketing reflects that change. If customers want to shop online because they do not want to go into town, we need to make sure that when they go onto the ecommerce sites of our retail partners, the execution of our storytelling and brand presentation is excellent. This is already working for us. 30% of the value of our sales is online right now.
WatchPro: Strategic choices must have been made some time ago so that it does not matter whether the percentage of online sales for your partners increases from 30% to 50%, you just need to maintain or grow your share whether it is online or offline.
Steve Brydon: I would be surprised if ecommerce sales increased to 50% any time soon.
WatchPro: GfK data suggests online sales have been flat or down for almost two years. What once looked like the saviour for retailers is stalling.
Steve Brydon: Yes, but GfK does not report directly owned ecommerce or brick and mortar store sales. For example, it would not include sales from Omega.com or Omega’s own stores. Nor does it have sales data from the Michael Kors and Hugo Boss boutiques and websites. That is a considerable part of the market so I do take the news that ecommerce sales are flat with a pinch of salt. Having said that, there is definitely a change. Five years ago for us, ecommerce sales amounted to 5%, today it is 30%. That tells its own story. From our point of view, we are not going to fight that, but we will make sure that whether customers go to a store or a website, our product looks amazing. Generally, the retailers understand that and are happy for us to provide images, stories and data. If anything, we want to do that better and we have put the people in place to improve that.
WatchPro: How are the independent jewellers doing?
Steve Brydon: From what we see, the majority of independents have moved upmarket and are working with the big brands with their accompanying big demands. These brands are demanding shop-in-shops, etc, or they will pull out. That is working its way through.
We have some stunning independents in this country. I travel a lot and the standard of these independents rivals anywhere in the world.
The mid- to lower-end independents are having a tough time. They are up against some very big, well run groups.
There is a window of opportunity while department stores sort themselves out — and they will — for independents to battle back. But if they cannot get any of the 10 or 20 brands that account for 75% and 90% of the market, they need to come up with something different. That might be jewellery and watches.
For us, independents represent a relatively small part of our business because there are fewer of them that are successful.
WatchPro: Are the small independents moving out of watches altogether?
Steve Brydon: We tend not to have so much distribution there anyway because there are quite strict criteria with our brands in terms of the types of stores are allowed to open and what adjacencies. The ones that do it well are still successful, but undoubtedly those that do not move with the times are falling away.
WatchPro: How do you feel about the shrinking size and influence of Baselworld?
Steve Brydon: We were one of the first to make the move away from Baselworld [last exhibiting in 2017]. We have 11 brands as a group and having that many stands costs tens of millions. It had less and less relevance for us. Part of our philosophy is to be as close as possible to our partners and to be genuine partners for them. We found that there was little point inviting buyers from major multiples to Basel because we will almost certainly have been in their office three weeks prior to the show and would be in there again four weeks afterwards. The majority of our turnover comes from 6-8 accounts, and we are able to show them new collections in the UK every year weeks ahead of Baselworld. That being the case, spending the money at Baselworld did not really make sense.
Now we bring our partners to an amazing location in Davos and immerse them in an experiential environment. It is much more relaxed. Nobody is dashing from one appointment to the next. It is really successful for us.
We have done Davos twice, and for the first time last year we invited the press to Davos. That is one area where Baselworld is still important because the world’s media is still keen to go.
We are also changing what we do here in the UK. Print advertising is pretty much gone, it is all digital now. The PR company is tasked with making sure we speak to journalists throughout the year rather than rush them round 10 brands in an hour.
WatchPro: What are your expectations for this year?
Steve Brydon: We expect to grow again, we certainly did in the first quarter. Product for the second half is really good. Boss watches are probably as strong as I have seen in 20 years. Boss has two facias: Boss Black, which is for the classic watch customer. Hugo is for a more trendy audience. There are two standalone stores for Hugo as a fashion brand.
We have made the decision that we will never place Boss Black and Hugo together. That gives us two sets of customers in stores and even online.
We have several brands in really good growth. We are putting more marketing money in the pot this year because there are some wide open spaces in the market that we feel we can capitalise on.
There is also the jewellery story. We have Mvmt, which we launched only a few weeks ago and have opened with John Lewis and it will go into both Ernest Jones and H. Samuel.