In 1919 the UK was emerging from the dark years of World War I and a broken but unbowed population was making its first tentative steps towards a brighter future. It was against this backdrop that three brothers: Isaac, Harry and Maurice Adlestone moved to Belfast to start a jewellery business from nothing more than a suitcase full of jewellery, silver and dreams. 100 years on, the company that started as Adlestones before being renamed Beaverbrooks is still in the hands of the same family with chairman Mark Adlestone now sharing the day-to-day running of the business with managing director Anna Blackburn. In a special Big Interview to mark the 100th anniversary, WatchPro’s Rob Corder caught up with the leadership team to discover how the company’s past is shaping its future.
WatchPro: What does Beaverbrooks’ mean to you today and what plans do you have to mark the 100th anniversary?
Mark Adlestone: I will be speaking to the company at our conference in April about exactly what this means. It is an opportunity to reflect and look back to the original founding three Adlestone brothers who created the business in 1919. They started with a suitcase full of jewellery and silver and hearts full of hope and quickly developed a very successful business. They began in Northern Ireland, but came to Manchester and established a head office. They were very entrepreneurial and we will be saluting them. It is going to be very emotional.
But one of the things that Anna wants to stress is that this is not just about looking back, it is about looking forward. It is our 100th anniversary, but we need to think about how we use this as a springboard to become even stronger in the future. How do we turn that tradition into a strength as we remain entrepreneurial and able to stay relevant? Just because we are a 100 year-old business, it means nothing if we are not able to adapt to the present and future.
Anna Blackburn: It is a balance. It is an opportunity to speak about how proud we are of our heritage and the way the business is built on those family principles. Everybody at Beaverbrooks buys into that so it is a massive celebration about our people, our culture and our success. But we are trying a lot of new things this year and we want to look at how we can use what we do in our 100th year to grow the business in the future.
Being 100 years old does not guarantee success going forward, it is about continuous change. There have been key promotions to director level among the team this year, and that is a good example of how we are always strengthening the business.
WatchPro: Tell me about those management changes. Are those promotions to board level?
Mark Adlestone: They are not board level in a legal sense like Anna became last year.
Anna Blackburn: Of the senior management team, Roger Fairhurst [head of brand], Adelle Thompson [head of buying and merchandising], and Simon Smith [head of retail], there has been some confusion about their roles and responsibilities. They are all heads of multiple parts of what we do, so we wanted to bring greater clarity to their roles and recognising the influence they have on the business. That is why we have created these director titles. Adelle’s new title is director, Roger is brand director and Simon becomes retail director.
WatchPro: Does this also give you greater management firepower at the head office level?
Mark Adlestone: No, it is not really about the firepower, it is about elevating them. These promotions reflect their importance both within the company and externally. Given the fact that we are a family business that has made the transition from being family-run to professionally-run, these are the guys who are driving the company as a senior management team. It is a lovely reward and recognition for them.
It is interesting that it has happened in the same year that Andrew Brown has stepped down and retired as a director. He is 73 years-old and has been suffering with Parkinson’s disease. He hasn’t been active day-to-day for some time, and he and we feel that the time is right for him to step back and enjoy his family.
It was not entirely planned this way, but the centenary year and his give us several opportunities for us to celebrate his 57 year contribution to this industry.
I started with Andrew in 1990 when we became joint managing directors. The first 10 years was a very strong period of growth. Andrew was involved in acquisitions and drove the visual side of things along with heading up the diamond business. I was more of the overall strategist and we worked brilliantly together.
Anna Blackburn: Over the last five years it has been a transition from a family-owned and family-run business to today’s professionally-managed business. There has been a real change in terms of increasing accountability across the company, and a transition away from the more patriarchal treatment of people. We always want to provide a fantastic workplace, but we now want people to take responsibility. That is definitely something that we hang our hat on in terms of our recent success.
We spoke four or five years ago about creating a culture of achievement, and that is about enjoyment and accountability, and it is working really well for us. Promoting key members of the team to director level is putting a final piece in place of that strategy and setting us up for the next 100 years.
WatchPro: I understand, Mark, that your daughter Chloe has started at Beaverbrooks, so that is a fourth generation, and I believe your father Gerald is also still involved so you have three generations contributing at the same time.
Mark Adlestone: Yes, it is lovely that Chloe [Adlestone] has come into the business and yes my father Gerald, who is 89 this year, does still come in.
Anna Blackburn: Gerald is amazing for his age. He comes in, he is interested, and he wants to know what is happening.
Mark Adlestone: My father has a very analytical mind. He asks great questions.
Anna Blackburn: Having Chloe come into the business is fantastic. It was her own decision after working in other areas [working in the PR industry for jewellery and watch brands in London]. She is working through a 12 to 18 month induction programme that exposes Chloe to all parts of the business. She is a qualified gemmologist with GIA and is involved with our loose diamond buying. But in order to have the greatest impact and influence going forward, she needs to get to know every area. She has worked in stores and loves selling. We have a real retailer on our hands, which is fantastic. As time goes on we will work out where her role will settle, but it is likely to be an amalgamation of a number of things. She has been blown away by how welcome everybody has been to her because they have another generation of the family in the business.
WatchPro: That could have gone either way. Some people can be bent out of shape when a family member comes into a business in this way.
Anna Blackburn: Yes, but because of our culture, trust and respect for the family within the business, I never had that concern. When I first spoke to Chloe it is something she flagged, but it was never an issue.
Mark Adlestone: I have been blown away by the reaction from our people to Chloe coming in. They are really pleased about a fourth generation coming in. I did not appreciate how important it was that Beaverbrooks remains a family business.
WatchPro: How have things changed for you, Anna, since you were elevated to the board and took the title of managing director just over a year ago. Has anything surprised you?
Anna Blackburn: No, I think we just go from strength-to-strength. The sense of responsibility may be slightly greater. When Mark asked me to become a director, it was a privilege of joining the board of a company that I have loved working at for over 21 years.
WatchPro: Last year we spoke about how you were introducing a wellness in the workplace initiative designed to encourage people to focus on their physical and mental health. I was a little concerned that could come across a bit nanny-ish to your team. How has it gone down?
Anna Blackburn: The journey for the wellbeing side is very similar to the journey from being a great employer to one providing a great workplace. We want our people to come to work, enjoy what they do and do a great job. Of course there are all sorts of things that go on in people’s lives that we do not know about, but we can support them if they need it.
Mark Adlestone: When we introduced this last year, we were thinking about work/life balance, about stress, about nutrition in areas that we can influence.
Anna Blackburn: This is where balance comes in, because when you start talking about wellbeing, it means something different to everybody. It can be health, fitness or diet; it can be emotional or spiritual. At the end of the day we are an employer and cannot do everything for everybody, so we had to work out where we felt we could make a positive difference. Similar to the way we introduced accountability across the company, we went the same way with wellness and we want to help people to help themselves; that is the route we took.
We have Yammer — an internal social network — and we do a lot on there in terms of hints and tips and sharing wellness ideas. We have also done a company-wide management training day around recognising stress and mental health in the workplace so that they can support their teams.
We do not expect to make massive inroads in one year, it is a continual process over the next five or more years. What we do want to achieve more quickly is to encourage people to be more open about their mental health, and make sure they get more support.
WatchPro: With 70+ stores across the UK, you are effectively running a network of 70 different small businesses where you are trying to get consistency and best practice across the whole group. How do you go about that?
Anna Blackburn: We are continuously looking at new methods, and it is a multi-tiered structure, but ultimately the aim is to keep things really simple. The messages and strategy that we communicate are as simple as we can make them so that people digest them and get on board with them. We are really good at repeating those messages consistently, and we are really good at listening.
Mark Adlestone: The tiering is very important, so our regional managers play a big role. We split the country into four, plus head office, and they create their own dynamic within their region, which is similar to other regions because they are all working to the same set of values, and that layer of management feed off each other to share best practice and best culture because they are all part of one team.
I remember many years ago, when we had 27 stores, standing up at conference and saying that we were aiming for 50 stores. The manager of Wigan, who is now general manager of Trafford, said to me: “This is exciting Mark, but I worry that we have this great culture and connectivity. If we grow, are we going to lose that?” It was a good point and I promised we would work hard at it, but it turns out that at 71 stores, we are closer together now than ever. We find different ways to communicate. Speaking is best, but we also use videos, written word, social media.
Anna Blackburn: I have to let you in on this. Mark had never done Facebook in his life, and then we launched our internal social media, and he has become one of the biggest users of it.
Mark Adlestone: The reason was that I was not interested in everything that goes onto Facebook, but I am very interested in what goes on our internal social media. It wasn’t a technological fear, it was that I did not want to waste my time with it. But Yammer is a great and immediate way for our people to connect.
WatchPro: Do these types of initiatives lead to measurably better employee retention for Beaverbrooks compared to your peers?
Anna Blackburn: We are constantly looking at retention, not against competitors but against our own record.
Mark Adlestone: I believe what we do is improving retention, but what is interesting to look at is the difference between retention in our stores compared to our head office. We lose very few people in the office, maybe 2%, but in our RSCs [retail store consultants] it could be closer to 25% to 30%. Overall we are at around 19%.
Generally we lose very few managers, we lose very few assistant managers and supervisors, and then we lose a lot more retail sales consultants because, working in a store you are working seven days per week, evenings, weekends, bank holidays. It can put a big strain on some people. What we look for is the reasons that people leave. If they leave because they are disengaged, not developed or badly treated, that would be a concern. We have an exit interview with every single person that leaves and then we analyse the reasons. Generally it is about changing personal circumstance.
Anna Blackburn: If a sales consultant stays with us for two years, they often stay for us a lot longer. Overall, the average length of time people work for us is around eight years, but if you look at just our managers, it is more like 16 years.
WatchPro: There is constant chatter in the media about the snowflake generation, which is a rather disparaging way of describing younger people as overly-sensitive to criticism and needing constant reassurance. Is that something you recognise when you are talking about sales consultants who must typically be younger?
Mark Adlestone: I would say no, but what we have noticed is that there are greater levels of anxiety, pressure, stress and mental health issues than I can ever recall. That may be a societal issue, a social media issue.
Anna Blackburn: I hope it is just that people are more willing to talk openly. I do not see a massive difference over the past 15 years, and one reason for that could be that we recruit for values, and that means we hire a certain type of character.
WatchPro: You just finished your financial year at the end of February. How did you do?
Mark Adlestone: We ended the year with sales of approximately £129 million. Operating profit will be around £12.5 million, which is slightly down on last year. There are a couple of reasons for that: first, the prior year was 53 weeks, secondly we have invested a lot of money in new areas of the business. Overall, we are very happy.
WatchPro: You said in last year’s accounts that you had been focusing since 2017 on shifting upmarket to more luxury lines, including watches and bridal jewellery. Is that continuing?
Mark Adlestone: It is fair to say that luxury has been the strongest part of our watch business and fashion has been more of a struggle, and this year is no different. Having said that, fashion is showing signs of stabilising and is still important to us, particularly for brands like Michael Kors, Vivienne Westwood, Emporio Armani and Olivia Burton.
Anna Blackburn: It is stabilising, but still falling. Compared to the rate of decline that GfK is showing, we are outperforming the market in that category. We are pleased that, even though we are down, we are less down that the wider market.
WatchPro: Is the fashion watch sector still important to you?
Anna Blackburn: Yes it is; it can be the first purchase people make with us and we have a wide demographic of customers. What everybody is seeing is declining footfall, lower volume of transactions, but rising transaction values.
WatchPro: Are the brands coming up with the right products for you? For example, do you like the direction some brands are taking into smartwatches?
Anna Blackburn: Michael Kors smartwatches have done well but in general smartwatches are not doing great. I don’t think it is so much about the product, it is more to do with consumer. People are buying fewer items but at higher prices.
WatchPro: How does ecommerce work for you? Many retailers I speak to do not crow about ecommerce success. It is seen by many as something they have to do, they invest in it, but are not finding it to be profitable because it takes so much investment to maintain and market it.
Anna Blackburn: It is very important to us. It is growing, and not at the expense of our stores. That balance is important to us because we want to drive ecommerce, but we also want to keep our stores.
Mark Adlestone: We have invested very heavily in the ecommerce team and they work very closely with our marketing team.
WatchPro: I often hear from retailers that ecommerce itself is not profitable in isolation, but that continuous investment can be justified because it is essential to today’s marketing.
Anna Blackburn: Not for us, ecommerce is very profitable. But it is also driving people into our stores as well. We will continue investing in ecommerce while it is growing and generating good profits.
WatchPro: Is commerce more or less profitable than brick and mortar?
Anna Blackburn: It is not a cheap. When we started out, the ecommerce business was a less expensive alternative to bricks and mortar, it certainly is not that way anymore. We have to be highly efficient, we have to invest and we have to be very clear about our online strategy because, otherwise, you could spend a fortune and profits would be hit.
WatchPro: Have you needed to create your own Amazon-style infrastructure?
Anna Blackburn: Absolutely, the investment has been massive. Another way to look at the issue is that unless you have the right ecommerce site, you lose out on sales in store as well. Our people constantly say that customers walk in knowing exactly what they want because they have researched it online.
WatchPro: Do you run into a lot of problems from grey market dealers on the global platforms undercutting you on price?
Anna Blackburn: I am sure there is plenty of that going on. People buy online for three reasons: convenience, trust and price. We think people are increasingly looking for people they trust online where they are reassured about deliveries, after sales service, warranties, authenticity.
WatchPro: How does ecommerce affect your build out of physical stores? It surprises me that you are still opening stores when many of your competitors are reducing the size of their networks?
Mark Adlestone: Sadly we are closing one of our stores in Westfield White City [West London]. We only have two weeks left of a closing down sale. Our rates have pretty much doubled and the bottom line is that we cannot take enough money. Maybe the demographic isn’t right for us. We have tried for 10 years and just cannot make it work. There is not the footfall to service the level of retail there.
WatchPro: You are certainly not alone in pulling out of certain locations. I have seen lists of disposals from your competitors that add up to dozens of stores being hawked around by agents looking for new tenants.
Anna Blackburn: We always want to know as a team that we have done everything in our power to make every store successful, but if we cannot make it work we do the right thing by our people
Mark Adlestone: We try to keep all our people, if we can relocate them, even if that means we are overstaffed sometimes. Our people are our primary consideration and we take the view that we have to do what we have to do for them.
WatchPro: Are you looking at similar numbers of disposals to other multiples in the industry?
Mark Adlestone: Definitely not. We have less of a tail than some others.
WatchPro: Do you think you will still have 70 stores this time next year?
Mark Adlestone: It is hard to say, but in a year’s time I think it will be about the same number.
Anna Blackburn: We are opening two Omega boutiques: one in Westfield Stratford [shopping centre East London] and the other in Metro Centre [Gateshead]. We have got Rushden Lakes [Northamptonshire] this year, which we are really excited about.
Mark Adlestone: To give some context around this subject, we work really hard with landlords, and if we find ourselves in a negative situation, particularly at the end of a lease, we will work to adjust things. In many cases, landlords do reduce rents for us. But in the case of Westfield White City, even if they had reduced our rents, it was not a sustainable store. Rents were just too high.
WatchPro: Did White City have an anchor watch boutique?
Mark Adlestone: We had TAG Heuer and Gucci, but not a boutique. Westfield Stratford is interesting because we are opening an Omega boutique, and we believe this will help the multibrand part of Beaverbrooks as well.
WatchPro: There appears to be a rush for major multiples like Beaverbrooks to open monobrand watch boutiques alongside your stores in your key locations because they define the wider positioning of the store and pull in customers.
Mark Adlestone: That is our preference. You are unlikely to see a standalone monobrand store that is not alongside Beaverbrooks. It does not make strategic sense because ultimately we want to drive Beaverbrooks.
WatchPro: It is interesting that you maintain such a broad product offering when compared to The Watches of Switzerland Group, which now generates around three-quarters of its turnover from luxury watches. How do your sales break down between watches and jewellery?
Anna Blackburn: Watches are approximately 50% of the business.
Mark Adlestone: Our diamonds are strong. Our jewellery is robust. It has been a very good year for both diamonds and jewellery, and it has been a solid year for watches.
WatchPro: What effect do you see when you have a monobrand boutique from the likes of Omega, Breitling or TAG Heuer alongside a Beaverbrooks?
Mark Adlestone: It does make a difference. There is a halo effect.
WatchPro: Had you managed to get one of those tier one brands alongside your Beaverbrooks in White City, do you think it would have made a difference?
Anna Blackburn: Maybe, but would it have made enough of a difference given the turnover and costs? Probably not in White City.
WatchPro: How competitive and complicated is it to get agreements from brands and space from your landlords to add monobrand stores alongside Beaverbrooks showrooms?
Anna Blackburn: It is and has always been competitive and this is where our experience, position and relationships all come into play. We want our fair share and we want to work with the brands with which we have great relationships, but we are not going to win them all.
WatchPro: How does the conversation go between retailers and the most desirable brands? How much is it you telling them you can transform the fortunes of a brand in a particular location, and how much is it the brands effectively inviting retailers to tender to open boutiques?
Mark Adlestone: From our point of view, we go to brands with a proposition.
Anna Blackburn: Rushden Lakes is a good example because it is a standalone unit with windows on three sides, which is a new concept for us. In that situation we speak to brands about positioning and expectations for turnover. There we have TAG, Tudor and Gucci, which is a great line up for us. We will also major on bridal and diamonds, which is really important for us.
WatchPro: The direction of travel for some of the major Swiss watchmaking groups is to increasingly focus on selling directly to consumers. How do you feel about that?
Mark Adlestone: I am not worried because, certainly the brands we deal with, will want representation across the country. They are not retailers, and it is not all going to go online, so they are very happy to work with us. While that is going on to an extent, I think it is the more rarefied brands that will go that route.
WatchPro: And London is different to the rest of the UK when it comes to brands selling direct to consumers from their own boutiques.
Mark Adlestone: London is like a different country, and we are not in that country.
WatchPro: Finally, what impact do you think the 100th anniversary for Beaverbrooks will have this year on the business?
Anna Blackburn: We began the year setting out very clear expectations for our people in terms of the level that we have invested. We set out very clearly what the balance will be between celebration and commercial expectation. We see it as a real opportunity and we have an expectation that, having increased our investment this year, we will see that feed through into commercial success.
This has been 18 months in the making. There has been a lot of planning and a lot of hard work, and we expect to reap the rewards this year both culturally and financially.
Mark Adlestone: We have made a great start to this calendar year. Our financial year ends in February and we have already seen that January was good and February was very good. That is coming off the back of the investment we are making and the stories we are telling both internally and externally.
WatchPro: You have been consistent in your approach — and you have described this to me many times and in different ways over the years — that you adapt to market conditions and control what you can control rather than jump at shadows in terms of the economy, political climate and competition. I accept that, but this year there are some pretty extraordinary external forces at work with the current Brexit turmoil. Do you have a plan for that? Do you plan for the worst and hope for the best as a way of protecting yourself on the downside?
Mark Adlestone: We are budgeting to be up this year because of the level of investment we are putting in. We have a story to tell, it is costing us money to tell that story, and that is what we are doing. We expect to take more money to pay for that investment, and the early signs are that it is working.
Anna Blackburn: The more we focus on external factors like Brexit, the less we are focused on what we need to do and things can spiral down. It does not need to be that way. People still want to get engaged, get married, have special birthdays, and we need to make sure that Beaverbrooks is there for them at these special times.
Mark Adlestone: We know from market research by GfK that confidence in the UK is lower than last year, but we cannot allow our people to use that as a reason hy people are not buying.
WatchPro: Beaverbrooks is renowned and recognised for being one of the best companies to work for in the UK, and also one of the most generous in terms of the charity work that the company encourages. Will we see this ramped up in your centenary year?
Anna Blackburn: The company donates 20% of retained profits to charity and since the year 2000, has donated £13m to over 750 charities. There are a number of additional things we are doing to mark our 100th year. Everybody in the business will have an extra day off this year to celebrate their birthdays as a way of celebrating our birthdays, and they will be given £100 — after tax — to go out and enjoy themselves. Mark and I are investing a lot of time this year to do a tour of regional lunches with our managers, supervisors and people that have been with us for five or more years. Our conference will be a big celebration with all of our managers and assistant managers.
Mark Adlestone: In May, we are going back to Belfast, which is where it all began in 1919, to celebrate with our people and our customers.
Anna Blackburn: On the charity front, where we encourage and incentivise all our people to get involved in fundraising and awareness of good causes, we are increasing our contribution as a company. In previous years, Beaverbrooks has matched any money raised by one of our people so that if they raise £1000, we will match it with £1000. This year, in our 100th year, we are double-matching what is raised, so if somebody raises £1000, we will add £2000, making it £3000 to whatever charity they are supporting.