When asked who they would like to interview as part of their guest editorship of WatchPro, the choice for Nick and Giles English was simple – Patek Philippe, a brand both brothers admire. The Swiss watch company’s UK managing director Mark Hearn is a man who usually spurns the spotlight but has made an exception to grant this interview, giving a rare insight into his 25 years’ experience in the watch trade and his forecasts for the future.
When we were asked to guest edit this issue of WatchPro, we were told we would have to interview someone in the watch industry that we admire. Our minds immediately turned to Patek Philippe and once we found out that its UK managing director Mark Hearn was generous enough to agree to meet with us we knew we would be in for an interesting conversation.
While the views here are those of Hearn personally, as opposed to those of Patek Philippe as a company, we feel that this is of even more value to the readers of WatchPro as he has a huge depth of knowledge and experience of the UK watch business, 25 years to be exact.
Hearn has been running the UK division of Patek Philippe for the past 12 years and before this he spent a similar amount of time running Zenith in the UK. Zenith was his first job in watches and he sealed his dedication to the watchmaking trade by learning how to dismantle and reassemble an El Primero movement, quite a feat.
And to top it all off, he likes to fly, just as we do; a fact he quirkily communicated to us during our meeting through his choice of Spitfire cufflinks.
GILES ENGLISH: In the past 10 years the watch industry has changed a lot. What do you feel have been the key changes during that time?
MARK HEARN: One key element is the knowledge and the sophistication of the British market. There is London which is, in its own right, an international marketplace, and then there is this other market which is the British market, the regions. The regional market has become far more sophisticated as a result of London becoming so much more important as a market worldwide. As soon as you start getting consumers who are sophisticated, they start to understand what mechanical watches are – it’s not just something that whirrs and moves around on your wrist, it actually has a purpose. As consumers become more sophisticated you get more product offering into the marketplace, which is what has happened in the UK and that feeds a greater educational cycle.
GE: The sophistication of the female ranges that Patek Philippe offers has been increasing. Have you seen a trend towards more mechanical watches there as well?
MH: I’m on record many times as saying, as far back as 2004, that you should pay attention to the female consumer as she is becoming far more sophisticated, reflecting a little bit of what is happening in society generally. If you go back 10 or 15 years there were certain male-dominated professions and the women were doing certain other professions; men drove these types of car, women drove those types of cars. Now it has become grey in the middle, there’s no black and white, and watches have followed that social trend. If you look now anywhere in the UK you will see retailers offering mechanical watches for ladies. And those watches are not just there as eye candy in the window. It’s a very interesting development and one that’s going to become even more pronounced in years to come.
GE: So in the past 10 years you’ve seen a move towards mechanical and ladies watches becoming more of a focus. How about distribution channels?
MH: From a Patek Philippe perspective it hasn’t changed for ourselves in the UK, as we’ve always been in the top stores and in effect what has happened has been additional opportunities that have been created for those retailers. From a retailer perspective, because there has been a growing awareness of mechanical watches for ladies it has meant that they have had to adjust how they look at their product offering. And they no longer can go for certain brands that are ignoring this growing part of the market. So I think you will see that changing more and more. You’ll see it with the staff that retailers are putting into their stores – ladies are also being trained how to sell mechanical watches.
NICK ENGLISH: Some of the best salespeople are women.
MH: Yes, and remember that often ladies sell better to men as well, because there is the psychological aspect to it. And it is a fact, whatever we say, that a man will respond differently to a lady. It’s actually a good move from the retailer’s perspective to have ladies in the shop who aren’t just selling jewellery and that’s a key shift within the focus of store sales staff. Because 10 years ago in general the ladies were selling jewellery and the men were selling watches.
GE: Obviously we’ve seen, not just in Patek Philippe but other brands as well, the growing of the shop in shop area. Talk us through that.
MH: It’s an extremely competitive market. If you walk down Bond Street or the centre of Manchester you’ll see hundreds of watch brands. As the market becomes more competitive, what do you have to do? You have to try and make your brand stand out. How do you do that? You either open your own stores, which is not a strategy we at Patek Philippe are following, although a lot of brands are. In fact, [Bremont] you’ve opened your own store haven’t you? You either go down that route, or you focus on your second-party retailer and you say “right, how can we make ourselves more impactful, more successful?”. So, by putting in a brand in-store area, you create a commitment from that retailer. The retailer also has to look at what is their return on investment in this area of the shop that they’re going to give over to a certain brand, because the space of 10sqft or 15sqft given over to Patek Philippe will yield significantly more than that same amount of space given over to a smaller brand. All brands have their place in the market, but the retailer has to think when they consider if there is a possibility of getting this in-store unit or that one, that if this one is going to yield £500,000 of sales and that one is going to yield £50,000, then it becomes an easy decision to make.
GE: Do you have that battle with Rolex? They are trying to do same.
MH: In the UK Rolex are the number one in their segment of the marketplace and the same applies to Patek Philippe, we are number one in our segment of the marketplace. I think the problem becomes when you go further down into the market, into the segment that you [Bremont] are operating in, as that is incredibly competitive. You know your competitors, they’ve been around for a long time, so it’s extremely difficult to get an in-store area but that seems to be the way forward for the time being and all of the brands are now trying to get this. Maybe you are thinking about it?
NE: It’s gradually getting to that stage. With some retailers we have been with for five years we have an area of the store dedicated to Bremont, which is great.
GE: We’ve spoken about the changes that have occurred in the past 10 years, but what about the next 10 years? What developments do you see shaping the market?
MH: Mechanical watches are here to stay, they are not going to go away. Effectively it is more a reflection of a lifestyle; you are not buying one necessarily to tell the time, it’s a reflection of you. That trend is going to continue. It’s as a general observation that consumers are going to become more discerning. In London there is a very international market, customers are bombarded with brands. Walk down Bond Street and you will see hundreds of brands all offering mechanical watches, so the problem for the end customer is they need to identify what is real value and what is not real value, what is simply marketing. You will find that more in years to come, customers are going to become more educated and discerning and that by definition means you will have certain brands that end up being more successful as they offer real value.
NE: Do you think that is also about being open? Saying, come and have a look at what we’re doing. The internet has been a very powerful tool, in a good way and a bad way, for the watch industry to get information out there.
MH: You’re right, the internet is good and it is also bad, but in terms of being a source of information it is very good. The fact that you can now go onto the Patek Philippe website and look at areas of the production and learn about the aftersales, is great. The internet and websites are giving more information, which is providing an education for consumers to make an informed decision and that is only going to increase in years to come.
GE: What about ETA restricting access to movements? Swatch Group is on record saying they want companies to build their own parts rather than being marketing machines, but I think the result of that is that the cost of mechanical watches will go up.
MH: It will go up, but I think that where you might have a problem is brands that have pitched their mechanical watches at a certain price point. When you end up creating your own production facility, you’re talking about a much smaller number; you can’t make economies of scale like a large company supplying you, therefore it becomes more expensive. The potential problem is then that you have to move your price point out of your market segment and perceived price range.
NE: And as a brand, can you take that?
MH: That is the key question. There are already examples of where that has had interesting consequences, and there will be more. It is very interesting as that move to be an integrated manufacturer may prove to be a step too far for certain brands. It could be fatal.
GE: What scares me about production is if you have a very good product then you might suddenly need to double production of it. What are the pitfalls?
MH: Unless you have systems in place, you will not be able to do that without affecting quality. With a brand like yours [Bremont], you are carving out a niche, which in a few years you should be very good at. But then if you say, “Oh, we could sell double of this” you might very well end up shooting yourself in the foot. Because part of the reason why you become successful in a certain area is because you build up a loyal customer base who want a certain level of exclusivity. If then suddenly there is double the amount flooding into the market, you will find that you end up losing your repeat customer, and that customer is extremely important.
GE: Your marketing is just fantastic, particularly the father and son campaign – how long has this been running, who created it and do you have any plans to change it?
MH: It has been running since 1996 and this was created by Leagas Delaney here in London, who are still our creative agency today. I am not aware of any plans to change it.
GE: I think that advert has done a lot for the whole industry, people are seeing it and buying other watches.
MH: That’s terrible! [smiling] But if it helps create awareness of very high-quality mechanical watches then it helps everyone in the long term.
NE: I think what my brother is trying to say, is that because of the advert people do now acknowledge that a mechanical watch is not disposable, that it should be passed down the generations. We have the same thing with our watches. We have fathers who buy three watches as they have three sons and while he’s wearing them now, he knows that in 20 years time his sons will be wearing them.
MH: If that philosophy can be encouraged, it should be. It’s not just something you wear for a couple years, it’s durable. I would caveat that by saying if that is the case, aftersales servicing is absolutely crucial. If we’re going to encourage people to buy watches and pass them on to their children then we’re going to have to be able to look after them. That is probably the biggest challenge facing the industry, and very specifically here in the British Isles.
GE: Has Patek Philippe been affected by the innovations in British watchmaking over the years?
MH: I knew George Daniels very well, he was a friend of mine, and he would talk to me about what he was up to, and I don’t think that it is a bad thing at all that British watch making is coming back. On the contrary, I think it is a good thing. After all, 300 years ago people thought English watches were the ultimate. You [Bremont] have taken a bold leap to produce a British brand and I wish you the best of luck in the future.
GE: You are involved with the British School of Watchmaking in Manchester. What are the plans for the school moving forward and what role do you see it playing in the industry?
MH: We started five years ago, and now there are a few years’ of graduates working in the UK watch industry and there is a chance to increase that still further in the future. Last year we increased from six students a year to eight and there is a chance to increase that still further. We need added sponsorship, so at some point I’ll be talking to you! We’ve got retailers involved, such as Watches of Switzerland, Wempe and Boodles, some of the major Swiss watch houses like ourselves, Rolex, Breitling, Swatch Group, Richemont and we want to bring more supporters on board. The more companies we can involve, the more students we can put through. It comes back to what I said earlier about aftersales, which we cannot ignore. All of us operating in the marketplace have a moral obligation to support the school. In years to come businesses like yours won’t be able to survive without watchmakers.
GE: You have boutiques owned and operated by Patek Philippe in London, Paris and Geneva. Do you have plans to open any more?
MH: We have built up over many years, very long-established relationships with second-party retailers, which are very important for a successful brand. The retailers trust us and they know we are not going to open a boutique next door to them. If you look at Patek Philippe’s distribution in the UK and Ireland you will see retailers that we have been dealing with for over 50 years, like Watches of Switzerland, Mappin & Webb and Hamilton & Inches, to name just a few.
GE: So let’s say you have been in a region for a long time with one particular store and they’ve done an alright job, but then a new and exciting retailer opens up in the same town – would you jump ship?
MH: We are extremely loyal, all of our retailers know how loyal Patek Philippe is and how loyal I am, my word is my bond.
NE: So they’d have to do really quite badly for you to switch?
MH: It’s not really about sales, it’s about relationships and quality. We all can go through good and bad times. I can understand why most brands would look only at sales but there are other factors. If a retailer is doing a good job and doing everything right and they’ve just been unlucky and performance has not been what they would want, or we would want, do you then just get rid of them? No. You shouldn’t get a reputation like that. It is a long-term partnership with Patek Philippe.
GE: If one of your top retailers in a few years time asked you if they could sell Patek Philippe online, what would you say? And how do you view the internet moving forward?
MH: The internet is a great tool for information and education as I said earlier. I think for any luxury product, and I’m not talking now about Patek Philippe specifically, if you look at any luxury product at the top end there is an experience to have. If you go and purchase an Aston Martin, it is a very luxurious product and you’ve got to go and drive that car and feel the power as you put your foot down, and also learn about the maintenance of the car and why it is so special. What you would do is go online and learn about the performance of the engine and the leather trim on the inside, then you go to whichever dealer you select and have that Aston Martin experience if they have the product available. You would do your research then choose your retailer.
GE: Even though consumers want to buy online? I think it’s the other way round – they go into a retailer, have that experience, go home and think about it, then press the button and buy.
MH: In the short term, the easy option, particularly for you, [Bremont] is to say we can sell £5,000 or £10,000 watches through the internet; but in the long term what people need to have is this experience and they need to have the Bremont experience, or whatever other brand it is, as that will give you longevity and allow you to build foundations for a castle on rock and not on sand.
GE: One final question. Do you think you have the easiest job in the watch industry? Because we think you do!
MH: I love working for Patek Philippe, and I’m a great believer in the saying you get out of something what you put into it. I can tell you, 12 years ago when I joined the company Patek Philippe was one of many brands, it was ahead of everyone else, but not massively ahead. It’s been a lot of hard work by the whole company. We have a team in the UK that works tirelessly, which has allowed us to grow to where we are today, supported fabulously by Geneva. But I’m not complacent. I haven’t really answered your question, but I can say that it’s a wonderful company to work for, and the Stern family are an inspiration.
This article was taken from the January 2013 issue of WatchPro. To read the magazine online, click here.
