{"id":45346,"date":"2019-01-24T11:21:12","date_gmt":"2019-01-24T11:21:12","guid":{"rendered":"https:\/\/www.watchpro.com\/?p=45346"},"modified":"2019-12-12T17:52:32","modified_gmt":"2019-12-12T17:52:32","slug":"the-big-interview-global-ambitions-for-the-watches-of-switzerland-group","status":"publish","type":"post","link":"https:\/\/www.watchpro.com\/the-big-interview-global-ambitions-for-the-watches-of-switzerland-group\/","title":{"rendered":"THE BIG INTERVIEW: GLOBAL AMBITIONS FOR THE WATCHES OF SWITZERLAND GROUP"},"content":{"rendered":"
November saw the first two major new store openings for The Watches of Switzerland Group in the United States with flagship showrooms for New York and Las Vegas. Despite strong growth in 2018, America is still an under-developed market where WoS Group CEO Brian Duffy thinks his proven formula of large, luxurious destination stores underpinned with kingmaker brands like Rolex and Patek Philippe will grab a large slice of a growing pie. The UK operation is also being reconfigured with an inexorable drive upmarket, as WatchPro\u2019s Rob Corder discovered in January\u2019s Big Interview with Mr Duffy.<\/strong><\/p>\n WatchPro: Tell me how 2018 has been going for you in both the UK and United States.<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> We reported our first half financial results through to October, which was very satisfactory in terms of year-on-growth and in particular like-for-like growth for luxury watches, which was in the double digits in both the UK and US.<\/p>\n We are very happy with where we are in the UK and the strategy that we have been following with investing in stores and investing in technology, digital marketing and customer reach-out through our CRM system.<\/p>\n In the US the market has definitely turned positive since the end of 2017, so we have benefited from that. In addition we have implemented all our systems such as our SAP systems, POS systems and data analysis. We have also established great relationships with all of the major brands, which are really helping us in America.<\/p>\n WatchPro: If you look at the Swiss watch export data, they show that growth has almost vanished in the UK in 2018 \u2014 albeit in comparison to the record year of 2017 \u2014 but the opposite is true in the United States where 2017 was soft and 2018 has been booming. Do you feel you are outperforming the market in both countries?<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> Looking at Swiss watch exports can often be misleading over the short term because it only shows product coming into the market. That does not always reflect what sell-out trends are. In terms of the UK market that has been true throughout this year. You will find that stock levels throughout the market are definitely lower than they have ever been historically because sell-out has been stronger than the sell in that you see in the Swiss export data.<\/p>\n It is a similar situation in the US. We are seeing stock levels at very low levels because sell-out has been so buoyant. The world-wide demand for Swiss watches, in particular the powerhouse brand of Rolex, has been consistently strong in both markets and on a global basis.<\/p>\n We have been gaining share in an improving market over the last couple of years. And we will keep doing what we do, which if focusing on the customer experience, while continuing with our marketing and outreach, and see where that gets us.<\/p>\n WatchPro: Have you found that the UK has returned more towards a domestic market this year?<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> One of the great features of the UK market is that it is nationally strong. We love our watches, we are very knowledgeable. We enjoy watches; both men and women. So, yes, the tourist business is influenced by factors like exchange rates, politics and other matters, but domestic business can always be strong. We in no way concentrate on one or the other. The whole approach of our stores, particularly our big flagship stores, is that they are for everybody. If we target anybody at all, it would be a younger more contemporary customer who really appreciates an environment where they can browse, be helped if they want help, and enjoy the watches.<\/p>\n WatchPro: Your most recent store opening in Manhattan looks like it is aimed at a younger audience with its industrial loft style. Other than the look and feel of the store, is there anything else you did from a business perspective that you piloted there?<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> The common theme in all of our flagship stores, whether that is 155 Regent Street (London), Las Vegas and the most recent opening in SoHo, Manhattan, is that we really want to give space for our big brand partners to express themselves, so the stores need to be physically big. Every element of the store has to catch customers\u2019 attention. We want them to look into every corner of each store, so everywhere they look needs to be exciting. We want the environment to be inviting and browseable. We also want to provide hospitality because, when people are spending a lot of money, we want them to have refreshments and entertainment. These are the common elements we want to deliver consistently in every Watches of Switzerland flagship along with, of course, the best selection of luxury watches.<\/p>\n Beyond these consistent elements, we also want to reflect the environment of where each store is located. The SoHo showroom is unique. The area is a legitimate luxury destination with the likes of Louis Vuitton, Dior, Chanel, Yves St Laurent, and they all work with the fabric of the buildings that are in the area. They are all ex-industrial buildings that are very spacious with high ceilings and work really well for luxury. We did not want to change the look and feel of the building, so the challenge was turning an industrial background into a wonderful world for Swiss watches. I have to say, with the guidance of our architects, we have done it fantastically well. Many of the original features are either still there, or we have recreated them, including a tin ceiling, beautiful wooden floors, cast iron columns, natural brick is all there. Downstairs we have the old ceiling that even has singes on it from various fires. It really works well.<\/p>\n Given that the store is in SoHo, and this is the first time there has been a multibrand watch showroom in the area, we have put more of an emphasis on the social hang out side, so there is a lounge area and cocktail bar. We have unusual watches including limited editions created especially for us by some of the brands and we have added space for vintage watches in collaboration with Analogue Shift, which has created a lot of interest.<\/p>\n I was concerned about it looking a little contrived, but it does not at all. It is our most beautiful store.<\/p>\n <\/p>\n\n WatchPro: Creating impact and drama in places like Las Vegas, Manhattan, Knightsbridge and the West End of London is one thing, but how do you take that concept into every store, whether that is Mayors in Florida, Mappin & Webb or Goldsmiths in the UK?<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> The fundamentals do not change. The store has to be welcoming, not intimidating and inviting intrigue so that people look around. That said, we have to adapt to the environment and the brand proposition for each location. Good examples are 155 [Regent Street, London], where domestic and international customers do feel welcome. It is modern, slick, uses a lot of modern materials and encourages people to browse all the great brands. If you go across the road to Mappin & Webb, it feels softer, more feminine, a bit more traditional, but it still feels welcoming.<\/p>\n WatchPro: You have said there is no news or statement regarding the rumoured IPO in 2019, but The Watches of Switzerland Group is owned by private equity firm Apollo Global Management, which will certainly want to exit its investment at some point. Any future shareholders or owners will not just want to see top line growth that is likely to come from all of the openings and upgrades you are doing, but also growth in margins leading to substantial profits. Has there been any shift in tactics from building top line value to improving bottom line profitability?<\/strong><\/em><\/p>\n Brian Duffy:<\/strong> Honestly no. Apollo have been wonderful in supporting us from the start. They have been totally on board with our strategy for investing in high quality growth and will continue to do so. It is a proven formula where profitability comes from growth and our focus has been on top line growth and seeing that flow through. Our shared conviction throughout has been that you have to do it right and believe that the consumer will shop for luxury when you give them a fantastic environment and line up of brands. If you don\u2019t give them these things, they will not buy. There is not really a choice between dialling up and dialling down investment in luxury.<\/p>\n EDITORS NOTE: Since this interview, The Watches of Switzerland Group’s accounts for the financial year ended April 29, 2018, have been published and show operating profit jumped by over 35%. From the UK, alone, operating profit rose by 24% to \u00a334 million.<\/a><\/strong><\/span><\/em><\/p>\n <\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n <\/p>\n