THE BIG INTERVIEW: Jeffrey Cohen, president of Citizen North America

Jeffrey Cohen, president of Citizen North America.

Citizen Watch Company has been amassing a unique portfolio of watch brands in the past decade that now includes Citizen, Bulova, Frederique Constant, Alpina and Ateliers de Monaco. Overseeing transformation of the group in North America is Jeffrey Cohen, who is finalizing the integration of different brand teams into a single headquarters operation in Manhattan’s Empire State Building and a logistics and service hub in California. This integration is much more than just a relocation of personnel, it is a root and branch restructuring that touches every aspect of business including IT systems, warehousing, logistics, marketing, accounts and much more. WatchPro’s editor Rob Corder met with Mr Cohen for a full briefing of the impact of the changes in this wide-ranging interview.

WatchPro: How is the integration going between Citizen North America and the watch brands that have been acquired over the past decade? I understand you have almost completed the process of bringing Citizen, Bulova, Alpina and Frederique Constant together in your Empire State Building headquarters.

Jeffrey Cohen: It is going great. It is a big change, but a necessary one because we need to serve our retail partners and the end consumers very differently today. The idea behind the Empire State Building move is to have all of the brands together in a center of excellence. Under one roof we have sales, marketing, executive offices; it is the place where all the major decisions are made.

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But there are also very clear lines in the sand. Each brand has its own marketing people, its own merchandising area, its own sales organization. Something we will never do is have people representing multiple brands because it is very important to me that everybody maintains their distinct points of view and approaches to the marketplace over the short and long term.

In addition to the Empire State Building, we are also moving people to a state-of-the-art customer care center in California. We are bringing in a lot of new technology, phone systems, cloud-based systems so that our customers and partners have a great experience working with us. We benchmark ourselves not against other watch brands, because we feel we are already far ahead of most competitors, but against best in class companies in all categories. This drives us to set new standards of customer service.

Everybody and everything in the business, from the back office functions, the technology, the customer-facing departments, finance … everything is going to be in California. We are enhancing our infrastructure from a distribution standpoint because we have a lot of different types of customers that want different things from us. So we have very sophisticated systems including a new ERP (Enterprise Resource Planning) system that Citizen moved onto last year. Bulova will join it in July and Frederique Constant and Alpina right after that. This will bring the company into a new era of connectivity that we are really excited about.

WP: I would imagine one of the key advantages of becoming a larger group is your ability to invest more in sophisticated technology, particularly on the data capture and analysis side of things. Big data must be massively important moving forward.

Jeffrey Cohen: You hit the nail on the head. Everything is about data. This company is driven by data, and also by the emotional connection between us, our retail partners and the end consumers. We need to continuously improve the way we interact with these communities. A lot of companies are very static and speak at people. We want to have a two way conversation and the data allows us to have that dialogue that is real and authentic.

The other thing is that, with the scale that we have now as a company, we are able to invest more in marketing. That will help us to grab market share. Increasing our share is vital because the pie is not growing so we need to take a much bigger piece of it. We are very clear about where we are going to win market share from.

WP: How have things worked culturally because you are bringing together great Japanese, Swiss and American brands into one group? Have you found that each brand has its own culture and DNA that makes them distinct?

Jeffrey Cohen: First thing I would say is that we don’t look at this business as Swiss, Japanese, American or anything like that. It is about brands and we are delivering extraordinary value across each category in which we operate. This is a great company with great product.

The mix is a great advantage because one brand may be strong in one thing that another does not have and they can learn from one-another. The world has become so small so that whether you are talking about merchandising, displays, marketing programs, anything, they need to consistent. The different cultures are less of an issue, they come together more and more because people travel so much today. It is very different to how things were 10-15 years ago.

In the office we have the very best people. We have executives that have worked with me or in other watch businesses for over 25 years. The beauty of it is that, while I am the number one goalkeeper, we have other fantastic leaders across the organization. We have a great chief marketing officer, a chief merchandising officer, a chief digital officer; these people are really best in class. Underneath all of these leaders we have brand-specific people. Now we are bringing all of these people into one building, it is going to help the organisation to flourish even more.

There has been a lot of change. We have Bulova, which has a history of over 100 years in the New York area; Citizen has been around for 40-50 years in the city. Bringing those organisations together has worked really well. We took the best people in the industry, the best people in the organisation, we promoted from within and we encouraged people to drive change and embrace change.

 

Citizen has signed a deal with The Walt Disney Company that will make it the Official Timepiece of the Walt Disney World Resort in Lake Buena Vista, Florida, the Disneyland Resort in Anaheim, California and Marvel New Media’s Creative Space. As part of the long-term alliance, the Citizen logo will be displayed on the Main Street USA clocks in Magic Kingdom Park at the Walt Disney World Resort and Disneyland Park at the Disneyland Resort. The logo will also be featured on select FastPass clocks displaying return times for park attractions at both resorts. Additionally, the Walt Disney World Resort and the Disneyland Resort will begin offering Citizen timepieces featuring designs unique to Disney Parks. “Disney is honored to align with Citizen, a stalwart brand that has stood the test of time.” said Carlos Castro, vice president of Disney Corporate Alliances. “At Disney Parks, every minute is magic. So, it’s appropriate that our Guests will have access to one of the world’s greatest names in timepieces, as they celebrate their time together creating memories with friends and family.” (Photo by Mark Ashman/Disney Parks via Getty Images)

 

WP: It has been 10 years since Bulova was acquired by Citizen, and it appeared to take most of that 10 years for Bulova to find its feet within the new structure. Is that a fair assessment, and how do you learn from that integration and do better with Frederique Constant and Alpina?

Jeffrey Cohen: You have to take a step back sometimes before you move forward. You need to have a very clear brand position. Citizen, for example, is in the affordable luxury category. The Bulova brand right now is attainable luxury. Then you have our luxury brands in FC and Alpina. Each needs to know its place in the market and have a clear story and delineation for our retailers and their customers.

It is not just about the brand story, it is identifying gaps in the market and moving into those spaces. That is what we have been doing.

We have not gone full out with Bulova outside of North America until the last 24 months, but now you are going to see that change. You are going to see the leverage of the Citizen distribution network, the relationships, the marketing. We are going to be spending a tremendous amount of money to make sure that Bulova stands out and continues to grow.

Now with FC and Alpina, these are true beauties. We bought the company not only because we saw a great opportunity, but also because our biggest and strongest networks in North America and Japan have the greatest potential for growth for these brands.

I was personally involved in part of the process to buy FC and Alpina, and it is a beautiful baby that is going to flourish.

So many people have gone off brand in crazy directions in the past few years, we have not done that. We have stayed very focused, we know exactly where we are going and we have a sustainable business model. A lot of other brands have been floundering around with their retailers telling them which way to go.

We want to be the company that is setting the direction for the watch industry, now have retailers set the direction for us. If we have the right product, the right brands and right segmentation, that is how we will win.

WP: I interviewed Frederique Constant CEO Peter Stas last year, and he said that Citizen taking control of the business in North America led to almost instant growth and success.

Jeffrey Cohen: This was an under-developed market for Frederique Constant, it was not a focus before and now it is. The relationships that we have and the space in the market for brands like Frederique Constant and Alpina is huge right now because a lot of competitors have fallen away. The retailers see that. They know our capabilities when it comes to marketing, service and productivity and want to jump on board.

Also, people want something different. They are tired of the same-old-same-old and want new brands too. It is difficult to get customers to stick with a brand; young people move on, so we need to engage them in many different ways.

WP: It can’t hurt that Frederique Constant makes fantastic watches at great prices.

Jeffrey Cohen: They are beautiful. It is priced very well for the marketplace, which is a core value for our company. FC has the in house manufacturing and development, which is another part of what Citizen stands for. Everything we do is that way, it is vertically integrated, not just assembling parts from other suppliers. It is home-grown.

WP: Speaking more widely than just your group activities, how do you see the retail landscape changing, and how is that affecting the watch industry?

Jeffrey Cohen: The marketplace has changed dramatically. It changed initially during the recession in 2008, and more recently it has changed even more in terms of digital formats. As a company we have needed to change and so have our retailers. The backbone of our business is the network of mom and pop family jewelers. They are the ones that set the tone for the industry; they are the most important and dearest to our hearts. That will not change even if some of them are having difficulties adapting to the technology side of the business. That backbone will remain the most important for all of our brands.

You also have the national department stores and jewelry chains, which are very important to us. Plus we have ecommerce direct to the consumer. If people want to buy a watch at 2am from their sofa, we want them to have the opportunity to do that.

WP: Which of your brands sell direct to consumer?

Jeffrey Cohen: In North America, we control the Bulova.com and Citizen.com ecommerce sites, which are transactional. FC and Alpina have a more limited presence, and that is the model we will continue with for now.

We have always been pioneers and leaders that everybody else follows. We are conducting studies right now into how everything works together, looking into the whole channel: how we support our wholesale customers, how we support the end consumer, and how do we nourish relationships over many years.

The retail channel is changing fast, but we are adapting very well. The chairs are shifting, so in the past we might have had more people working on traditional media, now they are sitting in digital. We are making this shift over time and being very thoughtful about it, but it is exciting. The changes to the way distribution is working creates opportunities. If things stay the same, there are fewer opportunities to exploit.

WP: We were speaking earlier about the importance of ‘big data’. That is both daunting to traditional mom and pop retailers, but also a huge potential opportunity. Are you able to bring them with you as your digital and data-driven business develops?

Jeffrey Cohen: We have a lot of digital asset management programs. We work with customers on things like sales force automation and stock takes that help them manage their inventory mix better. That makes them more productive. We also get external data from retail analyst and we pile that in too. There is not as much rich data from the independents, but we get it from the national and use it to help all our partners make better decisions.

WP: The Holy Grail at retail is increasing stock turns and eliminating slow moving stock that ties up cash. How much help can you give your partners to improve that?

Jeffrey Cohen: We are very strong in that. A lot of the retailers we work with are not sophisticated enough to do that, so we do it for them. We see that as part of our job. We don’t want to just go into a retailer and sell them watches, we want to make sure it is the right stock, we help with the marketing to make it sell-through. We help them understand what is working well and what is not working well. Every store is different, particularly now we have several brands. We will mean one thing to some retailers and something different to others. As a company we are most interested in sell-through, not sell-in. For us it is turnover, turnover, turnover that matters.

WP: You mentioned how much change you have seen in the past five years in the retail landscape. One of the key developments is that businesses like yours increasingly take responsibility for the sale all the way through to the end customer and then take care of the after-sale service. Retailers today have less ownership over that process than in the past, and brand have more ownership. Would you agree?

Jeffrey Cohen: It is all on us. We used to just be able to appoint a brand ambassador and put them on our merchandising to sell watches. Now people want a two-way conversation. They want a conversation that is personal to them. That experience had better be what the customers want, or they will be online, on social media, rating their experience. More than 50% of people that look products online will check ratings and comparison sites to see how other people have felt from both a product and emotional standpoint. This means we have to be engaging with the consumer in the right way from the beginning right through to the end of the process. That is really important. Some retailers have fallen short of that, but it is turning around.

We are not like the fast fashion industry. We have been very old fashioned and far from cutting edge, particularly on the jewelry side (watches have been a little more progressive). Here at Citizen we are about two steps ahead of our competition. We need to be, we need to lead or we will be led.

WP: Finally, can we talk about challenges and opportunities for the newly enlarged group. You said earlier that you do not expect the pie to grow, so for Citizen to grow you must take a larger slice of the pie. How does that translate into tactics and strategy?

Jeffrey Cohen: Wrist share is way up, and now it is taking that share and trying to increase it as much as possible in the traditional watch category. That traditional market is not growing, but we are taking a greater share year after year as smaller companies are falling away. They do not have that connection to consumers; they do not have the service levels or the systems; they do not have the marketing budgets. We also see competitors going in so many different directions, while we know exactly where we are going.

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