Like the rest of America, Burdeen’s was forced to close all of its Chicago stores at the beginning of the pandemic in March last year.
A pro-business governor allowed them to reopen just six weeks later, giving owner Matt Burdeen and his wife Rada optimism that the worst was behind them.
But the city was in flames at the end of May as protests over the death of George Floyd turned violent and every one of Burdeen’s downtown boutiques was looted not once, but twice.
Remarkably, Mr Burdeen saw opportunity amid the crisis, and snapped up a tenancy on the city’s most prestigious North Michigan Avenue and has now opened a boutique carrying Vacheron Constantin, luxury pre-owned watches and estate jewelry. Rob Corder met the inimitable entrepreneur to pick up the story.
WATCHPRO: I just checked my records and the last time we sat down together for a big interview was November 2019 after you opened boutiques for A. Lange & Söhne, IWC and Panerai in Chicago’s Waldorf Astoria hotel complex. It is hard to fathom what the world has been through since then. How have you handled the past 18 months?
Matt Burdeen: Those new boutiques have done very well. We have outperformed our expectations and Richemont’s expectations of us, especially with A. Lange & Söhne, which has been on fire. We have been a very strong performer for them, so everybody is delighted.
We got a great allocation from Lange, perhaps because we were one of the only boutiques in the world that was open for much of last year. We have amazing personal relationships with our clients, which means we were able to generate business throughout the turmoil of 2020.
We also have a fantastic relationship with Rudy Chavez [president of A. Lange and Söhne USA]. He is just a rock star to us. We had a client who wanted a special piece that was only available in the New York boutique, which was in lock down so nobody could go in or out. He drove to the boutique himself, grabbed the watch from there and overnighted it to us so we could make the sale. Who in the corporate world does that sort of thing? It was over and above the call of duty.
WATCHPRO: That is fantastic to hear because, as you say, the world of large corporations like Richemont can make them much less sensitive to the needs of retail partners and your customers too.
Matt Burdeen: I have had the opposite experience. I have the cell phone number of every brand president in Switzerland and in the United States. I can call any of them and they will either answer or call me right back.
When we had the riots in Chicago, I got personal phone calls from the global president of every brand that we carry to make sure we were OK and to offer any help that we might need. Nothing was too much trouble.
WATCHPRO: Interestingly, I have had a few conversations recently that suggest Richemont may be reconsidering its inexorable march towards selling everything direct to consumer and is showing a much greater appreciation of the benefits that great independent partners bring to the business.
Matt Burdeen: Absolutely, they do value the expertise and relationships we bring. Chicago is an unusual market. Seen from Europe, Chicago looks like the third biggest city in the country. It is seen as this giant metropolitan area, but I always liken it to one borough of New York. Really, that is what Chicago is. Pretty much all the action in the city is concentrated in this Gold Coast area. It is not like there are all these different centers of economic and retail activity.
Richemont realises that, and a lot of larger brands do not. Tourbillon, Swatch Group’s multibrand retail concept, failed here. Tourneau had an outlet here that failed. Chicago is a big, small, town.
What we have done is to make sure our sales team is engrained in the community. We encourage them and financially support them to get involved in local philanthropy and community projects. We want them deeply involved, and that is what develops great relationships, rather than us just waiting for people to wander into our stores.
WATCHPRO: Your team must have been severely tested over the past 18 months. For how many weeks or months were you forced to close your stores during the pandemic and the rioting?
Matt Burdeen: We were forced to close for about six weeks, but we were allowed access to our stores and were able to hold private meetings with clients there.
On day one, when we found out we were going to have to close, we took the decision that we would continue paying everybody their full salaries. For commission salespeople, we even gave a stipend to make sure they were OK as well.
They really appreciated that and returned it with loyalty to the business, they worked 150% for us. The sales team, marketing team, accounting team; everybody was amazing.
They all had to learn new skills. Our accounts team, for example, mastered how to access government support like PPP and loans. It was tremendous, and it is times like this that you really get to know people.
WATCHPRO: I assume that six weeks would have been at the start of the pandemic in March, but then no sooner had you reopened than the riots erupted.
Matt Burdeen: We have two locations downtown including one called B. Young & Company and our boutiques at the Waldorf. Both locations were looted twice.
Everything valuable was in vaults, so we did not lose much as far as merchandise goes, but all of the beautiful furniture was destroyed; cigarettes were ground out on our carpets; people were just walking in and kicking stuff over to break the glass.
It was very demoralizing for it to happen twice. It was actually one of our biggest challenges to keep morale up when all that was going on.
WATCHPRO: Even though your merchandise was in vaults, there must have still been huge costs associated with the loss of income and then cleaning up and repairing everything.
Matt Burdeen: It took a long time, particularly since covid held everything up like replacing the furniture. It probably took six to eight months to repair and replace everything.
Again Richemont was incredibly supportive and helpful. They tried to pull furniture from other places so we could get up and trading again, which really helped.
Thank god, nobody was hurt, and everything physical could be replaced. I am not as emotionally attached to stuff as some people might have been. I care much more about our people. I knew we were in a good position financially, so I was not super-worried.
In fact, after the first riots was when I signed the lease for our new store, which we will come on to talk about. Everybody was talking about Chicago being over and the world ending, but I thought that was a good time to make a sharp deal, which we did.
We had to grab that opportunity because it is very difficult in a major city like Chicago to make a profit because of the sky high rents.
WATCHPRO: Let’s get into the story of that new store. I know you are really excited about it.
Matt Burdeen: We sure are excited to be bringing Vacheron Constantin to Chicago. I am sure you know they are opening a spectacular new flagship in New York. That gave us a lot of confidence in the brand.
Mr Ferla [Louis Ferla, CEO of Vacheron Constantin] has made it a priority to open boutiques, and that makes us comfortable that we will have the support we need to make ours a success.
WATCHPRO: What is the deal? Is it is a joint venture?
Matt Burdeen: No, we own the boutique and we have a four year contract that we can keep renewing.
WATCHPRO: Where is it located?
Matt Burdeen: It’s at 909 North Michigan Avenue, in between the Bulgari and Omega boutiques on the block right next to the John Hancock building.
We have very special boutique with a beautiful VIP room at the back. The Burdeen side is exciting. We convinced Studio K Creative, which is a design house here in Chicago that has created some of the most iconic interiors like the Nobu Hotel and a bunch of restaurants. That was another opportunity because they did not have as much work lined up as usual so they were delighted to get the job with us even though they would not normally take on projects this small. They have a designer from Amsterdam, and she brings this really cool aesthetic to us.
The capital expenditure for the new store, which is 2,200 square feet, is the same per square foot as we spent on our other Richemont boutiques, so it is really spectacular. We are about twice the size of the Bulgari store to one side of us, and about 50% bigger than the Omega boutique to the other side.
The idea of the design is to give it a sort of speakeasy feel with a long artistic gallery that goes into a back room where we have a beautiful table in front of an open fireplace. We will have hundreds of pre-owned watches there and we will specialize in estate jewelry, which is not something Chicago has from any other retailer right now. Vacheron Constantin will be the sole new watch brand at the store.
The pre-owned watch boutique that shares the same retail unit with Burdeen’s Vacheron Constantin boutique.
WATCHPRO: Was it your most famous Chicago son, President Obama, who said that you should never waste a good crisis? It sounds like you have followed that advice to the letter.
Matt Burdeen: That’s right. We are resilient. Chicago is resilient, America is resilient and everything is going to come back. This is a spectacular, beautiful city. We have had a bad rap with the violence and the politics that has been going on, but it is a great destination.
WATCHPRO: The portfolio of brands you are carrying, and the investment you are putting into them is really taking your business to a new level. Is that also helping with the pre-owned side of things?
Matt Burdeen: Pre-owned has been on fire, and we have over 1,000 units available for sale. We have been building up that inventory ahead of opening this new store, but pre-owned has always been an important part of our business, and we are always looking to buy great watches.
WATCHPRO: Have you ever experienced the sort of price rises we have seen since the beginning of the year in pre-owned? It seems the hottest models are getting even hotter while more and more references and brands are catching fire.
Matt Burdeen: Quite honestly, it is a wonderful time to be in our industry because brands are really understanding the power of scarcity and how success in pre-owned can strengthen brands overall. Before, brands thought that pre-owned was a completely separate thing, but now they realize how much pre-owned affects the new market. More often than not, customers research what the pre-owned prices are doing for a watch they want, and that is influencing what they buy.
WATCHPRO: I have never met a jeweler yet that talks on the record about the importance of the investment potential for their timepieces. Everybody wants to sell to watch lovers rather than investors, but it is simple human nature to be attracted to an asset that will hold its value or even increase rather than drop 30% as soon as it gets out of the door.
Matt Burdeen: You have two different types of consumers. You have consumers that are buying a piece of jewelry that aesthetically they love or they are fans of a brand. But a large percentage of consumers want to know what the value is of whatever they buy. I would use the term value rather than investment potential.
Ulysse Nardin is super sensitive to this, particularly since Kering took it over. They are doing a fantastic job of really cleaning up the brand and making it more exclusive.
WATCHPRO: It is amazing how much more dialed into the secondary market brands have become, I would say particularly since Richemont bought Watchfinder, which allowed it to bridge the gap between the primary and secondary markets. They also became leaders in ecommerce with Yoox Net-A-Porter, and they dramatically improved their global inventory oversupply problem when they spent hundreds of millions on buying back stock. The work that has gone in over the past five years to better match supply to demand has transformed the situation for Richemont and partners like you.
Matt Burdeen: It all changed. They are very sensitive to SOSI (sell out, sell in), rather than just pushing product onto retailers. Scarcity is so important in luxury. I would much rather tell a client that I can’t get a piece than have too many.
We are trying to sell something that is precious and exclusive. It is hard to do that if they are all over Jomashop and places like that. Those companies have started pivoting more into fashion because they are finding it so difficult to get their hands on watches from the key brands.
WATCHPRO: Most retailers I have spoken to say that ecommerce and clienteling increased dramatically during lock downs. Was that your experience?
Matt Burdeen: Absolutely. I would say that over 70% of our business during the pandemic was ecommerce and telesales. We have invested in a custom CRM system over the past 18 months, and that turned out to be a fantastic investment during this time. But, like I said, we have always been on the ground reaching out to our customers rather than waiting for them to walk in.
I delivered an IWC tourbillon watch to a customer’s home during the lock down. I picked the watch up from our boutique, when to his house, left the watch on his doorstep and called him from the street to tell him it was there. We just waved at each other and laughed.
WATCHPRO: We all have our own versions of those stories, and I am convinced it is character-building and will be good for us and our teams in the long run.
Matt Burdeen: I agree. The tougher it gets, the harder we work. I remember starting out at my parent’s store and the gross sales were less than $1 million per year. I grew up sweeping floors, changing straps and watch batteries, helping every customer that came through the door. Doing whatever it takes is not new to me and my salespeople could see that, which motivated them.
My wife and I were the first people into the store after the riots and we grabbed brooms and started sweeping up the mess. I did not want my staff there because it was dangerous and I thought it would be emotionally easier for me to handle the problem rather than my team walking in and seeing the store destroyed like that.
We came in at 6am past the roadblocks that were out on the streets and started the clean-up. It was humbling and a good reminder of who you are and where you came from.
WATCHPRO: Stop me if you don’t want to talk about this, but it would be remiss of me not to ask about the situation at fellow Chicago jeweler C. D. Peacock earlier this year. That has the potential to change the landscape in Chicago so you must be watching with interest.
Matt Burdeen: It is, for sure. I do not have any first-hand information, but it sure is interesting. That company is run a different way to ours. It is run remotely so who knows what went on.
I do not expect Rolex or Patek Philippe to make any snap decisions. They will see how it plays out to the end before they decide what to do.
WATCHPRO: It is certainly key to the success of Rolex and Patek Philippe that they are loyal to their retailers and they expect loyalty in return, so I am sure you are right that they will not rush to judgement. But there must be a part of you wondering whether, if the cards fall a certain way, Rolex and Patek Philippe might want to shift their support to another retailer and I assume you would welcome them with open arms?
Matt Burdeen: I would love the opportunity, for sure. We think we have a solid infrastructure to open more stores and boutiques in Chicago. We really understand the situation on the ground here and we would welcome the chance to work with any great brands.
The most important thing for us is that brands that want us to open boutiques for them have already opened and run their own boutiques. We want them to have walked the first mile in our shoes so they really understand what it is needed to be successful.
WATCHPRO: Rolex and Patek Philippe do not have their own boutiques, but I guess that would not deter you from taking them on in Chicago?
Matt Burdeen: That’s for sure. That is the lay-up, the low-hanging fruit, and I have never had the luxury of picking that fruit. I would love to.
WATCHPRO: What is working for you that did not work for Tourneau or Swatch Group when they were running multibrand showrooms in Chicago?
Matt Burdeen: It is that corporate structure that does not work here. The most successful stores in Chicago are all family-run businesses. It took these companies a long time to realize that.
WATCHPRO: We are speaking in early May. What is the situation on the ground now in Chicago? Is everything pretty much back to normal?
Matt Burdeen: The mid-Western tourists, which make up most of our clientele downtown are people from Ohio, Minnesota and Wisconsin. They are not traveling any place else but they are coming into Chicago to eat out and for entertainment. They have fewer luxuries they can spend their money on, so they are coming to us. We have fantastic stock in jewelry, pre-owned watches and the new watch brands we carry, and that means we have been able to capitalize on that situation. We have not held back on buying the best pieces at every opportunity we get.
WATCHPRO: How did this year work for you with the big Swiss shows moving online? You are a big Richemont partner, so ordinarily you would have gone to meetings with the brands at Watches and Wonders in Geneva. What did you do instead?
Matt Burdeen: That whole digital presentation thing was exhausting. I am an in-person guy. I’ll greet you with a handshake, give you a hug and take you for a drink and dinner. To sit on Zoom for hours on end, sometimes listening to the same pitch twice from the European and US teams, it was very difficult. It definitely was not as exciting as going to Geneva.
WATCHPRO: Is the outcome the same? Do you know your allocation by the end of those goddam Zoom calls?
Matt Burdeen: It is the same, and we do know what watches we are getting, it is just not as exciting. On the flipside, we have been able to line up video calls between clients and people very high up in Switzerland because of our status. VIP customers have been able to speak directly to watch designers and global CEOs about new watches.
That has been a benefit. Clients have been able to see the novelties straight away, rather than waiting for them to arrive in this country, which makes them feel good. I expect that to continue. Brands will set aside time for these VIP clients and give them one on one attention.
IWC did a spectacular job creating an amazing studio so they had incredible cameras that could show watches in fantastic detail. The sound and lighting was great and it was for sure the best presentation of all the brands. Others were just holding up watches to their webcams, which we all know doesn’t work.