WatchPro’s Rob Corder visited the flagship store of Fink’s Jewelers in Roanoke, Virginia, at the end of March just as the Coronavirus pandemic was starting to affect businesses and found father and son Marc, the company’s chief executive and Matthew, its president, planning for a future that will have been buffeted by the virus, but not blown off course. An update from Marc in late April, which we include here, struck an optimistic note, despite closing all stores and relying on ecommerce sales through the crisis.
The business has since reopened ten out of eleven stores in Virginia and North Carolina with Matthew Fink describes trading in late May as, “different, but we are optimistic that with time it will return to previous levels”.
WatchPro: I typically ask first about the history of a retailer, but in the current Covid-19 emergency, it is hard not to start with that. How have you, the team and your customers been managing?
Matt Fink: The team is well and safe. We have been conducting business with our clients virtually through our website as well as communicating through text, email, postcards, letters and phone calls. We are here to service whatever needs our clients have, and we hope that everyone is staying safe and healthy.
We will reopen our stores once our State-mandated stay at home orders have been lifted, and it is safe to do so. Ecommerce has been healthy, comparatively, but this is also aided by our sales associates. It is not making up for the closures.
WP: How do you think the remainder of this year and into 2021 will look?
Matthew Fink: We are planning very conservatively and reevaluating constantly. We are hopeful that the world can bounce back over time.
WP: How have your suppliers, in particular the watch brands you work with, been treating you through this unprecedented time?
Matthew Fink: Brands have been very supportive to us during this time.
WP: This will not be the first crisis you will have lived through, since Fink’s Jewelers is recorded as being founded in 1930, and around the table today we have third and fourth generation leaders of the business. Why don’t you give me a bit of background on how the company has developed over the past 90 years?
Marc Fink: My grandfather was a pharmacist by trade, and back in the 1920s and 30s, you had drug stores that supplied medicines, but they also had sandwich counters. Those are gone now. Of all places, he had a drug store in Salma, Alabama, He had to close the business in the 1920s because the economy was so bad and he came up to Roanoke to work for a jewelry business.
In 1929, that jeweler he was working for lost everything in the stock market crash of the great depression. My grandfather ended up pushing a wooden jewelry cart in downtown Roanoke selling jewelry that he had on consignment to customers to whom he extended credit. There was hardly any cash changing hands until the customers paid my grandfather and my grandfather paid the suppliers.
That is how it started, and from there he opened his first store and grew it to around ten stores in lots of small towns in the 1950s. But in 1960, my father and his brother-in-law split up the company and Fink’s Jewelers ended up as just one store in downtown Roanoke.
During the time my dad was running Fink’s after 1960 we saw it grow back up to seven stores, but four of the stores were in Roanoke, Virginia, which was crazy. Times change, and today we are in eight markets with 11 stores.
We are consolidating. Our stores in prime locations are doing better but, because some malls that we are in have gone downhill quickly, we have been building bigger and better stores in our best locations and closing stores in the declining locations.
Eventually, we will be at ten or eleven stores, down from seventeen in 2013 and 12 today. They will all have the right mix of product and be delivering considerable value. They are bigger, better stores. We are closing all our smaller under-performing stores.
Matthew Fink: Our business keeps growing. We will do around 10% more business with twelve stores this financial year than we did with fifteen stores two years’ ago. That is the trend.
WP: Tell me about the culture and philosophy of Fink’s as a multi-generational family business in Mid-Atlantic States.
Marc Fink: The cornerstone of our business is the way we treat our customers and build relationships. You can buy what we sell everywhere, but we are obsessed with the quality of people that work with us. We have incredible people, not just running the business, but throughout the company.
We are very entrepreneurial. Many of our store managers have worked for much bigger companies throughout their time in the jewelry business, but they like our culture, they love personal selling and they want to take care of individual clients. On top of that, we work with the best brands in the industry so they like quality.
Virginia and North Carolina both have very strong economies. The Mid-Atlantic is a good place to be. We have a milder climate so we have a strong population of baby boomers and affluent people because it is warmer than the northeast or Midwest. A lot of retirees come to this part of the country. Not everybody wants to go to Florida. So our business continues to grow.
Matthew Fink: I was recently looking at the staff turnover in the whole company and over half of our team has been with us for over ten years. We do not have any sales positions open at the moment.
When you ask a lot of our long term people, and some of them are sales associates, which is a notoriously high turnover role, they love the feel of the entrepreneurial ownership of their client book and their business. We have a highly professional corporate structure, but we are not micro managers of people. That is down to the way my dad is and it is carrying forward.
Marc Fink: We do have weaknesses, but in my lifetime I have been able to attract the best people in each of our markets. We have such a great sales culture and sales force, which is why we are so successful. We have one of the highest per square foot retailers in the United States; we have been for years.
Matthew Fink: We have stores in malls of around 3000 square feet that are doing sales that are second only to Apple per square foot.
One other thing that makes us unique is that we have a very healthy mix of watch business, jewelry business and diamond jewelry business. We are very focused on maintaining that mix because when we meet a customer for the first time, they might buy jewelry first and later buy a watch. Our people own the relationship with that client and are not segmented by product. They get to know their clients and work with them for years. We do not believe in that department store mentality.
Marc Fink: Our sales associates might see one of their client’s kids hit a home run at a baseball game and send them a message of congratulations. It doesn’t get any better than that. What happens when you have that level of care for clients is that you get referral business on top, and that is the best of all.
WP: It always surprises me that the big Swiss watchmakers want to find ways to cut out their retail partners and go direct to consumers. I do not think it is possible to replicate the sort of client relationships you are describing from a headquarters in Geneva.
Marc Fink: The smartest and the greatest watch companies in the world understand that. You are completely right. They want to work with us.
WP: I suspect that your culture of maintaining fantastic long term relationships with customers is the same culture that helps you maintain great relationships with suppliers.
Marc Fink: Absolutely. You have to be prepared to compromise and work with them. In the end, they want to do more business, we want to do more business and we all want to do it the proper way.
Matthew Fink: It is interesting in the watch world there is not as much private equity ownership. There is a little bit more among the jewelry brands that we sell. There are public companies in the watch industry, and two privately-owned brands, which everybody wants to work with; three if you include AP, but they do not really want to work with retailers anymore.
We are a privately owned company that thinks very long term, and we see changes in management and strategies among a lot of our suppliers and we know that some of those tactical changes are cyclical. Sometimes that means we are perfectly aligned, sometimes we are not. We do our best to navigate that.
Marc Fink: The one thing that never wavers is that we always want to conduct ourselves with the utmost integrity and honesty. If you are consistent with that as a business and as people, it will come back to you ten-fold. It is the right way to live your life.
You must have a great product. You need the right people. You have to be in the best locations and you have to be consistent with your messaging. It is not that complicated.
WP: I noticed reading through Fink’s history, it has been a very brand-focused company from the early years. That is quite unusual. Many retailers only really started appreciating the power of working with the best brands in the 1980s or later.
Marc Fink: My dad influenced me to be very brand focused early on. I came into the business in the early eighties. He understood the power of brands and I had the benefit of having him in the business as my mentor so that when the explosion in brands came along, we jumped on it as quickly as possible. We realized immediately how important it is to work with the right brands, but also to build Fink’s as a brand and to create our own jewelry brand.
We did not want our own jewelry to be unbranded or to call it Fink’s jewelry. We chose instead to call it the Sabel Collection, because my mum’s maiden name was Sabel. My mother was a model in Manhattan, and there is a great story that links her life to the Sabel Collection. That is very exciting to us, and on the jewelry side, Sabel Collection is the fastest-growing part of the business. It has gone from being 4% of our business to a little over 10%.
WP: Do you have the same relationships and work on the same terms with brands today than you would have in the past?
Matthew Fink: Ecommerce has changed things. If a brand in the past wanted to work with us, they would ask to be stocked in each of our stores, and we would consider it a success if we had their watches in all stores. Now, we launch new brands online and with a single store. That is very powerful because it gives all of our stores access to that brand. We have done that a few times lately and it has worked well.
Marc Fink: Another example of a positive change is the level of training that the top brands give to our people. For Swiss watch brands, their expectations from our people in terms of training has risen exponentially over the past decade. It is so important for our people to immerse themselves so that they can represent the brands the right way.
We carry this through into the way we present the watches in our stores. We are always quick to invest with all brands for the proper look in stores. The stronger the brands, the better they have done with this.
WP: It is clear you do not like speaking about individual brands, but the most powerful players — and everybody reading this knows who we are talking about — are effectively rolling out their own monobrand boutiques, and retail partners like Fink’s are paying for them.
Matthew Fink: That may be truer in the biggest markets in the United States like New York, California, Miami and Dallas, but you can see from the pictures of our stores that you see the Fink’s Jewelers brand about as frequently as you see other brands. You could argue this is a good thing because having international brands demonstrates that we stand behind selling quality.
WP: Being an authorized dealer for Rolex, whether that is in every store or just a fraction, gives you the right and makes you obligated to splash with Rolex at the top of your website’s home page. Does that branding define Fink’s to a certain extent?
Matthew Fink: It depends how customers are first introduced to us. In Roanoke and Charlotte, many people will have first come to Fink’s to buy an engagement ring and will know us as a diamond jeweler. If you are looking for a Rolex in one of our markets, and that is your first contact with us, I suppose it will be what you associate with Fink’s and that is a good association to have.
WP: Your stores are in a mix of cities, towns and semi-rural locations. Is it easier to make money in a really crowded and competitive market like Richmond or Charlotte, or is it better to have the market virtually to yourself like you have here in Roanoke?
Matthew Fink: It depends. To be fully transparent, our top line is definitely driven by volume first, so high traffic cities like Charlotte generate more sales, but the cost of doing business there is also higher. Cost of living, advertising, real estate, everything is more expensive. So, while Charlotte might do more in top line sales than a store like we are in here in Roanoke, the cost of doing business here is lower and therefore very profitable.
Where we are is that we aim either to have a smaller presence in a big pond, or we would need to be a big fish in a smaller pond. You can’t be the only big fish in a huge pond, so a market like Charlotte will have several quality fine jewelers. In smaller markets, there will also be other quality businesses, but they might not carry the same high end brands that we sell.
It is really great to be in a market of 250,000 to a million people and to be the only retailer in that area that sells the brands we sell. That exclusivity is not possible in places like Washington DC, New York or Dallas.
WP: As you reconfigure your network, with some stores closing, others opening and some, are you always focused on a certain level of profitability per store, or per square foot?
Matthew Fink: That is a good way to put it. The situation recently in Raleigh [North Carolina] is a good example because we consolidated two stores into one about five years ago. We are now in such a good location and have more square footage in the single store than we had in two previously. Locations also change. Some of our stores started out in great malls that have become B- or C-grade malls over time, so you have to keep adapting.
WP: Major Swiss watch brands are going through a similar process with their global network of partners. They want to concentrate on a smaller number of partnerships and stores where they can have significant shop in shops or branded boutiques. Are you moving in lockstep with the brands on that trend?
Matthew Fink: We certainly are. We cannot talk about all of them, but we are in conversation with a number of brands about how we can improve their footprints, locations and visibility in our stores.
WP: It sounds like you are combining family values and great care and attention for your communities with hard-nosed business sense and the ability to make bold decisions at the right time.
Marc Fink: I always like to tell people that we are a family-owned jewelry business but we really run it professionally.
WP: How do you feel about The Watches of Switzerland Group and Bucherer coming into the United States with their scale, experience and access to capital? There is considerable investment going into creating spectacular destination stores.
Marc Fink: Even though they are not directly competing with us in many locations, I think they are affecting all States. It shows confidence in the United States market. For us, as long as we manage our business well, it can only be positive.
Matthew Fink: These companies have market share in their core markets of Switzerland and the United Kingdom that will be hard to achieve in the United States because we are so spread out and we have valuable regional knowledge.
WP: In the case of The Watches of Switzerland, they have bought concentrated market share in Florida with the Mayors acquisition, but do you think it would be difficult or undesirable to repeat that elsewhere?
Marc Fink: I can see these businesses making additional acquisitions. For me that is healthy, it shows the market is creating opportunities.
WP: What would you say are the key opportunities and challenges this year as we try to see through the Coronavirus situation into the second half of the year where we have a Presidential election?
Marc Fink: Getting through this Coronavirus phase is our first hurdle. Thinking back to 2016, election years can be a challenge. We hope they don’t stir things up in a way that hurts retailers in December. You never know what is going to happen at the end of any year. An election year can make it unsettling. But we are always conservative and we try to be as careful and think as long term as possible.
Matthew Fink: Once we get through the worst of Coronavirus, I think we will see a tremendous rebound in the United States and for our business. This is a wake-up call for governments and health authorities on how prepared they should have been and need to be. But we will come back. What up must come down and what goes down must come up.
WP: It seems strange to talk about it, but let’s look long term over the coming two to three years. What do you have in the pipeline that you can share?
Marc Fink: The most significant plan is that we are opening a new store in the Fall in Virginia Beach. That will be around 8,000 square feet and will be quite a new format for us. We will have a lot of spaces for customers to interact with our sales associates. A number of retailers have closed around our current location in Norfolk, but our sales have held up. That shows we have become a destination that customers will seek out. But by moving to the number one zip code in the city, we will be surrounded by strong brands and retailers.
Matthew Fink: We will be outside a mall as a key tenant for a strip mall with a freestanding building, which we like. It will be reflective of modern retail with refreshments, a jeweler on site, more entertainment space and seating areas. Virginia Beach has a catchment of around 1.2 million people, and we want to be the biggest and grandest jeweler in that trade area.
Marc Fink: I think the style of the new Virginia Beach store will be a template for our future stores. We will look at the stores we have in our best locations and figure out how we can grow them to deliver the same modern retail experience. That is a better way to grow than looking for new locations in new cities. We are looking for a certain volume now, which is much higher than used to be the case. We switched our focus to this strategy about 18 months ago and we are now seeing same store sales increases of around 20%.
WP: Is that rise in sales down mainly to rising prices, or are you also selling more units?
Matthew Fink: Last Christmas was the first time we’ve had a rise in unit count and the value of sales in five years. That is against a backdrop of lower footfall as we see in every retail market in the world.
Marc Fink: We also seeing rising website sales for the first time since we launched it, and watches have been the fastest growing. It has been a big focus for us and it has taken a long time, but we are starting to see success now. It is a part of the business that does not generate a ton of profit, but it is really important to have that presence and link it to our in-store experience.
For further information please visit Fink’s Jewelers online.