Long’s Jewelers has five stores across Massachusetts and New Hampshire and — covid restrictions permitting — will open the largest Rolex boutique in the United States this side of Christmas. CEO Craig Rottenberg and his brother Judd are not ending their expansion ambitions there, and are looking forward to the post-pandemic era when a trend towards retailers consolidating into larger but fewer stores is expected to accelerate.
WatchPro: Like so many of America’s leading jewelers, Long’s has a history that pre-dates the current Rottenberg family owners. What can you tell me about how the business was founded 140 years ago?
Craig Rottenberg: The very quick history is that, yes, you are right we are a 140-year-old company, founded here in Boston. We are not the oldest retailer in the US, but we are among the oldest. Thomas Long started it, and there is a bit of a grey area in the history that we have not quite managed to reconstruct, but it ended up in the hands of Birks in Canada when it owned a whole portfolio of US companies including Shreve, Crump & Low, Shreve & Company, and others.
One part of our story was that time as part of Birks. The other side is looking at our family, which started with my grandfather, Hyman, when he opened a store called Ross Jewelers in Lynn, Massachusetts. My father Bob Rottenberg joined that business in the 1960s and he was the visionary that grew it into a chain. At the time there were a lot of malls being built and there were no national players like Zale and Kays to fill them; only regional players like Ross. So my father put stores into a lot of these new malls.
My father was a huge admirer of competitors like Shreves and Long’s, and so when Birks ran into trouble in the late eighties and early nineties, he was able to jump in and get Long’s as the wheels were falling off the Birk’s US operation and fell into bankruptcy. Long’s came into the hands of our family and we operated both the Ross and Long’s brands for a period of time, but it was clear that Long’s had the better name and history; it had better brands across timepieces and jewelry. It was also becoming clear that while once malls were a great place to be, they were pivoting towards a younger demographic that made them less viable for us.
We wanted to consolidate into one brand, which we knew had to be Long’s. We closed a number of locations that were no longer working and focused on doing more with fewer doors.
WatchPro: You and Judd are the third generation to run the business. Was it always destined that you would take over from your father?
Craig Rottenberg: That’s right, my brother Judd joined the business in the nineties, almost straight out of college. He worked briefly with a diamond specialist to learn that side of the business before coming into Long’s. I took a different path. I joined the company 15 years’ ago, having spent 10 years doing other things. I was on Wall Street working for a private equity fund. I did some entrepreneurial things including starting a technology company. I went back to school and got my MBA at MIT. After that I felt the draw of retail. I had worked weekends and holidays in the family business when I was young and was always fascinated.
After my MBA, I went to work for a merchandise optimization company that helped big companies to use analytics to make smarter business decisions, particularly around the area of merchandising and mark-down optimization. Our customers were Bloomingdales, Nordstrom, The Gap, Anne Taylor — really big retailers.
It was fascinating because, even in those large businesses, you could see both traditional and old fashioned retail practices going on at the same time. I distinguish between the two because tradition can be a strength, but what I found was that many of these companies were making decisions based on gut instinct without the science to back it up. I am in no way saying that science is everything. I am a big believer that there is art to great business decisions as well, but bringing art and science together is what really helps companies succeed.
Working for that company, which was called ProfitLogic and was eventually acquired by Oracle, rekindled my interest in getting into retail in a major way. The timing was right to return to Long’s in 2005 because it had expanded, we had different locations, we were really looking at how to step on the gas, and I was excited about what I could do back in retail. It is in my blood.
WatchPro: I have known executives like you, which have spent years out of the business in areas like finance and technology, struggle to be accepted in the jewelry and watch industry where people are expected to have spent their childhoods at the bench learning to polish diamonds or service movements. It can be ridiculously old fashioned that way and almost afraid of people with new ideas.
Craig Rottenberg: I am a weird hybrid because through my teenage years I was in the family business; not at the bench, more on the commercial side, but I have always had that familiarity and relationships with people. It wasn’t until I was in my thirties that I came back into the business, and I think the different perspective that my time away gave me has been really beneficial to the company.
WatchPro: I am guessing you came back to Long’s bursting with new ideas. How did you and Judd work things out between you?
Craig Rottenberg: Judd and I have always got along fantastically. What is great about our working relationship, and this includes my father, is that we all have different interests. In any family business like ours, which has 100-plus employees, we all wear a lot of different hats at all times. My brother loves product and he loves to sell, but I spend more of my time on the business side. That works beautifully. We defer to each other. My father, brother and I share the same vision, we just have different approaches on how to get there.
WatchPro: You have five stores today across Massachusetts and New Hampshire. Do they all have more or less the same brands and a similar split between fine jewelry and luxury watches?
Craig Rottenberg: We are a fairly balanced business. Timepieces, jewelry and what I call bridal all contribute. The percentages may shift over time, for example with Rolex really taking off, but we design the business with balance and diversity. We are driven to be a business that will serve our customers whatever the occasion they are celebrating. We find that once you have credibility and trust with a customer, we can build a great relationship that lasts for years.
The brands are fairly consistent across our stores. We have Rolex in all of our stores. Beyond Rolex, there is more of a mix so we have some brands in just a couple of doors. That serves us well. Four stores are in Massachusetts. One is in Boston’s financial district, the equivalent of Wall Street up here, the others are in surrounding suburbs, including the store in Nashau, New Hampshire, which is just to the north of Boston and practically another suburb.
Our store there is just 200 yards from the Massachusetts border. The great thing about Nashau is that it is tax-free, so people will drive up there in order to save a significant amount compared to stores in Boston. That is a great store for us.
WatchPro: Obviously Rolex is your key anchor brand, but you are also an authorized dealer for Cartier, Omega, Breitling, Tudor and others. Most retailers with a brand portfolio as strong find their center of gravity shifting towards watches and away from jewelry. Have you seen that or have you managed to maintain the balance you talked about?
Craig Rottenberg: I do agree and Rolex has led the charge for us. It is extraordinary what Rolex does. Their long term focus has paid short term dividends for us recently. Overall we love the watch business and selling fine timepieces. A lot of people here are very passionate about watches. It brings in a lot of traffic and often our watch customers become great fine jewelry customers and vice-versa.
WatchPro: These brands increasingly demand investment in their presentation, in training of your teams, in service operations and much more. Jewelry, particularly your own jewelry, makes lesser demands on your capital. The journey with Rolex over recent years has seen them wanting shop in shops, then their own window, then a boutique, an authorized service centre, qualified watchmakers. It is never-ending.
Craig Rottenberg: If we are going to take Rolex as the best example, they are incredibly demanding, but it works. What they are asking us to do is to create a global standard while working with thousands of authorized dealers. How many companies of that stature and brand reputation could have done that without ever running their own retail and dealing directly with customers? It is extraordinary for them to be relying on this network, it works only if they are very clear on the rules of the game and the investment required.
I get it and I like it. It is a level playing field and, from an economic standpoint, it is worth it. If the brand was not performing and they were still making all of these demands, it might be a different story.
WatchPro: And Rolex does not compete with you in the say that some of the brands you work with do through running their own stores and ecommerce operations.
Craig Rottenberg: Exactly. That makes it easier to want to be a great partner. It feels like they are investing in us as well. Every brand requires huge investment in the inventory, the marketing, the training and I always have to keep an eye on whether that is delivering the right return. That is why we have stayed very focused with our watch portfolio. We want to be in a position to make the investment that makes sure each of our brands performs. It might feel great to have an amazing watch brand in your store, but if it does not perform, what is the point?
My outside perspective has helped us because it is easier to check that ego at the door and decide that we don’t need every brand.
WatchPro: I can see that you have a reasonably tightly curated portfolio of the most commercial brands. Do you consider smaller independent watchmakers that might be making fewer than 1,000 watches per year? It feels like these brands are performing well because people are looking for something new and authentic, and these watchmakers can tell their stories well over the internet.
Craig Rottenberg: I agree. There is a movement in all parts of luxury retail. It is customisation, it is personalisation, and that is trickling into the watch world where people like unique things. If you want something that is broadly available, it has to be really special. If it is not special enough, what is the point?
You can look at the rise of sites like Etsy, which is flourishing right now, that is because people love the idea that an item is made just for them.
WatchPro: We can’t avoid talking about this unprecedented year. How were things looking for you coming into the covid quarter?
Craig Rottenberg: We came off a record 2019 firing on all cylinders thanks in part to a strong economy. We had been relentless about investing in our brand and grabbing market share through traditional and digital marketing. Our DNA is always trying to move forward. Treading water feels like moving backwards.
The first two months of 2020 were record-breaking for us, and then the brakes were slammed on. The hardest part for me about covid was the uncertainty. How bad is it and how long will it last?
I know we are going to come on to talk about this, but the opening of a Rolex store in Boston, which we are planning for this December, was a long time in the making. That lease was signed last summer so we were committed and well into the steps of designing and building the store. Covid put all of that into question depending on how bad and how long the pandemic was going to last.
We did not know what the impact on the business would be with the closures and, even when we reopened, we did not know how customers would react.
April was a horrible time because we did not know how to predict things. It was nothing like a normal recession like we had in 2008/9, which we knew how to handle. We never planned for revenues dropping to zero, or close to it.
Massachusetts was similar to New York and other parts of the north east because we have an incredibly conservative governor, so we were shut down for almost four months. As time went by were able to do some business through ecommerce and then kerbside pickup. It was really hard.
We are always looking for the next opportunity, which is why this Rolex boutique we are opening is so perfect for us. We are ready to make a big investment.
WatchPro: Did it hit your city center stores more than those in the suburbs?
Craig Rottenberg: All four Massachusetts stores were affected equally, because it was a state-wide decree to stay shut from the end of March to the middle of June. New Hampshire, fortunately, relaxed things a little bit earlier so we were able to open in Nashua in mid-May. That was a huge help because we had a point of sale open that people could visit.
We tried to use the time productively and kept our team active with training and new initiatives. We launched a mobile clienteling app, so that our team could reach out directly to customers to discuss their needs. Before that, all those conversations took place in stores.
We relaunched our website, which we have wanted to do for some time. The plan was not to stay still, but to lay the groundwork for post-covid life.
When we reopened, demand was really strong. We saw in most parts of our business — certainly in timepieces and especially with Rolex — that there was pent up demand. There is a trend that, even if people are not trapped at home, they are not traveling and spending money on fine dining and entertainment. That meant there was a lot more disposable income around and we found that people wanted to cheer themselves up.
There is a shortage of luxury goods across the board. You can’t buy a luxury car or boat right now and we really benefited from that.
WatchPro: Has the experience of shopping changed for your customers since reopening?
Craig Rottenberg: We have made certain changes. First, we are open five days a week, not seven, because we want to have a chance to reorganize and clean the store. The door is locked and we have a concierge greeting every customer to make sure we take them to the right part of the store to meet the right person and give them an amazing experience. If they are looking for something that we cannot provide, we tell them so that they don’t just come in and walk around.
In spite of that, we have found demand has been pretty remarkable.
We will see how the fourth quarter goes. Things are pretty uncertain again. Cases continue to rise across the US but we are still open for business here in Massachusetts and New Hampshire. We hope it stays that way and we are remain optimistic that we will the Rolex Boutique open before Christmas.
WatchPro: Most retailers at the luxury end of the watch market have said that conversion rates have gone through the roof because people have only been venturing into shops if they are really committed to buying something.
Craig Rottenberg: Traffic is down, but conversions are way up, which has added up to solid business. I one hundred percent agree.
WatchPro: Are you seeing a rise in average transaction values as well?
Craig Rottenberg: Absolutely. That is happening across the board. If people spend, they want something of quality. Retail therapy is helping people to feel better and, traditionally, jewelry is one of those things that makes people feel better, although we are not selling “occasion jewelry” because there are no big events, no big weddings. We have adjusted to that.
WatchPro: You have talked about Long’s being entrepreneurial and always investing in future growth. That can often mean you put cash to work rather than hoarding it, and that strategy might have caused difficulties in a year like this. Did you have to make adjustments?
Craig Rottenberg: I would rather not comment on our balance sheet beyond saying we are in a good position, but I will say that our philosophy is to reinvest what this company makes into a bigger engine. We are always looking for the next opportunity, which is why this Rolex boutique we are opening is so perfect for us. We are ready to make a big investment.
WatchPro: Let’s get into the story of that Rolex boutique. Having set the train in motion last summer, was there a time in the spring when you felt you had to delay that investment until you knew what the impact of covid would be?
Craig Rottenberg: We never doubted, even during the dark days of the shut down, that this was right for us. During lock down, we were taking so many calls so we quickly knew that the demand for Rolex watches was there.
It is incredible. Rolex’s discipline in limiting the growth of supply and keeping things steady has been remarkable. Like every Rolex dealer we are fighting for more of our share of watches, but demand is strong across the range. It is not just steel. We have never seen so much demand for gold pieces than right now, even in the middle of the pandemic. We just can never get enough supply, but that is a good problem to have.
Part of me wishes we had more so we can make as many customers happy this Christmas as possible. But at the same time our business is growing, so we cannot say Rolex is not taking care of us.
WatchPro: What details can you share with me today about the new Rolex boutique you are opening?
Craig Rottenberg: We believe it will be the largest Rolex boutique in the United States. The entire space is about 4,600 square feet, most of which is going to be Rolex retail space. It is over two storeys. The address is 8 Newbury Street, which is right in the middle of a block that has seen a flurry of new luxury stores opening from the likes of Cartier, Van Cleef & Arpel, Richard Mille, Bulgari, Chanel. This is the only location that would have made sense. It is like Bond Street in London or 5th Avenue.
One of the challenges with Newbury Street is that it is all old buildings and not all of them are suitable for retail with small entrances and little visibility through the windows. One of the great things about our property is that we have an extraordinary vertical exposure. We are very excited about what it is going to look like.
WatchPro: Do you have a date for the opening?
Craig Rottenberg: We are trying as hard as we can to get open in December, but we need a lot to come together. Our original plan was to open in September or October, but that was impacted by covid.
WatchPro: There is a rumor in the market is that you are working with Hong Kong’s $7 billion Chow Tai Fook Jewellery Group on this Rolex store and you could be opening a number of additional stores together in the north east. Is there any truth to that, because it would be huge news to have Chow Tai Fook following Bucherer and The Watches of Switzerland Group into the United States?
Craig Rottenberg: I don’t mind you asking, but I can tell you that is absolutely not true. We know Chow Tai Fook. We have had a long relationship with their Mémoire brand in the United States [Chow Tai Fook North America was established in Boston in 2019 and distributes Hearts On Fire and Mémoire jewelry brands], so I have spent some time getting to know them. But they are not involved in this venture in any way. They are a powerhouse retailer, and they are interested in growing their business in a lot of ways, but they are not part of this.
It is interesting that Bucherer and Watches of Switzerland are investing in this market. What is amazing about this industry is how fragmented it is, and how you have all these incredibly strong local brands run by families, and that has endured for generations. I think about the long term sustainability of that. You have massive consolidation in the industry even before covid with stores closing. You have operators close to retirement that do not have children to take over the businesses. I think there is going to be consolidation among some of these independents with the best operators taking a lead. That is really intriguing to me.
Multi-store regional chains like Long’s have the infrastructure to run several stores and you are starting to see some great names, some of them with Rolex, putting themselves on the market.
WatchPro: So much of this is about the most powerful brands like Rolex and how they choose to work with independents and major international groups. If Bucherer and Watches of Switzerland have the power to twist arms in Geneva and secure watches, that leaves operators like Long’s wondering whether the only way to compete is to scale up to the point where you also have leverage with the brands.
Craig Rottenberg: The advantage for Bucherer and Watches of Switzerland is that they have the relationships and the money to invest to build up the visibility of watch brands without hesitating.
WatchPro: Are you planning to be part of this consolidation and does that mean you are looking for acquisitions?
Craig Rottenberg: I would rather be driving the bus than throwing the keys to somebody else, but there is nothing in the pipeline at the moment. What I do expect in 2021, when the pandemic is over, is a lot of action that you have not seen for a long time.
WatchPro: There are always three parties in a negotiation to acquire another retailer: both retail companies and the powerful watch brands that can make or break a store like Rolex, Patek Philippe or Audemars Piguet. I am sure you would love to acquire a business with Patek or AP, but it is impossible without their blessing.
Craig Rottenberg: Those three brands are all partners in our business already; maybe not from a legal or economic perspective, but the way we run our business is in partnerships. The brands will no doubt be part of the [consolidation] process. They hold a lot of the cards.
Covid is accelerating trends that were already happening. Brands are going to make moves that would not have happened before.
If you wish to listen to the audio version of the interview, follow WatchPro on Spotify and tune in here: