The current weakness of the pound may be sucking in high-spending tourists, but not many of them head for the North of England, stronghold of luxury watch and jewellery group Berry’s. The company’s managing director, Simon Walton, has built his 10 store business empire on outstanding relationships with old family money and the success of local entrepreneurs. No wonder the world’s luxury brands beat a path to his door, as Rob Corder found out on an eye-opening tour of Mr Walton’s three Berry’s shops, plus Owen & Robinson, in Leeds.
WatchPro: In the past year, WatchPro has focused heavily on retailers across the UK who are are doing a phenomenal job creating the most spectacular stores that showcase jewellery and the biggest watch brands in a world-beating way. I’m convinced that Britain’s current success with luxury watches is not really about currency depreciation or anything like that, it is about amazing business people doing a phenomenal job.
Simon Walton: I totally agree with you. A few years ago the watch industry was centred around London. Everything was London, London, London. But I think you’ll find there are 15-20 really good retailers outside London who are very professional. If you go anywhere in the country you will discover these guys really know what they are doing in terms of shop fits, the locations, the size of the shops, the staff, the training, the stock. They are the ones who are really pushing the business forward.
It is amazing what level of watches these kind of people can sell to local people. They’re not just relying on foreign visitors, which are predominately in London. There’s a bit of a tourist trail around the country, but the vast majority are relying on local clients built up over generations.
WatchPro: You have three stores in Leeds?
Simon Walton: Leeds is really our stronghold. This is really where we are well known. We have three stores here so it is our fortress. There are lots of other jewellers here that we compete with but our brand name and our brand loyalty is particularly strong in Leeds. All our three shops in Leeds have slightly different target audiences.
Actually, we have another store in Leeds called Owen & Robinson, so in fact we have four stores in the city. Owen & Robinson was established in 1801, so it is a very old name. I think it was one of the first public companies in the country and they had a number of stores and we ended up buying the Leeds store 25 years ago. Berry’s and Owen & Robinson actually trade independently and we compete. They have different watch brands to Berry’s and the jewellery is very different.
They carry a lot of brands where they are the only place you can buy those brands outside of London. They have A. Lange & Sohne, Audemars Piguet, Vachereron Constantin, Breguet, Blancpain and one or two less expensive brands. They sell Richard Mille as well, which is interesting. We are the only Richard Mille shop outside of London. We don’t sell dozens of them; it is a very different kind of business to Harrods or the Richard Mille London boutique, but we do sell them.
I’m always being asked, how on earth do I sell those watch brand in Leeds? But the catchment area of the North of England is very good. There is money up North, as they say. And over the years we’ve built up a good client base. We have sold Vacheron for many, many years. What we try to do is make Leeds a hub for luxury watch sales in the North of England. With Berry’s we have two stores that sell Patek Philippe. Owen & Robinson sells Vacheron, AP, Lange. So, in Leeds, you can come and buy almost any quality watch you could do in London.
What we realised a few years ago that we were not really competing with local jewellers. We were really competing with London and the jewellers abroad. That’s what we’re trying to do.
WatchPro: Am I right that you don’t do Rolex?
Simon Walton: No, we had a disagreement. We did sell Rolex in two stores in Leeds, but we had a bit of a falling out with them about five years ago. At the time I thought the world had come to an end but we’ve done very well and managed without it. It’s obviously a major brand and we miss it but we’ve kind of concentrated on particularly Patek Philippe and put our energies into Patek Philippe.
WatchPro: Where is Rolex now?
Simon Walton: They are here. A jeweller opened with a Rolex boutique opposite another Rolex boutique in Commercial Street in Leeds, so there are two opposite each other [run by Goldsmiths and Prestons].
We own most of our properties and about five years ago we decided to open an Omega boutique, inside one of our stores. That started a chain reaction and before long there was a TAG boutique with Beaverbrooks and then soon after there was a Rolex boutique. We then decided to open a Breitling boutique. Now, between us, we have created almost a Bond Street in Leeds. It was revolutionary at the time. Since then Manchester has done a similar thing around St Anne’s Square where there are lots of monobrand boutiques.
WatchPro: I’m not certain those monobrand stores are working financially for everybody.
Simon Walton: It works for us because we own the property. I’m not so sure it works with the high rentals and business rates some companies have to pay. Our Omega and Breitling stores trade very well, and it also works well despite the fact that we have two other shops selling Omega in Leeds – Berry’s has it in Albion Street and we have it in the Victorian Quarter. You wonder why people buy Omega from a Berry’s shop when they can go to an Omega boutique. The answer is that they are loyal to us [Berry’s] and they want to go into a multi-brand shop.
It is nice for people to buy in a branded boutique because they have a huge choice of watches from the brand. They have the furniture and the staff are experts in the brand.
Financially, with the high rentals, boutiques don’t work everywhere. It depends on the brand and it depends on the city. In Leeds it has worked well, but it has taken us a number of years to establish the branded boutiques.
WatchPro: Different types of shops have access to different watches from the brands. We see a lot of boutique-only limited editions being launched by the major Swiss makers. Do you get access to those pieces as a franchisee, or is it only the boutiques directly owned and managed by the watch brands that get their hands on those top end exclusive pieces?
Simon Walton: It is very frustrating as a multi-brand retailer and a partner with monobrand boutiques because we do not get access to those limited editions. It depends on the brands; some of them we do, some of them we don’t. But it is very frustrating that you go to an exhibition, do everything that a brand asks of you, and then the best watches of the show are not available to you. That is the way of the world, you either accept it or you don’t sell that brand. We are fortunate enough to sell these huge international brands, and you can look at the way they work in two ways: you can either fight it or you can embrace it. The only thing to do in my opinion is to embrace it and work with the brands in the way that they allow.
You also have to look at it from their point of view. They have to make their own boutiques pay and that means a certain amount of business has to go through them. If a brand can launch 50 limited editions and they are all sold through their own boutiques, and that makes them viable, then you can understand why they do it.
I just think that is the way of the world. Luxury brands will continue opening more and more capital city boutiques around the world. They want to control their distribution and relationship with the end user. I think they will have fewer and fewer partners and they will demand more and more from those partners in terms of space and investment.
WatchPro: If you look at London, the multi-brand outlets, particularly Harrods, Watches of Switzerland and Selfridges, are booming, while the monobrand boutiques on Bond Street, I keep hearing, are struggling to turn a profit. London might be different to other capital cities because if you look at the strength of Harrods, Selfridges and Watches of Switzerland and the comparatively unremarkable Bond Street, you can see why customers go for multi-brand rather than monobrand boutiques. The same might not be true in New York and Paris where they do not have the same quality of luxury department stores.
Simon Walton: Correct, I think London is unique, and that makes the UK unique because you have some major shopping destinations around the country, and you have London as well. London is a huge hub at the moment with the weak pound encouraging tourists to spend. But I believe that has filtered across the country. I read an interview with Brian Duffy in WatchPro before Christmas and he said he was surprised at how strong the domestic demand had been. I would totally agree with that, we were quite surprised at how buoyant that was. We thought it would be difficult after Brexit, but so far it has been good. We haven’t just been relying on overseas customers, the UK customer has held up.
WatchPro: Have you got any insight into why UK customers might have been splashing out at such an uncertain time? Could it be a last hurrah before we start to feel the impact of Brexit?
Simon Walton: I think it might be that. These businesspeople have done well since Brexit, and their money is earning them nothing in the bank so they might as well buy something as an investment that they can enjoy and keep for future generations.
WatchPro: Do you feel like you are a bit of a barometer of the local economy so that if local business owners have a good year, you benefit, and if they have done badly, you suffer with them?
Simon Walton: Totally, and it is not just us. Luxury jewellers around the country are all the same. If there is a feel good factor people will go out and spend. But I think we are in very uncertain times. I could list everything from Brexit to Trump to you name it. I think most jewellers are very unsure about how things are going to go this year. From the sound of things, we have all had a very good January. It has been a very strong month. I don’t know whether that was the January sales, or the Chinese New Year, or whatever; all I know is it has been a good January. I just don’t know whether that will continue through the year. I don’t know whether things will change when we trigger Article 50.
WatchPro: We are in unique times where you talk about businesspeople that have had a good 2016, which should inspire confidence, but those same owners are profoundly nervous and unsure about 2017 because of the political situation.
Simon Walton: I’ve had meetings with seven brands in the past few days and we are all enjoying the success but do not know whether it is going to carry on. We rely on new watches coming out at Basel; we have seen the new models launched in Geneva. I just do not know what this year has in store, but so far so good, it has started well.
Our financial year ends in June, and it has been a particularly good year on the back of a successful summer, and our prices are still considerably lower than other European countries. As long as the watch brands don’t put up prices too much, and punish the UK domestic customer, then we should be OK. But the worry is that watch brands try to keep prices level across Europe and the UK customer is punished again with another 10% increase in price.
WatchPro: I don’t remember the brands dropping prices in the UK in 2015 when the pound was strong and our prices were much higher than in Europe!
Simon Walton: No, that doesn’t happen. Some of the brands have put up prices by 20% since last summer. That is an awful lot, but so far so good. It is going to be an interesting year. Summer has become a crucial period for luxury watch retailers whereas years ago, particularly outside London, the summer was dead. My grandmother used to close the shop for two weeks in the summer because there was no business. Now the summer is really important, even in cities that don’t get tourists. Berry’s has shops in Windsor and York, which are more tourist-oriented, and they do well from around Easter to September.
WatchPro: This time of year, when we have just had SIHH and we are about to head over to Baselworld, some big buying decisions need to be made right now at a time of maximum uncertainty about the year ahead. How do you deal with that from a buying perspective?
Simon Walton: It is very hard as a multibrand retailer because the brands put you under pressure for more investment, more space, more events. You can’t do everything for every brand any more. For us, as a retailer, we are likely to have fewer brands, but those that we do continue with we will give more and more space and investment to. Unfortunately, we are going to have to lose brands that we have space and money tied up with. I’m sure that is repeated all over the country.
WatchPro: How does that process work – if your best-selling brand demands an extra 100 square feet in your store, do you have to drop other brands that might otherwise have occupied some of that space?
Simon Walton: We analyse on a weekly basis the brands that are performing and the brands that aren’t performing. You can have a lot of money tied up in brands that unfortunately are not selling, and the investment required is so high that you have to constantly measure which brands are performing best.
WatchPro: That sounds like life is getting tougher and tougher for independent watch brands.
Simon Walton: Yes, it is getting tougher because the investment needed every time a new range comes out is so substantial. You have to invest properly, or not at all. You cannot do that with every single brand, so we choose the winners that we are going to have a long term future with.
At this time of year, you look at the year ahead, you look at what each individual brand has to offer, and you invest accordingly. What is difficult for us is that we sell different things in different shops. Some shops are good with particular brands, and some shops are weaker. That is the challenge of a good retailer to get the right investment in the right place at the right time.
We are having a huge shop fit here later this year. We are doubling the size of the shop. We have owned both properties [two adjacent properties on Albion Street in Leeds] for a number of years and we have been planning to make them into a double-sized store for three or four years. We shut the store in around May, and the work will take roughly five months. This shop is going to be only watches and next door is going to be only jewellery. Right now there is a battle among the various watch brands we sell because they all want the best space. They want two more square inches than everybody else.
WatchPro: Does that make you feel for once like you are holding all the aces when you are negotiating with brands?
Simon Walton: I am a politician. I keep all the brands happy, and it is very difficult sometimes when I have to make sure I keep seven or eight brands happy. Some have corners, some don’t have corners. You have to explain to those that don’t have corners why that is the case. You can’t win. And the difficulty on top of that is to keep the identity of your own shop, otherwise you are selling yourself to the devil [laughs] not quite the devil, but you know what I mean. At the end of the day, the name above the door is Berry’s and that is where your heart is.
WatchPro: How many square feet will the new shop be?
Simon Walton: I’m not too good on square feet, but it is doubling the size of this shop, and will then become one of the dominant shops in Leeds and one of the largest outside London. It will also be two-sided because next door is on the corner.
WatchPro: Will the jewellery and watch sides be connected?
Simon Walton: Yes, we are knocking through. It is going to be a major shop fit. This type of project is going on around the country, with major destination stores emerging, be that in Stratford-Upon-Avon or Watches of Switzerland at 155 Regent Street. These are hopefully destinations where people will travel to buy watches. This is how we see ourselves competing with the Internet. Rather than people sitting at home and clicking on the ‘buy’ button, they will want to travel to superb stores around the country and enjoy the whole experience. We are trying to make a statement about Leeds and a statement about Berry’s.
WatchPro: Looking at the plans, this is a massive investment for this particular street in Leeds. If you don’t mind me saying, Albion Street is not the most luxurious part of the city centre. You are surrounded by some pretty unremarkable outlets: banks, building societies, fast food. It isn’t exactly exclusive.
Simon Walton: No, it is not. We have owned this property for a few years and we have asked ourselves, do we stay, do we move? I think we would have moved were it not for the fact that we have the other three properties in Leeds. But we have been here since the 1960s and when you have been in the same place for so long you have a huge local client base that comes to you. Rather than move and start again, we realised that a lot of our clients are regulars who know where we are. Also, by making this twice as big, we make it a destination store. We are a bit of a B position, but because we have been here so long, we expect that doubling in size will bring people to us.
WatchPro: Leeds has changed dramatically in the past decade with the Victorian Quarter opening, with a huge new John Lewis. Has that pulled the centre of the action down the hill away from Albion Street?
Simon Walton: Not really, you have got different parts of Leeds. We have a shop in the new Victorian Quarter. If we didn’t have that, we probably would have had to move. But this area, because we have a big shopping centre down the road and two big car parks up the road, this is where most shoppers start their day. So it is a better location than it appears.
WatchPro: It sounds like you are channelling your investment into making your existing property work as hard as it can rather than adding space in the form of new stores in other cities.
Simon Walton: You expand in three ways: you open a shop from scratch, you take over a business or you expand from within. The problem with expanding into other areas is that there are not many cities where you can get the main brands. That makes it very difficult to open from scratch. If you look at buying a business, there are not many businesses for sale, and those that are for sale, the owners want a fortune for them.
I came into this business 25 years ago and we had only one store. After that we opened a new store almost every year for seven or eight years, and it then took us years to catch up in terms of systems and everything else. We realised that we could probably do a lot more with those shops if we invested properly in them with the right brands, the right people, the right shop fits, than we would do just by opening more shops.
We decided that we were better having 10 shops run really well, stocked to the hilt, looking fantastic; than having 20 shops not run well. Plus, I work with my father and between us we feel we have enough on our plate. There is no point being busy fools.
We would like to open up a couple more shops in time, but for now we want to invest in what we have and make those shops look as good as they possibly can, and get the best staff we possibly can, and to add to the brand portfolio.
WatchPro: It sounds like the phase you are in right now is about increasing the revenue you make out of every square foot of real estate you own.
Simon Walton: To an extent. We have set ourselves up to be a luxury jeweller and high end watch business in each city. We are not really at the volume end. We sell Tissot in some of our shops, but we are a high end brand business. We have realised over the years that you can’t be everything to everybody. You can’t sell a Patek Philippe from one counter and something less expensive from another. Gradually, we are moving more and more upmarket.
WatchPro: How much are your average transaction values increasing, and how does that affect the buying decisions?
Simon Walton: The values are rising. Ten years ago when we sold a watch for £10,000 it was a huge sale. Now, we sell watches for six figures and I have even sold a watch for seven figures. It never ceases to amaze me what is sold around the business. If you give high levels of service and look after people, they will come back and want to support their local jewellers. It is remarkable what is sold in high value diamonds and fine watches.
WatchPro: I wonder whether people in Geneva or even London understand that?
Simon Walton: I think they do now. A few years ago, I would have said that they did not realise what was going on outside London. But I think they do now understand that there are some very good retailers around the country that work closely with the brands and are very successful at selling very nice watches.
WatchPro: Patek Philippe has benefited from a really strong, British-based, British-run management team.
Simon Walton: Yes, I cannot speak highly enough of Mark [Hearn], Adrian [Lurshay] and the whole team at Patek.
Simon Walton: It is very different. Swatch Group in the UK is mostly Omega, then Longines and Tissot. Breguet and Blancpain are predominately London brands and outside of London distribution is, shall we say, improving.
Patek Philippe is totally different. They work very closely with the family businesses, they have outstanding support and have pushed and pushed us. If you had said to me 20 years ago that we would sell the value of Patek Philippe that we do now, I would never have believed it. We sell minute repeaters, nice complication watches on a regular basis; it is amazing. It is a huge success story for Mark and the team, but also for the retailers around the country that have driven the brand forward. Mr Stern and the Patek Philippe directors have really understood that there are great retailers outside London that can sell the brand well and have the clients who remain loyal to those shops.
Another factor is that the Patek Philippe boutique in London works with us rather than against us. For example, I took one of my best clients to the salon the other day and was totally embraced by the salon and the manageress. On the other side, Richemont brand salons take a them and us attitude.
WatchPro: How do you view selling online?
Simon Walton: It is increasingly important to us. We are predominately a bricks and mortar retailer, but sell more and more online if the brands allow us to. It is a source of constant frustration that brands do not allow us to sell online when there is so much grey market going on. Gradually the brands are waking up to the fact that, done properly and done consistently, we can sell watches online, and there are more customers that want to buy online.
WatchPro: I think this may be a pivotal year when Swiss brands will accelerate their plans to sell online.
Simon Walton: I totally agree with you.