Tobias Reiss-Schmidt has steered Timex Group through one of the most tumultuous periods of the company’s 167-year history, not just keeping it off the rocks during the pandemic, but repositioning brands ranging from Guess and Ted Baker in the mass market fashion space up to Versace and Missoni’s Swiss-made luxury watches. Most important is the positioning of the Timex brand itself, which is adapting to a world where apathy to traditional watches and gadgets from Apple are transforming the landscape.
WatchPro: How has trading been for Timex Group over the past year of the pandemic.
Tobias Reiss-Schmidt: Prior to 2020, Timex Group was on a really good path. We had solid growth in 2019. Our existing brands had positive momentum. We were gaining market share in a lot of markets, and we were also on a path to grow our brand portfolio.
We added Ted Baker in 2019 and then Furla and Missoni were about to be added in Fall 2020.
The last pre-pandemic event we had was a global sales meeting in Dubai in February 2020 and the energy there was extremely positive. Everybody was very optimistic. Then, five weeks later, the world shut down because of covid.
Our immediate priority was to implement a remote working model to ensure that our teams stayed safe and healthy, but also to ensure we had business continuity while we worked remotely.
I have to say I was really impressed by how quickly we were able to react to this unprecedented situation and every day since, I have been impressed with our team and how our business partners — licensors, vendors, customers — have handled the situation. Everybody we work with has shown incredible resilience and resourcefulness in finding solutions to minimise the impact of the pandemic, which we are still in.
Obviously, 2020 trading was impacted, especially in the second quarter, but after the initial shock consumer demand started to recover more quickly than we had expected. Each quarter since, our business has been getting stronger.
Throughout the entire period, we have made sure that we have not just been playing defence to protect our cash position, but we really wanted to make sure that we continued throughout the year to develop our business and our brands.
In the Fall of 2020, we launched complete collections and supporting marketing packages across all brands, and the same for Spring 2021. The feedback we have from our retailers is that many brands have not been doing that. We also went ahead with the launches of Furla and Missoni in Fall 2020, as we had planned and there were some real success stories with the newness across our brands we introduced in that season.
For example, the new Timex Q colours, the Pacman T80, the luxury brands Versace and Ferragamo had some really strong sales throughout this period. We also saw Guess do much better again in some our top online and offline retailers. We think those successes were greatly helped by how active we were and how committed we were in bringing new collections and stories to market.
Looking ahead, we are really optimistic. We have strengthened our position in the market and we have a lot of exciting stories and newness in the pipeline so we expect 2021 to be another strong year for us.
WatchPro: It is a fascinating story from a business performance perspective, but for Timex it is even more interesting because you are a manufacturer, a wholesaler, a network of retailers. You have roughly 5,000 employees. How do you, as a CEO keep track of all of that. What sort of dashboard do you have in front of you that tells you what is going on in such a challenging year.
Tobias Reiss-Schmidt: There is no dashboard or blueprint for a situation like this. What has been crucial is to stay very close to the organisation throughout. I have spoken very regularly with the leadership team and the wider organisation as well.
We have needed to be very clear on our priorities. For example, we would not compromise on the health and safety of our employees. We had to implement very rigid policies, particularly on the manufacturing side around things like hygiene, distancing, creating pods of workers to minimize interaction so that if there was a case of covid, it did not spread throughout the whole factory.
We have been very successful with that. On our manufacturing side, we have never had a spread without a factory. Cases were always brought in from the outside and never spread from person to person within the factory because of the protocols we put in place.
WatchPro: I read an interview with you from a few years ago when you said that growing market share was among your most important goals or KPIs. In a normal year, you would have to grow your sales to grow market share, but in this pandemic year, I assume it meant sales falling less fast than your competitors.
Tobias Reiss-Schmidt: We do measure well against publicly traded companies. When we look at their reports, we are trading in line or better than that. But I look at it in a slightly more differentiated way because the pandemic has not hit the whole world in the same way.
To give you an example from Timex Group where we are unique and have an advantage over some competitors, is that we have a strong business in retail accounts that were considered to be essential, and were therefore allowed to stay open during the pandemic in the United States.
There are countless examples of businesses that are strongest in parts of the world that had the hardest lock downs, or you are strong online versus offline, or where you have your own network of stores. All these factors make a huge difference in how companies have performed through the pandemic.
This is how we have looked at our performance, and why we have worked so hard to get feedback from our customers. Putting all of that together, we really feel like we have been able to position ourselves in a favorable way coming out of the pandemic.
WatchPro: Momentum is key, and so is positioning.
Tobias Reiss-Schmidt: We were well-positioned with what I would consider foundational elements, meaning that we have strong brands with momentum. We have strong capabilities within the company to produce strong products and good storytelling. We have a great understanding of how we connect with consumers.
How we make the most out of opportunities beyond these fundamental issues is what we continue to refine.
Ecommerce is an example, across both wholesale and direct to consumer, where I do not feel we are yet getting our fair share and that translates into an opportunity. We corrected our course [relating to ecommerce] a couple of years ago, and we are seeing tremendous growth, but we are not as strong as we should be.
WatchPro: What would be a good breakdown for you between ecommerce (wholesale and DTC) and brick and mortar sales?
Tobias Reiss-Schmidt: That depends on a number of factors, such as whether you are an own brand, a licensed brand, a luxury brand at a certain price point or more mass market. We have a very strong network of very long standing distributors and there is a lot of opportunity to develop them.
The mix of ecom and brick and mortar is not a one way street. When we look at our opportunity landscape, we see partners that are very successful with their brick and mortar store network and on the other hand we see some ecommerce partners that are really struggling to engage consumers and build a strong business.
Generally, ecom share is growing, but some of our partners are doing an amazing job within their store networks. Buying a watch is such a personal experience; to buy something you are wearing on your wrist and look at many times per day.
There is a lot to be said for going to a store with a great selection of watches and sales associates that are well trained to give you good advice. We still see success and growth opportunities in bring and mortar.
WatchPro: You have to be where the customers are, or you will lose market share to those that are.
Tobias Reiss-Schmidt: There is no question that ecommerce share has increased during the pandemic, and that will not go away. Pre-pandemic, we saw the share of ecommerce in many markets at around 25%. In some markets up to 40%. It has gone up from there.
WatchPro: Biggest part of your portfolio is in the sub-$500 space, and maintaining share in that part of the market, when Apple has gone from zero in 2015 to become the biggest watchmaker in the world, is tricky. What have you tried? What has worked?
Tobias Reiss-Schmidt: There are still parts of the world where the sub-$500 market has managed to maintain growth over the past five years, and there are places where have been able to grow in absolute terms, not just in market share terms, in 2019.
Sometimes the watch market is defined as including both traditional watches and smartwatches. We look at traditional and smartwatches as two completely separate markets.
We do not view smartwatches as an evolution of traditional. They are quite distinct. Smartwatch customers have a very different set of criteria that motivate their decisions. They also have very different distribution models and it is right to measure their success factors differently.
We now have two very large and established segments, and there are opportunities in both of them.
Our core strength is in traditional watches. This is what we are focused on. We some incremental opportunities in smartwatches and we believe the Timex brand has the right attributes to play in that space and we have some in house competence. We launched a number of products in the past 18 months that have been successful, and we will continue to do so. But our focus is clearly in traditional watches.
We are seeing a new generation of consumers in the sub-$500 market that are really engaged and love watches for a variety of reasons. A watch is a very personal item with a strong emotional connection that can be truly meaningful to its owner.
On the product side, design trends continue to evolve and change over time, but what we consider to be really important is that consumers are getting smarter and more educated. They know everything about a brand and a product so it is more important than ever for brand to be authentic if they are going to thrive in the long run.
That authenticity can come in many different guises. You can be a fashion brand with exciting designs or you can be a classic watch brand with great craftsmanship and 180 years of heritage. One way or another, you need to have a clear identity to remain relevant. You then have to do an excellent job season by season to tell your story in a compelling way.
The $500 segment has come a long way. At Timex Group we are really lucky that our brand portfolio includes market leaders in their respective categories ranging from fashion to classic watches.
Today there are more and more brands with amazing watches in the sub-$500 segment. There is much more excitement in this category that there was five or ten years ago. Based on that, and we have data to support this, I think there is a new generation of consumers that are really engaged in our category and that makes me very optimistic for the future of traditional watches in that price segment.
WatchPro: I think the sub-$500 category has learned from luxury.
Tobias Reiss-Schmidt: We have learned from the luxury brands and also from digital native, disruptive, brands that woke up some of the incumbents to the fact that the market is moving so fast and we have to engage much better with consumers. The segment is much more interesting than it has been.
WatchPro: Make buying a watch more an experience. Plus make watches more expensive. Japanese have been good at pushing up market.
Tobias Reiss-Schmidt: Across brands we have been stretching our price segmentation and we have seen success going up and in some cases creating new lower entry points. With Timex, specifically, our average price has increased very materially over the past three years. If you look at Timex.com you will see a lot of automatics selling at north of $200 or $300. Timex has been able to reconnect with true watch enthusiasts. We are seeing collectors that normally enjoy only Swiss luxury watches getting excited about some of the Timex watches we are creating. They are signing up to our e-mail databases to make sure they know when a particularly Timex SKU is back in stock.
That is a direction we have been taking and will continue to do so.