Watch Retail Consolidates, Rapidly – What It Means for the Industry and Enthusiasts – Episode 83
While preparing to speak on a panel about the rapidly changing state of American watch retail, Gabe stumbles onto an annual industry report that ranks the largest jewelry and watch retailers by revenue — and what he finds stops him cold. The company sitting at the very top of the list is one neither he nor Asher had ever heard of: a quiet giant operating thousands of doors in plain sight. And the name long assumed to rule American watch retail? It's quietly been overtaken.
This week, Gabe and Asher dig into what the numbers actually reveal — an industry consolidating faster than most enthusiasts realize, on both the retail floor and the brand side. They trace how one retailer went from almost nothing to the brink of a billion dollars in a single decade, why brick-and-mortar still rules even in an online-first world, and how a single dominant brand quietly pulls the strings behind some of the biggest players. Along the way, a long-held assumption gets turned on its head: the position everyone once considered the safest bet in watch retail may now be the most exposed.
The bigger question hanging over all of it — as the giants get bigger and the old rules fall away, is any of this good for the people who actually love watches? Gabe makes his case, Asher pushes back, and they map out where the independents, including businesses like their own, might fit in a landscape that looks nothing like it did just a few years ago.
Openwork is a weekly podcast about how the watch industry actually works. An unfiltered look behind the scenes — no press releases, no hype, and no sponsored takes. Hosted by Asher Rapkin and Gabe Reilly, co-founders of Collective Horology. Available on Apple Podcasts, Spotify, YouTube Music, or wherever you get your podcasts.
You can find us online at collectivehorology.com. To get in touch with suggestions, feedback or questions, email podcast@collectivehorology.com.
We're probably just getting started and scratching the surface of how consolidated watch retail
will become. This is Openwork. It's a look inside the watch industry, a podcast from
Collective Horology. I'm Gabe Reilly, co-founder of Collective.
I'm Mr. Asher Rapkin, co-founder of Collective. Collective Horology is an independent watch
retailer based in Southern California. We carry a wide range of independent brands,
including Niton, Toledano & Chan, Arm & Strom, and more. To learn more about us and our available
inventory, visit collectivehorology.com. Have you ever seen that interview with John Mayer
where he had one of his watches inscribed Mr. J.C. Mayer?
Yeah, yeah. Wasn't that his second installment of Talking Watches?
Yeah, and just said like, I am not Mr. J.C. Mayer, but like when I wear this watch.
I imagine I am.
Yeah, I enjoyed that.
Yeah.
Well, I remember on your wedding day, you had some fine suit from the armory and Jeremy
Kirkland posted your suit and you were captioned Mr. A.R.
It was a good suit.
I think of you in a double-breasted suit. So, hey, tomorrow, no, not tomorrow, the day
after tomorrow, I'm heading to Las Vegas, going to JCK and I guess a number of other
events that are happening there. There's Time to Watches.
Gambling on the corporate dole?
No, I'm speaking on some panel. This is perplexing to me why I'd be invited to speak about anything,
but I'm speaking on some panel about kind of the rapidly evolving retail landscape in
the U.S. Collective is a part of that overall story, a small part of that overall story.
But obviously, we cover the industry on open work. So, we have a perspective on that. And
I was researching to prepare for that panel. So, I actually have real things to say. And
I stumbled across this article from Watch Insider. And it was a recap of this report
that I guess comes out every year that I had no idea about. It's published by National
Jeweler. So, they're a jewelry trade publication essentially. And they create every year what's
called a state of the majors list. And these are rankings. And so, basically, they rank
jewelry and watch retailers. So, they don't differentiate between jewelry and or watch
retailers. It's like if you retail jewelry and or watches, you're in this ranking.
And they rank them by revenue. And they track the who's up, who's down year over year,
as well as number of locations.
But it's only public companies, obviously.
I would assume some of these are-
Or self-reported.
Are owned by private equity. Some of them may be family-owned. It's probably an estimate. I
don't know exactly. And there's a real hodgepodge of things in here. I'm looking at this. There's
everyone from the Movado Group to Kohl's to Amazon and Walmart to Benbridge and some of
the retailers we'll talk about.
So, they're not ranking specialized retailers exclusively. They're ranking anyone who's
involved in that industry.
Yes. It's an interesting-
And so, there's probably some methodology to estimate this. Because, of course, even if you
take a look at any of these companies, you could say, oh, well, sure. Amazon's a publicly
traded company. They report earnings. They don't report their jewelry earnings specifically.
So, there's probably some estimation in here. So, this is pretty rough.
But it was really interesting. It gave me a very clear snapshot of who the players in
the industry are, one, by the number of locations they have. So, who's got the footprint? And then,
two, based on these estimates, and I don't know the methodology, but let's assume it's apples
to apples here, who's really dominating the industry? And one, I found a couple of things
were extremely surprising and kind of shocking. And then, it was like one of those moments,
like a beautiful mind moment, where all of a sudden, all these things you've sort of been
thinking about in the back of your mind or experiencing or things we've talked about on
the podcast click into focus because you have numbers against them. And it's no longer this
gut feeling of, oh, it seems like this is happening. It's like, no, the numbers are on the page.
You know, when you shared this with me, one of the things that I found fascinating, and I mean,
this is because you and I, you know, our business operates within a niche of a niche, right? You
know, the watch industry is a subcategory of the larger jewelry industry to a degree. And then we
represent, you know, a sliver of that larger industry. So, Color Me surprised when I saw who
was number one at the top of this list, because I had never even heard of them. Because for the
majority of what we do from a business standpoint, we would never bump into them, which is a company
called Cygnet. Tell me about Cygnet. Yeah. So Cygnet is a company, they operate in the US, Canada
and UK. And if you've ever been to a main street, commercial main street or a mall in the United
States, or I suspect anywhere else in those, in those other countries, you've probably seen their
retail brands. They own Zales, Jared, Kay Jewelers and others that are maybe more focused on the UK
market or Canada market. But I had no, no idea that this company existed. It's, it's not the
holding company, not the holding company. It's the number one jewelry and watch retailer by revenue
in the United States doing an estimated 6.36 billion, 6.36 billion in revenue across 2,329
locations. And their revenue is up from the previous year. So their revenue looks like it
was up about 60 million. Is that 22,329 stores in the United States or globally? I don't, I don't
know. That's a monumental amount. I'm going to assume it's US. That's almost 50, 50 stores per
state. Yeah. So it's, it's crazy. And you might go to a mall where like there's a Jared and a Kay
Jewelers or Zales, you know, like it, it's, it's pretty, it's pretty remarkable. And just to be
transparent, like the next company in line has almost half the revenue. So it's actually
Richemont is the number two jewelry and, and a watch retailer. They've got 105 locations. So
that pales in comparison to the 2000 plus of Signet, but they're doing a little more than
half the revenue. So 3.6 billion in revenue is what's, is what's estimated through those doors.
So in terms of like how much revenue per square footage, an employee it's, it's way higher,
not surprising. We've talked a lot about Richemont really being driven by, by jewelry in particular,
but they've got 105 company owned and operated stores, which is, which is interesting. And we've
talked a lot about how those company owned and operated boutiques have become increasingly
important to driving more top line revenue for the, for the large holding companies, but
they are, they're sitting there at half of what Signet is doing, which is, which is just stunning.
Now I looked into how, how now Signet and these stores, they do sell some watches,
but it's not much, it's estimated to be single digits in terms of percentage points, maybe around
5% of their overall businesses and watches. So obviously Richemont would probably be the number
one in terms of, of watches. But what the signals to me is one of the trends we've been talking
about quite a great, a great deal in the last few years is the consolidation of retail. And we'll
talk more about that today. So there's obviously consolidation happening among retailers. We'll
talk about watches of Switzerland in particular. By the way, if it really is 5%, that's still $318
million. Yeah, it's remarkable. And so on the one hand, you've got retailers who are consolidating,
but then the brands are consolidating too. You know, famously, we just talked about Richemont.
We'll talk about LVMH. We're going to talk about Rolex and Bucherer. The brands themselves are
going to consumers directly as well and consolidating retail is there. We've talked a lot
about, you know, examples of plenty, plenty of brands, whether it's AP or Lanca or others who
are closing third-party retailers and focusing on their own and operated boutiques. So this just
signals to me, if you look at how dominant one player can be in jewelry and how consolidated
that market is, well, who's to say there isn't more opportunity for the same to happen in watches?
And it probably will. We're probably, if you look at Signet, we're probably just getting started and
scratching the surface of how consolidated watch retail will become. And we'll talk about how
unrecognized it could become. I'm thinking it will be. We've talked a lot about how
unrecognizable the retail landscape in the U.S. is today versus 10 years ago. And we'll talk
specifically about watches of Switzerland and Bucherer in a moment. Imagine what it could be
like in 10 years if this trend continues or accelerates. So I want to dive in to look at
the watches of Switzerland and Bucherer thing because that's interesting. But I do think that
there is a difference between retail jewelry and hoterology. I recognize, obviously, like when we
talk about the Richemont Group, for example, we're also including more accessible brands there in
terms of doors and some of those more accessible brands produce in higher numbers. And those are
more transactional in the nature of the sale. I hear what you're saying. I think you're probably
right. But I do think that the nature of the watch industry is slightly different in the sense that
when we look at high like high jewelry, yeah, a whole other thing. And that's probably represents
a meaningful portion of the revenue that we see through like Cartier, for example,
or like a Harry Winston with the Swatch Group, you know, things like that, you know, Bulgari with
LVMH that that are not comparable around a consolidation concept. But those are those are
brands. We talk about retail, which can specialize. That's where you get to an interesting place. So
so my prediction isn't the entire watch market is going to be consolidated. But I do think the
more commoditized brands, the more mainstream or heritage brands will continue to consolidate
their retail channels. I don't think that's going to happen for truly hoterology stuff. I don't think
that's going to happen for independent watchmaking and things like that, because there's a level of
specialty education, knowledge that's required in those in those markets that isn't necessarily
required to the same degree if you're selling more mass market product. Agreed, which is why I find
it fascinating when we take a pivot here and see who's leading in the space, which, as you pointed
out, is watches of Switzerland. This is huge news. So when you think about and certainly at least
when I do, but I think when a lot of us who are watch enthusiasts think about, you know, typically
who's the dominant watch retailer in the U.S.? The first name that comes to mind is probably
Tornow, which is now owned by Bouguereur. Tornow dominated the U.S. market for decades. I'm sure
you've bought watches from. Oh, sure. My dad bought watches from Tornow. A lot of people have bought
watches from Tornow. They were sort of like the big name. They were the behemoth and by far the
dominant player in U.S. watch retail in terms of revenue and number of doors. And Bouguereur still
is. I mean, they have thirty two doors in the United States and it's estimated they're doing
about eight hundred ninety two million in sales. So that's a big business. Yeah. But guess what?
According to this report, watches of Switzerland has now leapfrogged them, which is huge. And again,
if you step back and think about it, when did watches of Switzerland make their first acquisition
or open their first door a decade ago? Yeah. So this is wild. And I want to talk about specifically
how they got here, but just the numbers for watches of Switzerland, again, number of doors,
Bouguereur, formerly Tornow, thirty two doors. That sounds about right. Yeah. Watches of Switzerland,
fifty six doors. Yeah. Huge. OK, revenue. Bouguereur was eight hundred ninety two million.
Watches of Switzerland, nine hundred forty million. And that's up nearly a hundred million
year over year. We'll talk about what drove that. But the year before they were at eight hundred
fifty four million. So in twenty twenty four, eight hundred fifty four million. The next year,
twenty twenty five, nine hundred forty million. They are on the brink. I wouldn't be surprised if
they get there, given what we're seeing as far as the recovery. This is on the brink of being a one
billion dollar retailer in the United States, to your point, for a company who maybe opened their
first door here ten years ago. Well, yeah. And part of it is that they didn't really open their
first door here. They bought a lot of doors, which, you know, and again, like no shade on that.
But let's be realistic here. Seventeen of those doors belong to mayors. Yeah. Which they acquired.
Right. They bought Betteridge, which had boutiques in Greenwich and Vale and Aspen.
We've talked in the past about their acquisition of timeless luxury watches in Plano.
They bought Deutsch and Deutsch. We've talked about that on the podcast that they bought.
They bought Houdini and are attempting to. I don't know if you've been seeing this, but I've
been talking a little bit about bringing Houdini back into the retail side of things. So when
Houdini retails like their collaborations now, are they retailed through watches of Switzerland
or is that done through like the Houdini dotcom storefront? Well, right now, what's interesting
is they're actually retailing certain watches through the Houdini storefront as a vector of
sales. So they're doing that with the new the new universal pieces. Those weren't. Yeah,
it's interesting. You can go to the Watches of Switzerland website and I think you can find
them there, but they're trying to market them through Houdini's retail site, which is which
is sort of an interesting little push. So that's strange to me because Clymer made a huge point
when this acquisition happened that Houdini, I'm going to the shop right now to look at this.
If you click Houdini shop, you go to the Watches of Switzerland website, but it's sort of brand
co-branded with Houdini. So they're blurring the lines here. Yeah, well, I mean, they bought it and
they bought it for good reason, you know, and on May 20th, Clymer posted an advertorial that
basically said you can now reserve the new watches from Universal Genev right here and you
can you can click through literally on this page to buy through. Have they announced any other
retailers? Well, I'm going to read this and I'm proud to say, quote, that as of today, for the
next three weeks, you can reserve the entire range of the new Universal Genev watches directly through
the Houdini app or via Watches of Switzerland. So they are blurring the lines. That's kind of clever.
Yeah, sure. I like that idea. They bought it, you know, they got to get something out of it.
You know, one thing I was thinking about that whole UG thing was like,
take your opinions about this aside, but just look at the facts. Ben Clymer personally and Houdini
has done a ton to advocate for Universal Genev and build up the value and the equity in that
brand that, in large part, probably drove Breitling's acquisition of it. Yeah. Like
if Houdini never existed, if Ben Clymer never uttered a word about Universal Genev would
probably not have been acquired by, no, you know. And so I'm thinking about that and I'm like,
that's kind of a bummer. You know, he built a ton of value that another group, hey, fair is fair,
you know, bought the intellectual property to and then did something with. I mean, let's not,
this isn't totally cynical. Like those watches are well-made and impressive. They're nice watches.
So Breitling did something with it. It's not like a cynical cash grab, but I was like, yeah,
you know, he really contributed a lot to that and they kind of get nothing from it. But
I think that's an interesting way of. Yeah. Look, I think in general, when we look at this,
there's sort of two things that bounce around in my head, right? The first is
the undeniably impressive results that we're seeing here, which means that watches of Switzerland
and Booker are doing something right to a certain degree. Like you can't get to these numbers.
Knocking on the door of a billion. Yeah. But then the other side of it,
and I find this really interesting is a lot of this is tied to, to this more traditional view
of watch retail that's anchored in territory, which is this, this thing of like, let's all
fight over who gets to control a specific DMA from a sales angle, which will largely drive
the revenue of the business. For example, if you are a Rolex retailer who has a degree of
exclusivity in New York city or New York as a DMA, I always wondered how they do that in New York.
There seems like it's like Starbucks, you trip over Rolex boutiques.
Well, but there's not that many of them. Like the Rolex boutiques that are there,
there might be different, like physically different. There's the Wempe Rolex boutique.
There's there's multi brand. Wempe doesn't have Rolex anymore.
Really? Yeah.
Oh, is that new? It's new ish. So let me double, actually
pause. Let me double check that. They lost it. So now you have.
Yeah. And Wempe isn't, maybe they're held by a different company,
but they're not even on this list. Yeah. So now you have, you have the,
the flagship boutique, which is in New York. That used to be a Wempe boutique.
Who's running it now? In the Rolex building, right?
Yeah. So there's, there's what they refer to as the Rolex, as the Rolex flagship boutique.
In the same business. I don't know. I don't think that's corporately
owned because I don't believe Rolex has. No, Wempe used to operate it. Maybe they
still do. Maybe someone else does. No, they don't. They categorically do not
operate that. So maybe Booker operates it.
Potentially. But so that's, that's something for us to find out. If somebody on the pod knows,
we'd love to know, but you have them, you have London jewelers, you have.
They're based out of Long Island. Yeah. I believe they also have a
boutique down in the world trade center. Oh yeah. Yeah.
In the, yeah, you're right. They do. Whatever that thing is called the Oculus
and, and you have watches of Switzerland and you have Booker as you mentioned. So those just
having those doors in New York is a huge, huge amount of money versus having like, you know,
the rights to a much smaller, you know, first, second or third tier DMA.
Yeah. I'm the Rolex dealer and I've got exclusive territorial rights over St.
Louis, you know. Hey, let's be nice to St.
Louis. I am nice. I'm just saying like, I would imagine, I think it's Clarkson jewelers. There
you go. But, but they probably have a broader territory, right? I always just find how like
they carve up like London or New York to be fascinating. Like I would love to read the
franchise agreement they have with the retailers that say what their territorial exclusivity is in
those markets and how it, and how it works. But my point is when you look at how they've defined,
but when you look at this, right, like business, like think territory.
Yeah. And think about like where they are. Right. So you have New York, Vegas,
other key cities for watches of Switzerland. These are huge money makers, but just to pause
on watches of Switzerland. Yes, they did acquire a lot of those, but they also built new physical
stores. So in addition to like mayors, which is probably the biggest, they have built the,
I think there's two that they built in New York. So they've got Hudson yards and Soho.
Yep. Those were never something else. Watches of Switzerland built those. They built their
stores. They have multiple stores actually in the wind in Vegas. So they've got a watches of
Switzerland. They've got a Rolex boutique, a Breitling boutique, and a Tudor boutique all in
the wind. And then they've got, oh, don't they have something here in LA? Don't they have like
a grand Seiko boutique? They have a Topanga mall. Yeah. They've got a, they've got a Taco
Bell pizza hut in the Topanga mall. What's the, what's the Taco Bell? It's called Tag Heuer.
Okay. Got it. So they have built their own business, but what has fundamentally driven
the business are acquisitions. Yes. Most of their doors came, came through acquisitions.
Now they've obviously slowed their pace on acquisitions. They did Deutsch and Deutsch
last year, which I believe has three or four locations in Texas, but smaller,
smaller business. What they're saying is that their organic growth is being driven by Rolex
CPO in particular, that that's a huge driver of organic growth for their business, which I find
fascinating. Not surprisingly, what we've talked about is on the verge of also becoming a billion
dollar business. Right. And this of course goes back to this other thing about, about Rolex and
their ownership of a Bucherer. So you have this, you know, if Bucherer drifts and watches of
Switzerland grows, obviously no matter how you cut it, Rolex benefits, but Rolex is also in
control. So I do find that dynamic here, rather fascinating, you know, Rolex does control the
allocation of watches that go to the United States to be given to watches of Switzerland.
So there, there are all these levers that can be pulled or adjusted that, you know, business ethics
aside are still in existence. And I'll be curious to see over time how that plays out as well.
So let me ask you this question. I want to go back to Cygnet, right? Because we've talked about the
fact they have over 2000 doors, right? And this is the industry bohemoth, and it's a business that's
growing year over year, modest, but, but growing. I think it's impressive given everything that the
U.S. went through last year in terms of trade, I would imagine most jewelry is coming from
overseas, but brick and mortar. I mean, look, you've said you're right. Retail has been defined
by territory. And I think it would be easy to say like, well, look at the rest of commerce, right?
Look at the rest of retail. E-commerce is a growing force, continues to grow within retail
overall, yet in the watch and jewelry business, brick and mortar seems to be kind of the, you know,
the, the coin of the realm, right? Like having, having stores really is how you grow your business.
If your watch is in Switzerland and you want to grow your business, you're not going to do it
through e-commerce. You're not actually fundamentally going to do it by buying Houdinki or building out
your e-commerce capability. It seems like what they're telling us is their growth is coming
from these brick and mortar stores, whether they built them themselves, they acquired them,
or they begin running new programs within them like Rolex CPO, which I think we know sells
predominantly in store. Yeah. So brick and mortar is still, is still really important.
And Cygnet demonstrates it is in jewelry as well, and that there's still a huge opportunity around
consolidating there. Do you think that this trend can last? Is it wise for these companies? Let's
take watches of Switzerland. Is it wise for them to invest so heavily in brick and mortar or are
there things that they could be doing in digital that might be growing their, their brand more long,
their business more long-term? I mean, yes, but also how can they, I mean, I think one of the
things that we've seen in our former careers is that, you know, digital transformation is, might
be a necessity for some businesses, but it's not a foregone conclusion just because there's a huge
opportunity. There's sort of two components to that, which are always going to be a fundamental
challenge, right? Number one is of course the brands. You know, you can't, you can't retail
something online without the brands being completely okay with it. And the, and many,
many brands have very cagey about it or don't allow it at all. Exactly. So that's one major
thing. That's a component of it. And then the second angle is that as anyone who's ever attempted
to sell anything online, let alone at these price points knows in their bones, just setting it up
won't do anything. There's an entire ecosystem that has to be built in order to effectively sell.
Now, on the one hand, you could say, okay, well, they acquired some brain trust around that,
or I should say, watch this, Switzerland acquired some brain trust around that.
Hodinkee, Analog Shift.
Yeah, and Analog Shift, exactly. And, you know, Analog Shift has its own domain and still operates
separately, you know, from an e-commerce standpoint and appears to be doing so effectively.
Hodinkee, you know, certainly has seen success, you know, certainly with their collaborations.
I don't know too much about their actual retail business to determine if it was successful.
Aside from their pre-owned retail business, which was ultimately successful,
they were caught upside down.
Yeah, but even before the whole acquisition of Crown & Caliber, there was...
Yeah, they were an authorized dealer.
That's what I'm getting at, the vintage stuff.
But that was a small business.
Yeah, whatever, but they still knew how to do it. So I think there is some of it there,
but I think those two things in opposition make it challenging. And then there's the sort of like
third ghosty one, which is, you know, giant corporations aren't great at being nimble,
creative and flexible. And while I have zero insight into the corporate culture of either
Bucherer or watches of Switzerland, certainly won't make any assumptions, my own experience
in the corporate world suggests that like a lot of things get decided by committee, aren't necessary,
you know, go at the snail's pace. And that makes it very difficult to adapt to an ever-changing,
rapid digital space.
Well, and your brick and mortar spaces become this albatross that you have to surface. You know,
that's your legacy business. It's your core business. It's your core competency.
You need to staff them. You need to run them. You need to keep them stocked.
All of that, that's like, that's your bread and butter. That's your business. That's what
you know how to do. You got to focus on that. It's harder to blow on digital.
But I don't think it's just the fault of the retailers. You made a great point,
which is it would be easy to say, man, these retailers are really screwing up. You know,
they should be more focused on e-commerce. They should be learning how to do it. They should be
investing their long-term, but you're right. The brands really dictate this.
We had a reporter in here from WatchPro the other day. And, you know, we, last year we built like a
lovely boutique here in Ventura, which we're very proud of. And we were sitting there chatting with
her and she said, so why'd you build this boutique? Is it to grow your business and open up a new
channel? Transparently, the vast majority of our business is done online and over the phone.
You know, we're an e-commerce watch retailer, effectively. And she was like, well, did you open
this up to do more business? And I was very honest. And since I told her and it could be
reported, I'll say it here. Like one of the big reasons we built the boutique was not to open a
new sales channel or create so much of a place for customers to come in. It was for the brands we
carry. A lot of brands wanted us to either have a physical brick and mortar location or said,
basically like we can't open you as a retailer, no matter how much we love you, unless you have
a brick and mortar location. And it might not just have been because they were like, well, you know,
brick and mortar retail is how you sell watches. I think it's a credibility gap too. There's that
too. But the other, the other point they made, which I think is fair enough is like, Hey, look,
we have other retailers who've already been with us and they've invested significantly in like
building out a space and a presence for some, like it wouldn't be fair to them if we opened up and
you can, we can debate this, but I, and I'm not saying I entirely agree, but I understand why
they would think this, how they would say, look, it's not entirely fair. If we open you essentially
as an online only retailer, when we have, you know, this pressure we've put on everyone else
to have boutiques and I, I get that. So yeah, it's, it's never so straightforward as like the
retailers don't know what they're doing or the brands. There are all these other considerations
that play into this notion of like why brick and mortar retail is still such a thing that the
industry focuses on. Yeah. I get that. I mean, look, there's also the dark horse here, which we
haven't touched on, which is 1916 company. And the reason I bring them up is they're on the list.
Yeah. And the reason I bring them up is in addition to the revenue that they're driving
and their acquisition structure and the rest of it as well as they kind of walk the line between
physical retail and e-commerce, because they have an army of very talented salespeople who are
working the phones a great deal. And they sort of move in that gap of like, well, we're not actually
doing e-commerce for some of these brands, but we'll totally sell to you over the phone,
which of course, by the way, like. Yes. I mean, that is the reality of the modern watch industry.
That is a good, normal way to grow your business. Even if it's not letter of law in terms of the
way that, um, you know, sort of like external perception may appear. So I, you know, when you
say like, do I think that some like Booker and watches of Switzerland can potentially change?
I would say this in my personal experience, when I call watches of Switzerland, which does have a
call center, it's like calling, it's like calling Aetna, you know, you know, you ask somebody a
question, they're like, allow me to look that. Oh, I see. You're looking at a strong comma Armin.
So if you go to the watches of Switzerland website and you're looking at watches and then
you call, you can call a store, don't get me wrong, but you call the number on the website.
It goes like a call. It depends. It depends. Like if you're calling, if you're, you can call
Booker, I'm sorry, not Booker watches of Switzerland, or you can call like a boutique,
you call a boutique, you're going to get some on the floor, but you can get a call center.
And it definitely is very like clinical. Whereas if I call up somebody at the 1916 company,
nine times out of 10, you're going to get somebody that knows what they're talking about,
because that's what they do all day. They're sitting, you know, it's, it's, it's, it's like
that, that, uh, what is it? Uh, uh, onion article. It's a guy with three monitors,
not fucking around. You know what I mean? Like that's who you're going to get.
Yeah. So you got to respect. Some of those folks are extremely informed.
Absolutely. They are very capable salespeople. So I think they have a different, they have a
different, uh, tactical advantage and don't get me wrong. There's still plenty of watch, uh,
sorry, 1916, you know, location. Yeah. There's 19, 19 total up from 16 the year before.
So they're growing their brick and mortar footprint as well, but you're right. Like
they're one of the only examples of a retailer who's truly embraced a like multi-channel sales
like, but like, it's not like, Oh, we're a legacy brick and mortar business. We're trying to bolt
on online or like we're online, like us and we're like dabbling in the boutique. Like they're doing
both, which I think, you know, it hats off to them. Oh, absolutely. I have a ton of respect
for 1916 company. And I think that they remarkable actually that they're able to do both well.
Yeah. So I, I look at them and I'm like, you know, ignore them at your own peril. There's,
there's definitely a strategic and, and in some cases like tactical advantages that they have
from, from their acquisition originally of like watch you seek into watch box into 1916 company.
Yeah. And they, I think they recognize on like the watches of Switzerland, 800 numbers,
perfect example, 1916 recognizes that like the digital business requires totally different
infrastructure. You know, they have editor, great editorial content, online marketing.
They have informed people who pick up the phone and are dedicated on that. And, and they're
personality driven and it's like, you're going to do both. You have to do both. Yeah, man. I mean,
if you, and the other thing about 1960, which I find utterly fascinating is that they are
personality driven, you know, you have your Tim mosses, you have your Jack Forster's,
you know, they really push those faces forward as a voice for this massive company.
Whereas watch the Switzerland, I guess you could say Ben climber is like kind of a face of
watch of Switzerland now, but Bucher is faceless. Yeah. But they sort of Houdini still kind of
plays coy with it. You know what I mean? Like if you're a casual person, like I'll give you,
you give you an example, like you're a casual person checking out watch content on YouTube
and you come across like any video of Tim Maso, whether it's a watch review or even some of like
he has that like faux late night talk show set up, you know, it's kind of,
it's very clear he's selling watches. It's always been clear, right? Like there's no,
there's no pretense about it. Whereas with Houdini, it's like they kind of flirt with the
watches of Switzerland thing. And if you're a more casual person, you probably have no idea
Houdini has anything to do with a watch retailer. No. And when you watch like talking watches,
it's not like, you know, watches of Switzerland presents Houdini's talking watches. Yeah,
exactly. A subdivision of the Shineheart wig company. I have to make that joke.
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Let's get back to the show. Yeah, it's really interesting to see what's happening there.
Consolidation continues. The focus is on brick and mortar and I think there's plenty of more
runway to go with consolidation. We'll see what happens there. The other interesting thing and
the other side of consolidation is not just among the retail focused businesses, but is among
the makers themselves. So like we said, LVMH and Richemont are on this list. Richemont is
the number two. LVMH is the number one, two, three, four, five, six on this list.
And they're not actually that far off of Richemont. I would suspect what's driving most
that $3.6 billion for Richemont is Cartier and jewelry, Van Cleef & Harpell, things like that.
LVMH not far behind $2.8 billion, 286 locations. So they actually have more company owned and
operated locations than Richemont does, not doing as much revenue through them. So hey,
credit to Richemont on that. I mean, the revenue they're generating per employee in square foot is
really, really impressive. So the LVMH one is really fascinating to me because I don't think
they're really primarily thought of in terms of watches and jewelry. I think they're more like
fine leather goods, luxury goods, fashion brands, alcohol, things like that. Watches and jewelry
are a segment of their business and an important one, but for them to be number six on this list,
just behind Costco, by the way. I wonder how much of a driver Tag Heuer is for that.
Of those 286 locations? I don't know. Well, you just mentioned one of the Pizza Bell Taco Huts.
Pizza Hut Taco Bells is owned by the Taco Buff. So I don't know what comprises that 286.
I would suspect that a lot of that are Louis Vuittons and a lot of that-
Because of course they do sell some watches and jewelry in there.
So I think a lot of those are Louis Vuittons, of which there are many doors.
And a lot of those are Tag Heuer, of which there are many doors. So I would imagine that comprises
the majority. Yeah, they actually slipped. So they flipped with Costco year over year.
They're neck and neck with Costco, which is remarkable. Now, anyone who's spent any time
at a Costco, there's the old jewelry and watch section up front. But look, Costco is big business.
Walmart is actually just ahead of Costco. Amazon is just ahead of them. So Amazon, Walmart, and
Costco are players in this industry, but still they're behind Cygnet and Richemont. So what I
think is fascinating here with Richemont and- Well, but it's also important. I mean, they're
occupying different segments of the industry. I'm sure Amazon is selling metric tons of G-Shock,
for example. But a lot of watches that are on Amazon are not- Who even knows what qualifies
as jewelry on Amazon? There's that too. And also there are, at least historically, I haven't looked
in forever, but historically there were lots of watches that were gray market watches on Amazon
that maybe would qualify as selling a watch, but aren't necessarily as fair game as you would
when you're comparing it to an actual authorized dealer. So this is a little bit of a gray, murky
area, but still it ranks. Tiffany, that's the other big one. So a lot of Tiffany locations for
LVMH as well, and there's watches and jewelry sold there. So I mean, to me, it's like these are
these kind of like sleeping giants here. These are major jewelry, luxury watch companies. They
have hundreds of retail doors that are company owned and operated. One of the reasons Rolex is
not on this list is because most of their stuff is sold through third parties. Bucherer is on this
list. We talked about them, but Richemont is ahead of Bucherer, for instance. To me, this just signals
how far these holding companies have come with their company owned and operated strategies. It
really is a major focus. And when you hear them talking about how it's growing their revenue and
how it's adding to their bottom line, because of course they capture the full margin on a sale here,
it's kind of shocking just how significant the company owned and operated boutiques
have become to these businesses. They're big businesses. And it shows you why Rolex would
acquire Bucherer. It shows you Patek Philippe acquired a retailer. They acquired Bayer,
now smaller retailer, but one of the oldest watch retailers in Switzerland. And they're using
the Bayer business. I think they're going to open Patek dedicated boutiques,
at least starting in Europe. I think it stunned a lot of people when Rolex bought Bucherer. It
seemed like a big change for them. But if you look at what Richemont and LVMH are doing,
no big deal. Of course they had to do it. It's a hedge. This, I think, will continue to be an
area of consolidation. I mean, look, all of this is fascinating, but if we look at what the macro
trend is that we've been talking about this year, this plays into it, which is that this is an
industry that is in a massive state of flux and change. And it may not necessarily look it from
the outside because on a store by store basis, everything kind of looks the same, right? But
ownership is changing. Consolidation is having a long-term impact. Old rules that
were steadfast are falling away. A lot is up for grabs. Now, this is a good thing.
Yeah. I was going to ask, you think this is a good, well, forget about the industry for a second,
because we've talked a great deal about how the consolidation benefits a lot of these holding
companies in terms of margin capture. Is this good for consumers? Is this good for enthusiasts,
I think, more importantly? I don't know, because it really depends on what these stores decide or
what these large companies decide to optimize for. Now we're entering into a more philosophical
question, right? I mean, corporations do corporation stuff, which largely means that
they're going to optimize for shareholder value. And it's like the old joke about bringing in
McKinsey, right? Pay a million dollars to reduce your costs and increase your revenue.
Yep. Good idea. Why didn't you do that? Now you owe me a million dollars. So that's what
corporations are largely going to optimize for. But in fairness to, I can't believe I'm going to say
this sentence, in fairness to corporations, that would be also assuming that there is no creative
thought, no flexibility, no insight. And 1916, I think, poses some of the best opportunities
for that change. Because if there is an external pressure from a company like 1916,
which relative to these other companies would be a challenger brand. If they continue to be,
because they're more enthusiast focused in the sense of the level of the knowledge.
For the online stuff.
Correct. Correct. I'm talking about the multi-channel angle. You are more likely,
if you pick a random 1916 salesperson on the phone, I think, and this is just purely anecdotal
from my own experience, to get someone with a larger knowledge base than if you were to call
the call center at some of these larger stores.
Or if you're just to walk into one of these larger stores.
Well, I've never walked into a 1960s store, so I can't speak to that.
Well, no, no, no. Forget a 1916 store. Look, you and I do plenty of similar shopping,
you walk into these boutiques, more than half the people there have no idea what they're talking
about.
Sure. But let's put that aside for a second. My point is, if 1916 continues to climb the ladder
by being successful at multi-channel, then one of three things will happen. Either Watches
of Switzerland or Bucherer will swallow them. Number one. Number two, either Watches of
Switzerland or Bucherer will copy them in an effort to snuff them out and then swallow them.
Or option three, Watches of Switzerland and Bucherer will be wheezing beasts of a company
that can't change enough and 1916 will climb and maybe overtake them. Those are the only
options that I see.
I don't know. A holding company could acquire them. I mean, Rolex bought Bucherer, why not
buy Watches of Switzerland?
Same, same. Same, same. Now, here's the other side of it. There are still many, many, many,
many, many significant-sized, multimillion-dollar, independently-owned retailers that are out there
that occupy different territories, different niche markets, and the rest.
So the question will then become, what's more interesting to me is less what's going to happen
at the higher end of the corporate side, but what's going to happen with these independent
boutiques that are successful businesses on their own, that are not seeking buyouts, and
here's the interesting one, that are not under the thumb of a company like Swatch, Richemont,
Rolex, or Patek? Because if you-
How many are out there?
Probably not many, 10, 20, 30 maybe, but still, if you combined all those together, it's hundreds
of millions of dollars of revenue. It's not a negligible sum, and they're not in podunk
markets. So if that's the case, those retailers offer another interesting thing, which is,
do they band together? Is there another solution here for businesses like us?
Will the acquisition offers come in to all of the independent retailers over time?
Will they attempt to negotiate and force them out by corporate machinations with larger
companies? But the reason I point out the Rolex, Patek, blah, blah, blah thing is,
you can snuff out an independent retailer if you're Rolex by a booker,
because if they primarily sell Rolex, you own them. It is much harder to snuff them out.
Not literally, but you have tons of leverage over them.
Correct, but it's much harder to do that if they're a diversified business that doesn't
rely on one brand that you control.
Is there any multibrand retailer who has Rolex that isn't dependent on them?
No, that's my point. But there are multibrand retailers that don't have Rolex that are more
diversified and therefore are stronger in their ability to defend against consolidation.
That's interesting. It used to be, it's true, it's a lot like car dealerships. I think the
mental image a lot of us have of the successful watch retailer in America is a family-owned
business that carries Rolex and some other stuff.
That's what it was for a long time.
We can all think of those stores. Many of them are still around. I would suspect most of Rolex's
sales network in the US today still fits that mold. That's the mental model for the successful
watch dealer. A big part of that formula was, man, if you had Rolex, you made it. That was
going to be your calm port in the storm. No matter what's going on in the world, people are going to
continue to buy Rolex, whether it's a hyped product or not. It's always just been a really
good watch that's in demand. When most people think watch, it's Rolex. Now we're at this point
where I think the writing is on the wall, where consolidation has begun and is gathering steam.
If I'm right and this consolidation trend continues, actually what that means is the
watch retailers who are the most vulnerable, ironically, are the ones who carry Rolex.
It's just flipped to this world where you used to think 20 years ago, I'm a watch retailer.
It's a family-owned business. If I can just get Rolex, I can breathe. That would be great.
Now it's like if you're a family-owned retailer and you carry Rolex, you're like,
shit, I need to diversify my business. It's a huge change. I'm not so sure that this is really
great for consumers. I think you're right. The 1916 company is a very important factor in this
market. Generally speaking, my experience is walking into a lot of these large multi-brand
retailers or even some of these company-owned and operated boutiques is a very mixed bag.
Oftentimes, there's salespeople who either don't really know what they're talking about
or they're so desperate for a sale, they follow you around the store like a lost puppy dog. It's
creepy and gross and pushy. It's not great. If I think about so many of the retail experiences
that I have in watches that have been great, it's largely a lot of these independent family-owned
and operated stores where you get to know the people. It's part of their family and their
business and all that sort of stuff. I'm just girding myself like, oh, god, we don't need more
of these stores. We don't need more consolidation. It's not good for the enthusiast especially.
But then I think about, you know what? You're right. There will still be independent retailers
no matter what either because they're not in bed with these companies or whatever it might be.
Marc Thiessen And because these companies,
as big as they are, aren't good at selling everything.
Danielle Pletka No. And as long as 1916 company is out there
who has a very clear focus on enthusiasts and informed selling, I think that does force these
other consolidators to be on their best behavior because otherwise sales are going to be siphoned
from them. I just hope that there continues to be, whether it's 1916 or independent retailers,
retailers who will recognize being informed and knowledgeable and helpful and resourceful good
salespeople. I hope that that continues because we don't want to end up in a situation where
if you want to buy a watch, it's the equivalent of going to a Zales, a Jared Jewelers, or a Kay,
where no matter what jeweler you walk into in the mall, they're all ultimately owned by the same
person. So there's no incentive for good service. That would be lame.
Marc Thiessen Well, on that note,
collective horology, a division of Merck chemicals.
Danielle Pletka Yeah, I don't know. I'm just not. I see this
happening in gathering steam and I'm cynical. I'd like to be wrong about this. I would love to be
wrong.
Marc Thiessen Yeah, it's so funny. Normally,
I'm the really cynical one. I'm a little bit more open-minded to what's going to happen here because
there's so much change in flux and because what you and I have seen in our just shy of a decade
in this business, we've seen this business move very quickly in ways that historically it just
has not. So I don't know, man, this is a snapshot. This is a snapshot. There's a trend line and I
get it. We're looking at the way this thing stands right now. I think we should revisit this in a
year and take a look at the state of the business because Lord knows that the watch industry looks
a lot different today than it did in 2024. Danielle Pletka
Yeah, we will have to take a look at this because as we've said, it's quite likely that the next
time we chat about this, watches of Switzerland will be at a billion dollars in revenue in the
United States, which, look, all of my cynicism aside for a second, let's just put this out
there. That is a remarkable achievement. Getting this far is a remarkable achievement. We know just
how hard and brutal this industry can be and to grow and to seemingly do it. I'd love to take a
look at how much debt watches of Switzerland has taken on to fund these acquisitions and their
growth in the US, but this is a tough business. And so to achieve what they have in this market
coming in from the UK is absolutely remarkable and they are a force to be reckoned with. So
hat tip to them. They're giving everyone else a run for their money. Let's see where they take
it. All right. Let's leave it there. All right. Well, thanks so much for listening. Openwork is,
of course, a production of Collective Horology. You can find us online at collectivehorology.com.
And if you call the number on our website, someone who knows what they're talking about
will answer your call and talk to you about watches. Could even be me or Asher. Who knows?
So give us a call and send your suggestions, of course, to podcast at collectivehorology.com.
Collective Horology, a division of Merck Chemicals. Don't use that.