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WOLF has three hubs around the world for its range of watch winders, jewellery boxes and accessories. One by one, they were shuttered by the spreading Covid-19 pandemic, but operations restarted quickly because sales kept rolling in through the company’s global network of ecommerce partners, the company’s chief executive Simon Wolf tells WatchPro’s Rob Corder. The Wolf Pack, as his team is known, proved incredibly adaptable and motivated to bounce back, and are now taking orders from key accounts that are — remarkably — even higher than last year.
As far back as January, WOLF was starting to feel the effects of the Covid-19 pandemic that would sweep the globe. Manufacturing of its jewellery boxes, watch winders and travel cases abruptly halted.
That was followed by the closure of company’s three offices and distribution hubs in Hong Kong, South of England and Los Angeles. Meanwhile its customers’ stores were closing down for months as governments across the planet enforced hard lock downs.
Even Baselworld was cancelled, a key event for WOLF where it normally displays a vast array of its products for customers and meets its agents and distributors from across the world. Simon Wolf, the fifth generation of the family to run the empire since its foundation in 1834, had no intention of being its last, and immediately flipped into survival mode.
“In the first and second weeks, I just looked at where we could save money. We had good stocks going into the lock down, so I was not too worried about supply while our factory was closed, but I had to look at every cost we could take out of the business,” he recalls in conversation with WatchPro in early June.
“After two weeks, we had done all that important work and we could look at how to start doing business again without calling up all our customers and trying to sell to them at a time when they were going through the same cash flow issues,” he adds.
Remarkably, and not entirely fortuitously, WOLF discovered its business activity was better than it thought after the initial shocks in its main markets because customers were turning to online shopping. It was not luck that ecommerce sales continued because WOLF has been working with online retailers for decades and offers a compelling drop shipment service where they do not have to buy and hold the stock that they promote. Once an order is placed on a retail partner’s website, WOLF dispatches the watch winder directly to the customer and the retailer keeps the full price of the sale.
“We have always operated online through our partners. I remember 20 years ago working with [US department store] Neiman Marcus to build a very good online business for them. I just loved the fact that we could receive all these orders from Neiman Marcus customers and we would deliver directly to them. We have built these partnerships around the world for retailers selling online, and that business has continued,” Mr Wolf describes.
The model could not be more tailor-made for these times. “It is perfect. Retailers feature our products on their websites but they do not need to buy and hold the stock, which ties up cash, and they do not need to bother with the cost and complexity of dispatching the products because we do that for them and they get the full retail value of the sale,” explains Mr Wolf. The system helps any size of retailer, from a single store up to a global giant. “We have been doing this with Watches of Switzerland, and their online business has been very robust for WOLF and can only continue to improve,” he reveals.
At the time we were speaking in early June, Mr Wolf was already reporting healthy year-on-year increases in sales through online stores, which follows a wider trend during lock down of ecommerce soaring while brick and mortar stores have been closed. GfK data for retail sales in the UK showed online watch sales rising by 76% YoY in May while brick and mortar sales were down by more than 90%. NPD is reporting similar patterns in the United States.
Despite this, even sales destined for physical stores were picking up, particularly for products that are made to order for a particular retailer that wants it customised in some way. “I have been so surprised by the demand from our customers, particularly those that do special pieces, co-branded products with us. There is a longer lead time, so orders like that would be placed around now for delivery in September/October. For those types of products, the orders this year have come in higher than the same time last year,” Mr Wolf reveals.
That is significant because WOLF is an accurate bellwether for the wider watch and jewellery market. The company even bases its own forecasts and targets on the number of watches that are made every year. Mr Wolf studies the export figures for Swiss watchmakers — typically around 20 million watches are exported in normal years — and calculates the potential market for his winders and other accessories. Retailers ordering greater quantities of WOLF products in expectation of a rebound in the third and fourth quarters are clearly planning for a similar surge in watch sales.
Throughout lock down, with his team of around 45 people working from home, Mr Wolf was drilling into details of the company’s operations that had been overlooked and allowed to drift for years. A company credit card with expenditure running to hundreds of thousands of dollars, was pored through line by line. “I looked at every item on it and discovered all sorts of things we should not be spending money on,” he reveals.
A tighter grip on spending is likely to be one business practice that improves WOLF as a company after the pandemic. Another, to the surprise of Mr Wolf, will be more working from home and meeting regularly over Zoom.
“The whole company has been working remotely from home. The three offices and warehouses have done a fantastic job. We started doing weekly Zoom calls with our 45 people globally, which isn’t easy with people joining from LA, Hong Kong and the UK. Without a doubt I am a traditionalist that felt we all needed to be in the office, but all the teams around the world have made a success of working from home and our efficiency has even improved. There is a change in the way people feel about accountability. It is on the individual to live up to their responsibilities, and they really have. We will never go fully back to everybody in the office. I am sure there will be a combination now of home and office working,” Mr Wolf describes. “The Wolf Pack, as we call ourselves, is like a family we have created and we will help each other get through this and emerge stronger.”
Like many employers and employees, WOLF found there were unexpected benefits to working from home, including helping to save the planet. “I am a big proponent, personally and through the business, of doing as much as I can to protect the environment. It is amazing what the lock down has done. It is common in Los Angeles for a commute into work to take two hours and another two hours or more back in a car. Now my guys aren’t doing that commute, and that is a massive reduction to the wear and tear on both themselves, their cars, the environment, plus there is a financial saving. It is phenomenal,” Mr Wolf says.
Without Baselworld, WOLF used other events such as Maison Objet in Paris in January and Inhorgenta in Munich in February to introduce new products, but has held back any revolutionary product launches. In fact, revolutionary is not the right way to describe the incremental evolution of the WOLF portfolio. This has turned into another advantage for the company, because none of its products will go out of fashion if they take a few more months to sell. Again, retail partners benefit from stock that does not age or need discounting as the seasons pass.
“We are not making stuff with pink polka dots,” Mr Wolf laughs. “The Viceroy [watch winder] collection has been with us for over a decade. It comes in units of single, double, triple, four, six and eight. Apart from technological improvements, it has stayed the same but we sell more of them every year as we become better known as a brand. We have not changed the design at all.”
Mr Wolf has a hand in the design of all WOLF’s products, and he likes to picture them as part of a household’s furniture for years. “For 2020 we have a new British Racing Green watch winder collection, and it works within a very traditional lifestyle for our typical customers. I want our customers to have an emotional connection to our products. They last a long time and I want them to look classic in ten years’ time,” he explains.
Jewellery storage, care and travel accessories, which account for half of WOLF’s turnover and 70% of units sold, are a little more trend-led, but even here Mr Wolf says they do not push the envelope too far. He will sometimes go mad with a radical design, just to send a message or get attention. “Even if it does not sell, it does not matter because I want to demonstrate what we are capable of,” he says.
Looking ahead, Mr Wolf expects a V-shaped recovery and feels he is in with a chance of hitting the goals he set for this year. “We look at it as if we have lost three months, so we need to do 12 months’ of business in nine months. We have not adjusted our sales goals for the year in any of our three regions. We are going to push as hard as we can,” he urges.
For 2021, all Mr Wolf will say is that he hopes the Swiss can find a way to put on a show of strength through the exhibition season and that brands like WOLF can find a home alongside the biggest players. “I hope that the folks in Switzerland put everything together into one show. The cost of these shows runs to hundreds of thousands of dollars for a company like mine, and many millions for the biggest brands. There are a lot of different people, companies and egos involved, but we need a single place where we can all come together, do business, have a laugh, have a drink. I need to reach all of my agents from around the world, and that is what a great Swiss show does for me. Expanding Watches & Wonders from a Richemont show to something bigger is a huge ask, but I just hope a way can be found to bring everything together,” he concludes.