After turning around the fortunes of the Early Learning Centre and selling it off in 2004, Mike France didn’t last long on the beach before getting back to business with his latest venture, Christopher Ward. Bryce Wilcock reports...
As CEO and co owner of the Early Learning Centre, Mike France was told he would never be able to sell kids climbing frames online. Despite this, he saw the potential in ecommerce and knew it could help turn the company’s fortunes around, so he became the vanguard who did.
That was 1998. Online retailers were just starting to emerge and many on the high street shrugged off the threat of online competitors. Fast forward a few years and Mike had sold off his shares in the Early Learning Centre alongside his business partner Peter Ellis, with its online business booming.
France said: “The Early Learning Centre was a national education toy chain which had gotten itself into difficulties. I was parachuted in to sort it out and we eventually bought it, turned it around and sold it to Tim Waterstone’s private equity firm Eagle Retail Investments in 2004.
“Because we were quite early and launched our website in 1998, we were part of the vanguard, we were one of the first high street retailers to embrace online retailing. I never had much experience of the internet but having spent many years in bricks and mortar I felt that the future of retailing was almost certainly to be online.”
Prior to the Early learning Centre, there weren’t many high street names Mike hadn’t worked with. Growing up in Liverpool, he joined Littlewoods as part of their management training scheme at the age of 18 just after finishing his O Levels. He then worked his way up to become a store manager before going into buying and eventually becoming the chains buying director. He was then poached by the Arcadia Group before going on to become the buying director of BHS. From there, he went on to help sort out Debenhams before taking up his role at the Early Learning Centre.
“After the Early Learning Centre I spent a month on the beach, which is more than sufficient for anybody. I was bored and looking for something to do. I wanted to begin something which was really interesting and something I was really passionate about. I knew Peter Ellis from the Early Learning Centre and Christopher Ward from my past at Liddlewoods in the early days, we’d always wanted to work together again.
“We got together and thought about the passions we had. Although we knew nothing about watchmaking, we realised we all loved watches but knew nothing about them. It fitted a number of criteria that we wanted. We anticipated that it was going to be a growth market. Secondly, there’s nothing as universal as time.
“If you’re going to have an internet business you want to be able to ship worldwide. You can’t really ship sofas to the world, it’s a bit tricky. Watches on the other hand are relatively high value and small volume therefore it gave us the opportunity of having an international business. Albeit we had no idea how it would evolve. We then got very lucky.
“I think you always need a slight bit of luck in these things. We didn’t know anything about the manufacture of watches but we did know some people who knew people. One in particular was an old supplier of ours who had ended up running Adidas’ largest supplier in China employing 30,000 people.
“He was Taiwanese Chinese but had been interested in horology all of his life and had been part of a class of 32 a while back that the Swiss had brought over to Switzerland and trained in the art of horology. Many of these people went on to become key manufacturers for the Swiss brands.
“Woody, although he couldn’t actually continue his career in horology as he had to take over his father’s business in China, knew many of these people and he introduced us to them. From day one, we were getting information and access that some people in their careers wouldn’t even get to understand or know.”
After picking Woody’s brains and making contact with the Swiss suppliers, the trio got together and began drafting up their business plan. Their first task, was to conduct some market research and decide whether the idea was viable. Like Mike said, they didn’t actually know too much about watches or how they were made, they just knew they loved them and if his experience had taught him anything, that he could most probably sell them.
“From our market research, we learned two very important things. Firstly, we learned that even the biggest brands were sharing movements. Movements are the core of the watch, a bit like the engine of a car, it’s what really matters in a watch and these movements we discovered were available to anybody and they were largely being manufactured and supplied by the Swatch Group.
“They were supplying all of their competitors, which was fascinating to us, it’s so unusual in the world of business that one of your key competitors is also your key supplier but that was the bizarre state the Swiss watch industry had gotten itself into in the early noughties. We could access the same quality that all the top brands could.
“The second thing we discovered was that some of these brands were multiplying the cost of their watches by up to 34 times. That’s a 3,400% mark-up. The average mark-up we discovered was in excess of 1,000%. It may be something to do with our Northern roots and the fact that our mothers sit on our shoulders all of the time, but we thought it was ludicrous, we understand brands have to have decent margins, but we thought this was just plain wrong.
“So with a low cost direct consumer model which nobody had ever done before in the luxury watch market, we decided that we would launch our own brand which, instead of having a 3,400% mark-up or a 1,000% mark-up, would be a model that gave us a fair profit. We would mark-up by 300%, so a x3 multiple if you like, before all of our other costs which allowed us a decent margin at the end of it. It created a niche for us in a marketplace which wasn’t used to this sort of value.”
Having identified a gap in the market and with a desire to take down the capitalist regime running the watch industry like a corporate Che Guevara, Mike, alongside Peter and Chris, took to the drawing board and they started to get to work on their business. Their first task was to decide on a brand name. Which any business founder will agree, is one of the most tedious tasks you’ll face.
“As all businesses do when they’re starting up, there was a lot of discussion and debate. Do we call it MPC? Mike Peter and Chris? There was a period even when it was going to be named after the maiden names of my wife and Peter’s wife, which would’ve been Fennel & Worsley, but we thought that would’ve been a bit old fashioned.
“What we didn’t want to do is create a name which wasn’t real, the whole point of what we were trying to be is authentic and genuine and not make up some fake sounding name. The best name we felt that expressed our Englishness, without sounding like a firm of solicitors, was Christopher Ward. We decided that was the best sounding name for the brand so Chris got lucky and got his name on a watch!”
Once they had finally settled on their brand name they got to work on their first batch of designs. Mike is the first to admit, they had no idea how to design a watch, so they sort the help of some old friends.
“Chris had a business which was operating out of a refurbished chicken shed on a lovely farm overlooking Cookham in Berkshire. That was our first ever office. We designed the watches ourselves with help from design friends who had never even designed watches before.
“We were told at the time that we would never ever sell watches online, we would have to go into stores. Well, people said that about climbing frames at the Early Learning Centre and we managed to sell plenty of those online. We decided to go for it and launched online in 2005 and then another huge dose of luck occurred.”
Talking to Mike, he mentioned luck on a fair few occasions and puts it down as something every entrepreneur needs when running a business. And it’s fair to see why. What happened next, even Mike couldn’t have forecasted.
“Sales were ticking along nicely and we’d taken out advertising in newspapers such as The Independent. We then suddenly started getting orders from all over the world and we had no idea why.
“It wasn’t until 8 December 2005, the date is now embedded in our brains, when we got a call from a Dutch guy named Hans van Hoogstraten. Hans asked if we would consider letting him launch an online forum about Christopher Ward and we couldn’t believe it.
“We asked, ‘why would you want to do that?!’ He said: “Well you must have seen the furore that you’re causing in the watch industry?!” To be perfectly honest, we had no idea what he was talking about.
“Hans pointed us towards what was then the world’s largest online watch forum, which is called timezone.com, based in the USA. A lecturer at Tasmania University had seen our ads, seen the components that we were claiming to be using in our watches (the same parts as some of the world’s most expensive brands) and had seen the price we were charging.
“He decided to buy one to ‘expose us as the frauds that we surely were’ because nobody could possibly sell this quality a watch at such a low price. To his eternal credit and to our eternal good fortune, we shipped it unknowing, he opened it up, discovered it was true and posted this eulogy on Timezone saying that he had discovered ‘the best value watch in the world, ever!’ it created a huge stir.
“We didn’t even know Timezone existed at the time. We became after several months of selling these watches one of the most talked about watch brands. In December alone we were talked about more than Rolex on Timezone. It spawned a lot of interest."
They soon realised that selling watches online wasn’t going to be the biggest challenge they would face. It was selling watches, made by the same people behind some of the world’s most expensive brands, at a fraction of the price, and convincing people it wasn’t a con. As the lecturer from Tasmania had earlier learned, it could be done. But, to the average consumer, how would they get the message across? They often say if something seems too good to be true, it probably is. But not in the case of Christopher Ward.
Mike said: “We still get people looking at us for the very first time who are a little suspicious, we know that’s the case. The beauty of the industry we’re in though, luxury watches, is that most people before they buy anything whether its online or through a retail outlet, research the product beforehand.
“They’re a bit like cars, there are more printed words, forums and blogs about watches and people engaged than almost anything else. There’s an incredible separate world out there filled with people fascinated by watches.
"The best thing about us is, touch wood again, when you research our brand and look at forums etc there are many many people out there from professional writes, bloggers and journalists all the way through to customers who have had great experiences with Christopher Ward and are prepared to write about it and post it online in one way or another. That is one of the key ways we overcome that resistant.”
Eleven years since their first batch of watches hit the market and it’s fair to say the gamble has certainly paid off. Christopher Ward now employs around 40 people and is looking to turnover in excess of £10m this year with further plans to grow in the future.
50% of their £10m turnover is also generated via overseas sales. The trio, as mentioned earlier, outlined from the start that they wanted their business to operate internationally. Like Mike said, that’s why they went into watches and not sofas.
He said: “International trade is now half of our business. Of that, half of it is to the United States, equalling 25% of our overall sales. We’re growing at a fast rate and are also seeing demand grow from the likes of Germany, Singapore, Hong Kong, France and Australia.”
One of the key talking points among businesses, especially those that operate overseas, is the recent result of the EU referendum. It has been widely reported that the weakening pound is proving quite a boon for the majority of British exporters but a huge hindrance for importers. This has proved a bit of a double-edged sword for the Christopher Ward team, which manufacturers its time pieces in Switzerland and retails them in the UK.
“The impact it has had on us thus far is mixed and I think that will continue to be the case,” said Mike. “The weakness of the pound has hurt us because we buy in Swiss Francs. The pound has devalued by around 13% currently against Swiss Francs since the referendum, at one point it was 22%, so it has bounced back a little. It’ll force us in the early new year to put our prices up. Most other retail brands immediately raised their prices following the referendum but we resisted and will not put them up now until February.
“On the other side of the coin of course, with 50% of our buyers being from overseas, it has proved advantageous for overseas buyers. We’ve seen a huge increase in the number of people buying from our .co.uk website from abroad. Just as physical retailers in London have seen an upsurge in people visiting their stores from overseas, we’re also seeing more overseas customers buying from our .co.uk site. It really is a mixed bag I would say at the moment. Whatever way anybody voted, we just have to get our heads down and crack on together.”
Despite doubts from industry experts and economic headwinds, the company has continued growing since day one and is showing little signs of slowing down. It’s clear to see that innovation has had a major hand to play in the company’s success, all the way from their design and supply chain through to their pricing. Their determination to succeed and upset the status quo has really helped establish Christopher Ward among what is one of the world’s most traditional and untouched industries.
But Mike can see changes ahead and is ready for what the future brings. He concluded: “When we started, less than 5% of people were using mobiles to search or to buy. It is now becoming 50-60% of our business and most of that has happened over the past three to four years. It is just this huge shift to mobile technology.
“I must say if you had asked me five years ago would we see the shift we’ve seen to mobile I would’ve said no, I’m staggered by it. I never used to buy stuff from my mobile but I do now. That is a huge shift in the way people are behaving. We saw growth in search first but the second shift behind that is in commerce, buying via mobile. I can only see that it’ll almost supplant everything else in the next five years the way it is going.
“I can also see quite significant changes coming in terms of the watch industry. The traditional Swiss watch industry needs to shake itself up. I think they will have to sharpen their values. Nobody can ignore the impact that smart watches are going to have.
“Apple alone have put 10 million watches in the marketplace in the last 18 months so this is not an insignificant threat to the watch industry, brands need to become more innovative, improve their supply chain and they need to generally understand the value of what they do. Going forward I don’t think the 34x multiple will wash, which could provide a major boost to challengers such as Christopher Ward.”