Tourneau CEO Ira Melnitsky took some time to speak to me today at the watch retailer’s Manhattan headquarters. While he declined to comment on reports that the company may be sold—private equity firm Leonard Green and Partners has owned it since 2006—he staunchly denied one report of issues at the company, noting that its sales have consistently risen during a tough time for retail. Here, he talks with JCK about the gray market, smartwatches, and whether millennials will become good watch customers:

JCK: So tell me from your perspective why Tourneau’s sales are up.

Ira Melnitsky: We made a decision probably three years ago that we were going to focus on the domestic U.S. customer. At that time there were still plenty of overseas tourists coming to the United States buying lots of watches. But the foundation of our business—we’re 117 years old—is the domestic consumer. We thought there was a period of time where attention was taken away from that consumer because of the influx of high-spending international tourists. So we reinvested in store-level training. We did it in partnership with our brands. And we began to change the culture of the organization to be long-term-relationship-oriented. And we have seen the results. We have grown every single year, even during this period of watch downturn. We’re up double digits to domestic customers, which are the vast majority of our business.

JCK: Can you talk about your online strategy?

Melnitsky: We have been selling online for 10 years, which is sort of an anomaly in this business. In 2014, we decided to make a major investment in technology. We replatformed our website, we updated our CRM and database capabilities, we invested in a team of talented people here in our office—we have 12 or 13 people just focused on the online business. For us, historically, [online] had been the certified pre-owned watch business, and those brands that have been online.

Since then, because of our dedication to doing it right, we have launched Cartier, IWC, JLC, Breitling, Franck Muller [online]. We had two more premier brands coming online before the end of the year.

JCK: Is online a big part of your business?

Melnitsky: It’s becoming a fast-growing part of our business. Until we have all of our brands online, it wouldn’t be our biggest door. But it’s been the fastest growing part of our business over the last three years.

JCK: How do you juggle the pricey locations you are in with the challenges of retail?

Melnitsky: It’s always a challenge but I think that a customer that purchases a luxury timepiece expects and deserves an appropriate luxury experience. We think we need the appropriate venues to provide that. And that requires the best locations.

We have gone full omnichannel in our stores. We are tablet-based. We can access inventory from different locations for that consumer who wants to buy online and pick up in store, or buy in store, or pick up at another store, or pick up at home.

JCK: Do people respond to the tablets?

Melnitsky: Yes, people do respond to the tablets. All of our stores now do a material part of their business off tablets.

JCK: Are you having issues with the gray market?

Melnitsky: It is absolutely an issue, an issue that we speak to our brand partners [about]. I think it’s a very dangerous channel of distribution for consumers. You don’t know where the watches came from, you don’t know if the dealers are as legitimate as they should be; they don’t come with brand warranties. We are strong advocates for trying to push that down. Most of our best brand partners are supportive of that. We recognize why it occurred, particularly the price differentials. But it’s not in the best interest of the industry, in our opinion, and it’s something we speak against and do our best to fight against.

JCK: How do you feel when you see a big name like Amazon carrying gray market watches?

Melnitsky: It disappoints and it troubles me. I think we have done an excellent job fighting against it.  We certainly don’t like to see nonauthorized dealers selling prestige watch brands.

JCK: Do you think that some watch brands are winking at the gray market?

Melnitsky: I think there’s a mixed reaction depending on the watch brand. Those that were quicker to adjust production to a changing environment around the world have also been equally active in reducing their exposure to the gray market. It’s my belief there are too many watches from too many brands out there.

JCK: How do millennials feel about watches?

Melnitsky: I believe it’s very positive. I today believe that the Apple Watch is a good thing for our business. It has gotten young people to put something on their wrist.

Our demographic data shows that our customer has not aged over the last five or 10 years. It is not an aging customer base that is buying watches. Our key customer base is in the 30 to 54 range.

JCK: Do you carry smartwatches?

 Melnitsky: We carry smartwatches from a number of different brands. They are doing well. The biggest success story has been TAG Heuer….

The vast majority of smartwatches are under [a] $500 price point. That’s not Tourneau’s key business. The vast majority of our business begins at $1,000 up.

JCK: What do you think of models like Eleven James, which rents watches?

Melnitsky: It’s important for people to try new things. It’s important for us as Tourneau to look at new things. Our customer and our data have shown they don’t have an interest in sharing. Obviously the sharing economy is a growing one. So it’s something that we look at regularly. Our approach has been the sale of certified, pre-owned watches, rather than the sharing. But that could change in the future.

JCK: You recently started selling Forevermark jewelry. How is that going?

Melnitsky: It’s going very well. It gets two customers. It’s an all-female product. We are getting customers that come in together, a man and a woman, where he’s purchasing a watch and she’s looking for a piece of jewelry. We also get that customer that is buying a watch for themselves and wants to bring home a piece of jewelry for their significant other as well.

JCK: You are a U.S. retailer. Do you see further expansion?

Melnitsky: Yes. I’m not suggesting that we are going international. We think there is a lot of opportunity in the U.S. We believe in the U.S. customer.

(Top: Ira Melnitsky, courtesy of Tourneau)

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