Sothil: A balanced partnership, a balanced business

by charlene_voisin | December 1, 2013 9:00 am

By Jacquie De Almeida

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For the last little while, Sean Polan might have thought he was in the store furniture business.

With designs, specifications, and a list of materials in hand, he’s been making the rounds with manufacturers, gathering quotes and weighing his options.

His goal is not to get out of the watch and jewellery distribution game. Instead, it’s to establish the first North American shop-in-shop for U-Boat. The Italian brand of luxury watches is just one of seven lines Polan and his business partner, Chris Iliopoulos, distribute in Canada.

If all goes as planned with the U-Boat boutique, Polan says he’ll consider it one of his greatest accomplishments, and worthy of a visit by the brand’s founder and designer, Italo Fontana.

“I’ll be proud of myself when the shop-in-shop happens,” says the 30-year veteran of the watch industry. “It will be a personal achievement and it will be good for business.”

U-Boat’s business, without a doubt, but also Sothil’s, the company Polan and Iliopoulos started in 2012 after picking up the watch brand. A hurried trip to BaselWorld 2012 to meet with Fontana secured the deal, and put the wheels in motion for Polan and Iliopoulos to distribute watch brands Davidoff and Maurice Lacroix. Jewellery lines Nomination Italy, Vahan, and Pesavento round off the company’s offerings and also help mirror the expertise the partners bring to the table.

Polan’s background in the watch business coupled with Iliopoulos’s jewellery and retail experience help achieve a balance that has worked well for the two. They stress the 50-50 aspect to their partnership (their business cards are free of titles), and ‘team effort’ is not just a routine response to a reporter’s question as to how they would describe their company’s growth over the past couple of years.

Where worlds collide

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Although originally from Montreal, Iliopoulos and Polan grew up on different continents. At the age of eight, Iliopoulos moved to Greece with his family, his father and uncle going into business and eventually owning four jewellery stores. It was in picture-perfect Mykonos that Iliopoulos got his first taste of selling jewellery.

Ten years later, he was splitting his time between university studies in Canada and spending the summer months in Greece, where he continued to hone his retail skills. When he wasn’t behind the counter in Greece, Iliopoulos was working at Everest Jewellers in Montreal and picking up a diamond certificate from Gemological Institute of America (GIA), as well as a diploma from École de Joaillerie de Montréal.

A devastating financial loss resulting from a store robbery, however, saw Iliopoulos make Montreal his home for good. It also saw him start up a wholesale silver jewellery company, an experience that helped him learn the ropes of importing into Canada. A bankruptcy involving their biggest U.S. client, however, forced Iliopoulos and his partner to shut down operations. No longer in wholesale, Iliopoulos picked up the distribution rights for Welder, U-Boat’s sister brand.

It was around this time that Polan decided a career change was in order after 25 years with TAG Heuer. His start in the watch industry, however, goes back to 1985, when he joined his father, Peter Polan, in P.M.P Sales Agency, a family business that represented Chronometric Co., TAG Heuer’s Canadian distributor. When the watch brand took back its distribution 14 years later, father and son joined TAG. As an account executive, Polan spent the next few years on the road until 2010, when he and the watch company parted ways.

It wasn’t long before Polan’s and Iliopoulos’s paths would cross, although the two already knew each other—Everest Jewellers was and still is a TAG dealer. A phone call with an offer for Polan to represent Welder laid the foundation for what would become Sothil, a company named after Iliopoulos’s daughters, Sophia and Thalia.

Control issues

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Although it acts as a sales agent for Vahan, Sothil distributes the balance of its portfolio, a decision the partners say helps them manage their lines independently and works in retailers’ favour, and by extension, consumers’. The setup is particularly critical when it comes to servicing high-end watches. It’s not unheard of for a customer to wait up to six months for a repair that’s been sent to say, Switzerland. To ensure quicker turnaround, Sothil subcontracts a local service centre, which is stocked with original parts for the most common repairs.

“When it comes to servicing [in a sales agency scenario], things can be more complicated and time-consuming because you depend on the supplier for everything,” says Iliopoulos, who oversees shipping, invoicing, and marketing, as well as sales in Quebec. “As a distributor, you have more control of the product in your market, and can service your retailers better. It can be very aggravating for the consumer and retailer to wait anywhere from six weeks to six months [for a repair].”

While the Swiss watch industry transitions away from relying on Swatch Group for its movements and movement parts, it is currently grappling with a crisis over the definition of ‘Swiss-made,’ a label that many view as the epitome of precision and quality.

Right now, regulations say 50 per cent of a movement has to be made in Switzerland for a watch to be called ‘Swiss-made.’ In addition, the assembly, finishing, and final inspection of the watch must also occur in Switzerland. However, the Swiss government has proposed a rule that at least 60 per cent of manufacturing costs for all products, including watches, must originate in Switzerland to earn the label. Larger brands like Rolex have no trouble meeting even an 80 per cent threshold. However, the proposed changes could strip many small and medium-size companies of their ability to call their brands ‘Swiss-made,’ as many actually produce components in places like China.

Iliopoulos stresses the value of the ‘Swiss-made’ label in watchmaking-—a high threshold ensures provenance.

“To a certain extent, it is false advertising when companies produce watches that are 20 or 30 per cent made in Switzerland and the rest is made in the Orient,” he says.

Polan has a slightly different take on the situation, a reflection of their backgrounds in the industry. Although he is not opposed to having a reasonably high threshold, he says one that is too high will result in less competition in the marketplace.

“You’re basically giving all the control to the big brands,” says Polan, whose responsibilities include sales and inventory control. “The Canadian retailer will have fewer choices and, by extension, offer less to consumers. If retailers have fewer choices and Swatch Group, LVMH, or Rolex, for example, don’t want to deal with them, what Swiss watches will they be able to get?”

First impressions

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As a distribution company fairly new on the scene, Sothil has spent the last two years building its dealer base, which at last count, numbered in the neighbourhood of 50. Determining which retailer will carry a particular line is always a point of scrutiny. A good opening order is important, but Polan and Iliopoulos look to repeat orders to gauge the strength of a line in a particular store.

Part of that requires putting together an order with an assortment of product tailored to the retailer’s market. A few pieces of any line do little to create an impact.

“Retailers have to show consumers what a line is all about,” Polan explains. “And a distributor needs to do as much as it can to work with a retailer’s budget, as long as it makes sense. [The product selection] has to make an impression on a consumer.”

On this point, Polan is adamant. He’s even been known to turn away business if a retailer is unable to commit sufficiently to a line.

“Business is a two-way street,” he stresses. “It has to be good for both the retailer and the supplier.”

Understanding the nuances of the jewellery and watch industries from both sides of the fence has helped them make the right decisions for their business and brands, Iliopoulos says.

“My experience in retail allows me to view things differently when we are distributing,” he explains. “I share that with Sean because he doesn’t have that experience, whether it’s setting a product at a certain price point so that it sells better in our market or the service aspect, which is extremely important for the end consumer. I think retailers appreciate that we know how the retail industry works and what dealers’ needs are, rather than just ours. We’re in partnership with our customers.”

One of the ways they do this is to track retailer sell-through. Not only does it streamline the ordering process with their suppliers, but it allows the partners to come to the rescue when a retailer is looking for a particular watch. Rather than ordering the watch from Europe, Polan can scan his records and find another dealer who may have the item in stock.

“It’s a lot of work and you won’t find too many companies that do this,” he says.

A tough job? Yes, but if you ask Polan and Iliopoulos, they wouldn’t have it any other way.

Source URL: https://www.jewellerybusiness.com/features/sothil-a-balanced-partnership-a-balanced-business/

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