Step #1 - Darren Bondar dreams of becoming Canada’s largest watch retailer. With seasonal cash flow and stiff competition, can it be done?
COMPANY Watch It
OWNER Darren Bondar
Darren Bondar started with a handful of display cases bought from Eaton’s, which was going out of business back in 1999. He also had $50,000 on credit and a retailing idea he’d spotted in New York. From there, in 14 years, he’s built a nationwide wristwatch retail brand with 28 stores called Watch It! But how does he manage cash flow feasts and famines, due to seasonal spikes in the retail business, while meeting his ambitions for the company? Those are, among others, massive growth, a new, in-house brand and ultimately to become Canada’s largest watch retailer. Are Bondar’s dreams going to lead him to the promised land? Or will he watch as Watch It! grows too fast?
Bondar comes from a business background. His late grandfather, Sam Bondar, started Bondar’s Fine Furniture in Calgary, which remains in the family. But that didn’t mean he had it easy. He was near penniless. “We started with literally nothing and, you know, now we’re a chain of [almost] 30 stores across Canada,” Bondar says. The first was on Edmonton’s Whyte Avenue, and the store was on a month-to-month lease because Bondar was testing the concept. He’d just finished his MBA and opened Watch It! on credit before Christmas of 1999. Business boomed; then, January came, and business disappeared. Bondar added retailing on the web, with some success. In 2002, Watch It! launched at the West Edmonton and City Centre malls. “Our stores evolved and the product mix evolved,” Bondar says. The next step was franchising. “It was a great way to build a chain of stores with limited capital.” Three franchises, including one in B.C., were sold. From there Watch It! has grown to its current complement of 28 stores across Canada, with three B.C. stores added this year through the acquisition of Timeco, a Vancouver-based competitor. The original Watch It! on Whyte Ave remains. Corporate headquarters is now in Calgary, with a branch office in Edmonton.
Watch It! has grown steadily in its decade and a half, with leaps at certain points and steps at others. The business has been profitable in four of the past five years, while its 2012 revenue was $6.58 million – not bad for a company with more than 100 employees. Just two per cent of the company’s revenue comes from international exports. Of the 28 locations, 12 are corporate (two franchises were bought back this year) while 16 remain as franchises. Two new franchises are set to open this fall.
Competitive. Anyone can sell watches, and many do. Competitors for Watch It! range from independents to chains and franchises, from boutique jewelry stores to gigantic department stores like the Bay and Sears. There’s also the growing online presence of retailers like Amazon, which sell watches and nearly everything else. But in the middle, where Watch It! resides, the retailer has few direct, watch-focused competitors. And while many retailers offer the same products, from sports stores to sunglass huts, service is a key differentiator. “I think that our competitive advantage is that we are a true watch store,” Bondar says, over the phone from New York City, where he’s at an anniversary for Casio, one of the brands that his stores carry. “You can come back to us for a battery change, repair or other after sales service and our staff are extensively trained in product knowledge.”
Ultimately, to expand the Watch It! brand out of the Western Canadian region it currently dominates and become a national chain with 40 stores across the country. Over the next year, the target Bondar has set is to double its revenue to $13 million and grow the store roster to 30. Oh, and increase profitability by 2.5 times. And there’s that new in-house brand launch as well. It’s all ambitious, to say the least.
Cash flow is the constant worry – Watch It! is in retail after all. Bondar is proud the company has upheld all financial commitments to suppliers and investors over the last 14 years. Still, concerns about cash flow remain. “We’re a seasonal business, so the bulk of our revenue comes during the holidays,” Bondar says. He’s still looking for ways to improve optimize cash flow over the rest of the year. He also wants to grow his brand’s recognition, and is looking for an outside, objective look at Watch It! stores to determine if they offer the right merchandise mix and environment. But the real challenge is the next step: more growth or stay the course? Bondar has achieved what he calls the “double-double” in the past 18 months – doubled revenue and profits. “I’ve always been a little bit aggressive.” All the growth must now be absorbed. And the question is, is this the best pace to achieve his longer-term goals?