Higher-margin McIntosh-brand ‘saved’ family business
A century ago, McIntosh & Watts delivered coffee, tea and spices to its customers by horse and buggy.
Today, ships transport McIntosh-branded tableware, gifts and collectibles from factories in China, Thailand, Vietnam and the Czech Republic to North America. In fact, with nearly 74,000 McIntosh pieces sold in Canada over the past 12 months, there is a container sailing aboard an ocean freighter at any given moment, says company president Peter McIntosh.
The decision to create the company’s own brand in 2008 “saved” the 106-year-old firm, says Mr. McIntosh, who jokes that if his family had stuck to its original business model, “today we might have been Starbucks.”
The company recently returned to Bank Street, opening a store in the Glebe a little more than a dozen blocks south of where its retail story began.
THE EARLY YEARS
McIntosh & Watts was founded in 1906 in a storefront believed to be located at 247 Bank St., at Somerset Street. Started by siblings Gregory McIntosh and Christina Watts (Peter’s great-grandfather and great-great-aunt), the firm gradually expanded beyond coffee and tea into related hard goods, such as teacups and saucers.
Throughout the first half of the century, the store moved several times and set up shop near the intersection of Bank and Lisgar streets and later at Bank and Gilmour streets. According to Mr. McIntosh, it was Ms. Watts’s “sheer sales power” that helped the firm endure through the First World War, the Great Depression and a devastating store fire.
“It survived on her personality and hard work,” he says, describing her as the public face of the business.
“For a woman entrepreneur at the time, it was quite rare.”
AFTER THE WAR
During the Second World War, Peter McIntosh’s grandfather, Grant, made connections with officials at several English fine bone china factories.
After the war, he began importing their products into Canada, allowing McIntosh & Watts to stock its shelves – and attract customers from the United States – with well-known brands such as Royal Doulton.
Lower-end dinnerware was of very poor quality in the ’50s, ’60s and ’70s, raising the value of brand-name products, says Mr. McIntosh. Furthermore, entertaining guests in one’s home was a major part of daily life. An important aspect of this was a proper dinnerware setting, which meant strong demand for fine china retailers. New concepts, such as bridal registries, also increased sales.
McIntosh & Watts continued expanding, opening locations on Sparks Street and on Elgin Street.
It was also an early tenant when the St. Laurent Shopping Centre, Bayshore Shopping Centre and Rideau Centre opened.
“(Setting up in malls) was a big shift and took the company to another level,” says Mr. McIntosh.
BRANCH PLANT PUSH
Up until the ’70s, McIntosh & Watts imported most of its inventory directly from England. But companies such as Royal Doulton eventually established wholesale and distribution facilities in Canada.
Mr. McIntosh says this had a significant impact on his family’s business. It reduced the need to place large orders for products that might ultimately be unpopular and allowed the company to rapidly replenish its inventory of products that were selling quickly.
On the other hand, it allowed more retailers to enter the market, increasing competition, and introduced a middleman that decreased McIntosh & Watts’s profitability. But Mr. McIntosh says the higher sales volumes helped compensate.
THE MILLENNIUM AND BEYOND
To understand the societal shifts affecting the china and tableware industry, one needs to look no further than their own dining room … that is, if one has a dining room at all.
Mr. McIntosh says many new homes are being constructed without one, reflecting the diminishing importance of entertaining guests. Furthermore, Canadians are “decluttering” their living spaces and no longer value the same objects they did decades ago.
Sales for “formal products” – for example, those that must be hand-washed, rather than cleaned in a dishwasher – have dramatically dropped off.
As sales fell, English tableware suppliers shipped manufacturing offshore to cut costs, according to Mr. McIntosh. It’s a move he says widened the opening for lower-priced competitors.
“It became a volume-driven commodity business,” he says. “It took away the perceived value and hurt the industry as a whole.”
McIntosh & Watts’s solution four years ago was to find a niche in the middle with its McIntosh-branded goods, which Mr. McIntosh describes as quality products “with really sharp pricing.”
McIntosh products are carried in approximately 400 stores across the country, accounting for approximately one-third of its sales. Another third comes from online and catalogue sales, with the remainder originating from the company’s own bricks-and-mortar locations.
The margins on its own branded merchandise are much higher than what the company retains on resales of premium branded products, and its popularity has Mr. McIntosh feeling confident.
“We’re bullish on our future,” he says.
“Hopefully one day we can look back at this article and see the start of a great Canadian brand.”