Are You Ready?

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MINIMALISM GOES to the office: SHARING THE TECHNOLOGY

RECOVERY Are You Ready? AMERICAN

ADVANTAGE Making it in the USA

RONNIE FIEG’S NEIGHBORHOOD

Design on the Verge

BRAND REVIVAL Sebago & Birkenstock

Return to their Roots

ITHACA, NY PERMIT # 191

PAID PRSRT STD US POSTAGE

FOOTWEARINSIGHT.COM • MARCH/APRIL 2011

Editor in Chief Mark Sullivan [email protected] 646-319-7878 Editor at Large Cara Griffin Art Director Francis Klaess

March/April 2011

Associate Art Director Mary McGann Contributors Michael Jacobsen Mike Kennedy Nancy Ruhling Tim Sitek Emma Johnson

Red Wing shoes designed with input from retailer turned shoe designer Ronnie Fieg.

Publisher Jeff Nott [email protected] 516-305-4711 Advertising Beth Gordon [email protected] 949-293-1378

See page 26

Jeff Gruenhut [email protected] 404-467-9980 Troy Leonard [email protected] 352-624-1561 Sam Selvaggio [email protected] 212-398-5021 Production Michael Jacobsen 201-396-7005 [email protected] Business Manager Marianna Rukhvarger 516-305-4709 [email protected] Subscriptions store.formula4media.com Made in USA: Munro Chloe

PO Box 23-1318 Great Neck, NY 11023 Phone: 516-305-4710 Fax: 516-305-4712 www.formula4media.com Formula4 Media Publications Sports Insight Footwear Insight Outdoor Insight Team Insight Textile Insight Running Insight Soccer Insight Footwear Insight® is a trademark of Formula4 Media, LLC, Great Neck, New York. ©2011 All rights reserved. The opinions expressed by authors and contributors to Footwear Insight are not necessarily those of the editors or publishers. Footwear Insight is not responsible for unsolicited manuscripts, photographs or artwork. Articles appearing in Footwear Insight may not be reproduced in whole or in part without the express permission of the publisher. Footwear Insight is published bi-monthly: Jan/Feb; Mar/Apr; May/Jun; Jul/Aug; Sep/Oct; and Nov/Dec by Formula4 Media LLC. Subscriptions: one year, $24.00 (U.S. Funds) in the United States. All other countries, $54.00 (U.S. Funds) for surface mail. POSTMASTER: Send address changes to Footwear Insight, P.O. Box 23-1318, Great Neck, NY 11023

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06 THE FOOTWEAR EYE MBT celebrates 15 years in the U.S. with a major ad campaign; Keds talks to college kids; Mozo cooks up a deal with celebrity chefs and Lola Ramone comes to America.

26 RETAIL: RONNIE FIEG ON THE VERGE This New Yorker cut his teeth working for his uncle at David Z and is now stepping out and offering advice, design input and ideas to key players in the shoe business.

10 ANALYSIS: BRAND REVIVAL Sebago takes an Artistic Approach; Birkenstock returns to its roots.

28 ARE YOU PAYING TOO MUCH RENT? An exclusive excerpt from The National Shoe Retailers’ Association’s Business Performance Report takes an in-depth look at occupancy costs.

14 STRATEGIES: Making it Here Keen, Munro and p.w. minor tell why they choose to make it here when they could make it anywhere. 21 WHAT TO WEAR TO THE RECOVERY The newest recovery shoes are athletically inspired, colorful and lightweight. 24 OFFICE TRANSITION The transition to “less shoe” is not limited to running. A look at five shoes designed for the office, or at least for home.

32 DAILY DISCOUNT WEB SITES WORK FOR YOU Groupon and other group daily discount sites are proving to be one of the most effective and low risk advertising tools. 34 HIGH END COMFORT: LINES WE LIKE AND WHY Lines that deliver on their promises in time for Fall 2011.

On the cover: K-Swiss Blade-Light Recover and SOLE Exhale are part of the new category of “recovery footwear” that is opening up new sales opportunities for retailers. Photo by Frank James

TIME OUT | MARK SULLIVAN

A Quarter for Your Thoughts The first quarter of the year is now officially behind us. Let’s quickly review what took place, what it means, and what could happen for the remainder of the year. Through the end of February, business was pretty good. Big stores like Foot Locker and Dick’s posted very good numbers and independents sold a ton of boots, which resulted in lean inventories heading into spring. March was not so good. It finally stopped snowing in the Northeast, but weather here and the rest of the country (except Florida) was pretty crummy and no one was inspired to go out and buy sandals or running shoes, which are the two major drivers in the footwear business for spring. But weather was not the only factor holding back consumers from spending money. Gas prices jumped to nearly $4 a gallon in many parts of the country. And that increase boosts the price of just about every other product we consume, especially groceries. So at the very moment when the retail business seemed poised for a comeback, the hopes for some genuine momentum are being strangled by the gas hose. I am a major believer in capitalism and the power of the free market, but the oil companies are being greedy and consumers and the government are being foolish. I would be okay with gas prices hitting $4.50 a gallon if .50 of every gallon went toward paying down the federal deficit. But if that extra .50 is going toward making the guys at BP a little richer, I have a problem with that. Since the 1980s, it’s clear our government needs some sort of alternative energy policy, but our elected representatives in Washington seem to live in an alternative universe. If we as consumers continue to drive the gas pump like sheep begging to be fleeced, it’s our own damn fault if we have no money left to buy shoes, which by the way are also getting more expensive. Not much surprises me anymore. But one of the few surprises of the first quarter was when Nike missed its earnings projections, saying it didn’t anticipate cost increases. Clearly we’re not sending a sufficient number of magazines to the nice folks at 1 Bowerman Drive in Beaverton because we’ve been ranting and raving for the past 18 months that price increases were coming hard and fast. Actually, the explanation behind the Nike numbers (their earnings would have been solid for any other company in the business, by the way) may provide a solid glimpse of what’s coming for the rest of the year. Shoemakers are going to struggle to maintain costs and retailers are going to have to justify higher prices to their consumers. And retailers don’t have the luxury of going face to face with every consumer and saying “Well, you know footwear prices for the past 20 years have been fantastic when compared to the Consumer Price Index, but people who live in China can now tweet to one another about better jobs, so wages are going up and shoes all of a sudden are going to cost 20 percent more.” Retailers are going to have to make that case by offering better service and selection and getting consumers so excited about buying that the price increases don’t get in the way. And brands will have to figure out how to make better and different product that gets consumers excited and still allows everyone up and down the supply chain to make a buck or two. I love the new minimalist running shoes for that reason. Less shoe, in many cases, means less material used, fewer fossil fuels consumed in the process, and really great exciting product for less money than a traditional structured shoe. So there are pockets of hope, but as usual it is up to us to make it all work. Before you turn the page and start reading the rest of the magazine, let’s review: Drive less so you don’t have to buy as much gas. Ride your bike whenever possible, eat less food, you’ll feel better in the long run and spend all your extra money on shoes.

For those readers who can’t get enough of my wit, wisdom and insightful analysis, you can catch me almost weekly on my new blog. http://www.insideinsightblog.com/category/sullivans-insight/

The Footwear Eye

MBT Appeals to ‘Core’ Audience

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MBT. Love the way they make you feel.

Day to Night

For more than 15 years, our philosophy has been to help you enhance your body’s natural balance. Own every hour of your day with The Original – MBT. Find out more at mbt.com

A FINE SPREAD: In early April, MBT will officially celebrate the grand opening of the concept shop with in-store consumer events and promotions.

BT is marking its 15th anniversary with its first ever national ad campaign, with two-page spreads in O, The Oprah Magazine and More magazine, running through December 2011. The campaign, titled “MBT. Love the way they make you feel,” features confident women in aspirational settings and was directed by Dutch advertising agency Kunde. MBT also opened its first U.S. concept shop in The Core by Footwear Etc., which recently opened in Palo Alto, CA. The Core is the tenth store for Footwear, Etc. and features select brands in the wellness, healthy lifestyle category. In early April, MBT will officially celebrate the grand opening of the concept shop with in-store consumer events and promotions, as well as kick off MBT’s partnership with Education for All Children (EFAC), a New Hampshire-based non-profit organization that provides secondary school scholarships for underprivileged children in Kenya. Twenty percent of the children who benefit from EFAC are members of the Masai tribe — the inspiration for the MBT brand. Beginning with the grand opening weekend, a portion of proceeds from the sale of all MBTs at The Core will go directly to Education for All Children. Paying further homage to the Masai, consumers will enjoy handmade, one-of-akind gifts with purchase, made by a Masai women’s cooperative. l

Keds Road Trip Will Target College Students

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eds has literally rolled out a new promotion that targets college students: a gigantic shoe box on wheels that will be visiting college campuses across the country. “The How Do You Do?” (HDYD) road trip tour features a mobile Keds shoe box that aims to inspire students to create, collaborate and contribute within their local communities. The goal of the tour is to encourage campus communities to “do what they do” and, of course, incorporate Keds into their lifestyles while they are doing it. The giant interactive Keds shoe box opens up to bring the How Do You Do? experience to life. Keds has partnered with two students at each participating campus. Local artists, bands, models and charities will all be participating, so each tour will better relate to the particular college and community. Students can step inside the giant shoe box to get a glimpse into how Keds is creating, collaborating and contributing at each tour stop. The inside right wall of the shoe box will feature two 50-inch touch screen maps that also show video of local artists and charity partners, as well as select retailers who sell Keds in each city. The opposing wall will showcase a video of all stops along the U.S. tour and a gallery of all 30 city-inspired shoes that have been created for the How Do You Do? campus tour. The floor of the shoe box will tell the brand’s almost 100-year history of American style, complemented by a ceiling shoe gallery that will showcase a multitude of the iconic Keds Champion silhouette. The Keds How Do You Do? print ad campaign features three Keds Collective artists from around the country and showcases how they “do what they do” in and with their Keds. All print ads direct consumers to learn more about the artists and the “How Do You Do?” college tour at www.keds.com/hdyd. l 6 • Footwear Insight ~ March/April 2011

Keds Tour Dates Boulder, CO April 4-5 U. of Colorado at Boulder Charity Partner: BreakThrough Arts

Lawrence, KS April 7-8 U. of Kansas Charity Partner: Van Go, Inc.

Bloomington, IN April 20-21 Indiana University Charity Partner: Blooming Artists Agency

Philadelphia, PA April 25-26 University of Pennsylvania, Charity Partner: City of Philadelphia Mural Arts Program

Savannah, GA April 30 Savannah College of Art & Design Charity Partner: Savannah Arts Academy

NYC, NY May 5 FIT and Pace University Charity Partner: Free Arts NYC

Boston, MA May 7 Boston University and Massachusetts College of Art and Design Charity Partner: Artists For Humanity

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The Footwear Eye

Acquiring Minds: Three Recent Deals in Review Feminine, but also a little rough.” Gitte Sandquist

LOLA RAMONE: Ketty (above) and Pippi (below).

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he M&A climate in the footwear business is heating up as evidenced by three recent transactions. In the biggest deal, Brown Shoe announced the purchase of American Sporting Goods, which owns the Avia, And1 and Ryka brands, for $145 million in cash plus assumed net debt. The two companies had been working on the deal since last summer. ASG has been on and off the market for years and by purchasing the company Brown gets three athletic brands to fill a hole in its portfolio. In the Brown structure, the brands will report to Mark Lardie, who is very experienced in the athletic space and well regarded. Lardie joined Brown’s Famous Footwear retail division in 2005 and recently moved the wholesale side of the business. Prior to joining Famous Footwear, Lardie was senior VP & general merchandise manager for Footstar’s Athletic Division. He also worked in senior merchandising positions for Just for Feet, Footaction, The Athlete’s Foot and Sportmart. The challenge for Brown and Lardie will be to market these brands successfully in the intensely competitive athletic business dominated at the mall and sporting goods level by Nike, New Balance, Puma, ASICS and Adidas. ASG’s expertise is producing quality athletic footwear at value price points and its distribution is extremely strong in the mid and lower-tier channels. The company had sales of $232 million last year. Avia has made some inroads in the triathlon market and the women’s brand Ryka has made some progress through an expensive endorsement deal with TV personality Kelly Ripa. In a smaller, strategic deal, R.G. Barry Corporation completed the purchase of substantially all of the assets of Foot Petals, LLC, a California-based developer and marketer of premium insoles and accessories. The acquisition gives Barry, known for its slippers, entry to the lucrative insole and accessory business with a company that has established itself in the women’s fashion niche and recently expanded into athletic insoles and footwear. Barry has the Nautica, Levi’s and Dearfoams brands for slippers. Several years ago it launched an outdoor inspired line called Terrasoles, which has struggled. The company also has the rights to the Italian athleisure line, Superga. Barry paid $14 million for Foot Petals and plans to run it as a subsidiary. Sanita has acquired Lola Ramone, a five-year-old women’s brand out of Copenhagen founded by Gitte Sandquist. The brand of funky stylish shoes with a rock’n roll attitude (the name is partly inspired by The Ramones) has developed a following in Europe and is just now being introduced to the United States. Sandquist describes the brand as “feminine, but also a little rough,” and describes the brand muse as “a girl who loves to wear high heels, but sometimes falls.” l

Chefs Cook Up New Line for Mozo MOZO FOOTWEAR: The shoes debut in May and will retail for $69.95.

8 • Footwear Insight ~ March/April 2011

Can celebrity chefs sell footwear to food service professional the way NBA stars sell basketball shoes to aspiring hoopsters? Mozo Footwear is aiming to find out. The brand, which was purchased by Deckers last year, has unveiled the Chef Signature Collection featuring shoes created in conjunction with well-known chefs Aarón Sánchez, Chris Cosentino and Marcus Samuelsson. Mozo has created affordable, comfortable, functional shoes for chefs and kitchen workers that also incorporate aspects of the three chefs’ personalities. Sanchez’ shoe was inspired by Mexican Sugar Skull, the symbol of one of Mexico’s most celebrated holidays, “Día de Los Muertos,” also known as the Day of the Dead. Samuleson, whose new Harlem restaurant, The Red Rooster is one of the hottest spots in New York, says he was inspired by copper cookware to use the metal for the eyelets surrounding the laces. The company says Cosentino’s shoe was inspired by the chef’s favorite cuts of meat. The shoe features honeycomb tripe on the front of the shoe or “vamp.” Mozo says Cosentino’s shoe is a pearlized white slip-on because white shoes are his favorite in the kitchen. The heel features the chef’s “Offal Good.” Mozo is sold through a tight retail distribution which includes Zappos and some Foot Solution stores. l footwearinsight.com

The Footwear Eye | ANALYSIS Two Iconic Brands are Being Transformed Under New Leadership

Sebago’s Artistic Approach TAKING THE LEAD: Clockwise from upper left: Blogger Kimmie Smith is boosting Sebago’s fortunes in the women’s business; shoes designed by Ronnie Fieg, Graffiti artist Stash.

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wo years ago, the idea of a graffiti artist, a few bloggers and a major rock band creating footwear collections for Sebago would have been incredibly far-fetched. Sebago was known for its hand-stitched penny loafers and preppy boat shoes, and since its acquisition by Wolverine Worldwide in 2003 the brand had worked to build on those traditional strengths. But over the past two years, Sebago has launched a series of collaborations with the goal of creating footwear that would appeal to younger consumers and in turn make the brand desirable to major retailers. “In the boat shoe business, Sperry had done a wonderful job,” said Gary Malamet, who joined the brand as Group VP & GM 18 months ago after stints with Lacoste, Kenneth Cole, Bally and Stacey Adams. “They had great product and prices and strong retail relationships. We realized that if we wanted to be meaningful to major retailers, we needed to do take a different approach.” That approach began about six months before Malamet joined the company when Sebago collaborated with Vane, a Manhattan-based design collective to create a line of Docksiders for the urban dweller. The collection was well received by retailers, consumers and the press and Malamet set about to negotiating a collaboration with 10 • Footwear Insight ~ March/April 2011

Ronnie Fieg (see related story on page 26). Fieg’s collection was an instant hit and he provided the brand with entry to the bloggers and other tastemakers who were extremely influential with the Gen Y consumer Sebago coveted. Working with Fieg, Sebago created The Nexus Project, which consisted of Fieg’s dream team of influential bloggers Marcus Troy, Joshua Kissi of Street Etiquette, William Yan, Greg Weinsten of Culture Shoq, and video director Jake Davis. Their mission was to redesign and reconstruct the classic boat shoe for Sebago by visiting the company’s plants in the Dominican Republic. The bloggers began working and blogging and within five months The Nexus Project had resulted in more than seven million impressions on the Internet. “Buyers started to hear the buzz and all of a sudden we were no longer viewed as just a boat shoe,” Malamet says. Macy’s, Bloomingdale’s, Saks Fifth Avenue and Urban Outfitters all came on board and Sebago was rolling. Over the past year, Sebago has signed collaboration agreements with New York graphic artist Stash (a protogee of Keith Haring) and The Brothers Bray & Co., the brains behind the BillyKirk leather collection. Late last year, Sebago reached an agreement with Kimmie Smith of Kitten Lounge, a well-known women’s style blog to create a women’s collection for the brand which debuted this past February. Smith also appeared on HSN to hawk Sebago product, 90 percent of which was exclusive to the TV retailer. “That gave us reach into more than 90 million households,” Malamet says. The collaboration with Smith should also boost Sebago’s women’s business, which represents only 25 percent of the brand’s overall revenue. Outside of the Artisan collections, Sebago recently announced an agreement with Filson to create a footwear line that will be a mix of that brand’s materials and outdoor expertise and Sebago’s shoemaking acumen. And the firm is also working on a collaboration with Swedish denim brand WESC. Sebago’s biggest play may be yet to come. Within the next month, the brand is set to announce a collaboration with a major rock group that will result in a new shoe collection and tie in with a music industry charity. footwearinsight.com

This spring, Saks Fifth Avenue plans to open a 600-square foot department in its Manhattan flagship devoted to the Artisan collections, and the brand is also working on “artisan” packages it can take to specialty retailers. “Everything we’re doing has resulted in real people telling their stories via social media and we’ve become cool by association,” Malamet said. “Our collaborators tell us they’re attracted to the brand because of its authenticity and craftsmanship. The brand has been through some changes but it’s never sold out. “ Malamet says all the buzz and excitement has rubbed off on Sebago’s core boat shoe business, as well. “We’ve had to double production.” And the next phase of the brand’s growth plan calls for a re-commitment to the boat shoe category with a line tagged The Extreme Marine collection that targets power boaters. “For Spring 2012, we’ll have the toughest shoes on the water.”

Birkenstock Returns To its Roots

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hen Jay McGregor joined Birkenstock about 18 months ago, he spent his first days on the job listening to retailers. “I heard the good and the bad. They were angry and felt we had focused on selling pair and not building the brand. And they felt we didn’t have a distribution strategy that supported the independent stores that had supported us,” he recalls. The good news? “There were still many retailers who were passionate about the brand and wanted us to re-establish Birkenstock in a positive way.” Over the past year, Birkenstock has sought to do exactly that. McGregor, who spent time as a senior executive at Teva, Adidas and Ektelon Racquet Sports, is working to get the brand back on track. Birkenstock has significantly bumped up its consumer advertising, with a print campaign in Better Homes & Gardens, Marie Claire, Elle and People. The brand is also aggressively targeting men with an ad campaign in Runner’s World, Outside, Backpacker and Men’s Journal and a new range of product. He’s also beefed up the sales team, adding territory managers and (for the first time in the company’s history) a group of tech rep whose job is to service and support, not sell, retail accounts. While he has sought to modernize the brand and change the perception of Birkenstock as “that hippie company,” McGregor also believes it’s essential to re-connect Birkenstock with its foundation. “With some of the changes that took place at this company in America, people forgot who Birkenstock was,” he says. “We’ve been around since 1774 and the Birkenstock footbed is what brought us to the dance.” Birkenstock footbeds are made of cork and natural latex, and contoured in the shape of what the company describes as “a healthy foot. The theory is that the contours ensure proper weight distribution with raised arches to help support the foot’s natural shape and structure. Then the toe bar allows the toes to grip and flex, stimulating circulation, exercising the leg, and helping to maintain footwearinsight.com

The Footwear Eye | ANALYSIS

A MODERN TOUCH: Jay McGregor and excerpts from Birkenstock’s largest consumer campaign ever that looks to update the company’s image.

balance. The deep heel cup keeps the foot’s natural padding under the heel to provide stability. As a result of these factors, the correct bones bear the weight of the body to keep the spine and legs in alignment. It’s a simple premise, but one that Mcgregor says had been forgotten. To re-emphasize, the relevance of the footbed to Birkenstock’s business, the brand’s recent sales meeting was themed “Birkenstock 101.” Sessions focused on the footbed and the human foot and skeleton. “The idea was to re-emphasize what made us different from brands like MBT and Skechers that have claimed some of the attention in the health and wellness conversation, and to stress that our heritage will make us valuable to retailers going forward.” Speaking of heritage, earlier this year Birkenstock created The Heritage Program for retailers, which will offer intense in-store support through the new tech rep force, exclusive product and advance delivery on other new product and a tie-in with a philanthropic endeavor. “Not all the details are set yet, it’s an idea we believe in and will develop,” Mcgregor says. “We want to work with stores that are advocates for our brand and push our message through them.” Part of McGregor’s brand-building efforts will also include the roll-out of several corporately owned brand stores in major cities in the U.S. and a revamping of the Birkenstock store program, which was founded almost 40 years ago when stores bought the rights to use the Birkenstock name for $100. McGregor estimates that there are about 289 stores with 400 total doors that use the Birkenstock name on the door as a result of the original agreement. “There are some great

partners in that group, but there are also stores that have the Birkenstock name on the outside of the store and it doesn’t mean that much on the inside. “That has to change. Our brand stands for health and wellness and the benefits that our product offers,” he says. “We want to be meaningful to stores that embrace that message.” Thus far, Macgregor’s listening and the actions he and his team have taken are paying off. Margot Frasier, who pioneered Birkenstock in America, sold the business to employees in an ESOP in 2005. That structure floundered and since 2007, the U.S. company has been wholly owned by Birkenstock Germany. McGregor, won’t disclose revenue, but says unit sales were up by 14 percent in 2010 and are running 12 percent ahead in 2011. He also says the business was profitable in 2010 for the first time in seven years. In the company structure, McGregor oversees Footprints, Birko Ortho footbeds and Tatami. Robert Mangione oversees Birkis as a brand leader and manages sales as a VP for Birki’s Papillio and Alpro. McGregor says the new structure has resulted in less infighting among Birkenstock brands and an emphasis on the competition and retail accounts. Although he has held executive posts at a number of footwear and sporting goods brands, McGregor says in the past 18 months, he’s often drawn on his experience as a sales rep for Ektelon. “We were a racquet sports brand, so we were very focused on specialty retail. Our goal was to work with the retailer and get down to business so they could make money. That’s what we’re trying to do with Birkenstock today.” — Mark Sullivan footwearinsight.com

STRATEGIES

THE AMERICAN ADVANTAGE Three companies tell why making shoes in America makes sense for them.

New Balance and Allen Edmonds are two of the bestknown brands making shoes in America. Munro, p.w. minor and Keen all have their reasons for doing it as well.

Keen is in the process of ramping up production at its Portland factory.

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Making Shoes and Economic Sense

he first shoe to ship out of Keen’s new Portland factory is a work boot named The Portland from the company’s new Utility line. But company president James Curleigh says it was business sense, not civic pride, that motivated the move to domestic production. “We’re not just flying the flag with this,” Curleigh told Footwear Insight on a recent tour of the facility. “We believe it makes economic sense for our company and our customers. Larger companies take their production costs and spread them over a number of line items, such as transportation, labor, duty, legal and materials. But when you look at all those factors and add in currency fluctuation and the counterfeit problem in China, it made good economic sense to make product here.” Since its founding eight years ago, Keen has established a number of leadership positions in the industry. Its original bumper-toe sandal

14 • Footwear Insight ~ November / December 2009

spurred a number of imitators. And Keen has also been at the forefront of green packaging practices. So their decision to produce shoes in America will be watched closely by other brands and industry analysts. Its 14,000-square-foot factory, which is about 12 miles from Keen’s HQ in Portland’s Pearl District, has already begun shipping its namesake utility product, which retails for about $180 a pair, and Curleigh says within a year will begin producing lifestyle footwear and sandals there, as well. The factory uses DESMA direct inject machines, similar to those used by Ecco in its Denmark factories. By the time it’s fully operational, the factory will be able to produce one million pair a year, Curleigh estimates. The plant employs about 18 people to run one of the two lines on a shift. As the company ramps up production, this will increase accordingly to run two lines and multiple shifts. Keen’s labor costs are higher producing footwearinsight.com

STRATEGIES in Portland, but most other variable costs are lower, according to Curleigh. Components still come in from all over the world and finished product goes from the factory to Keen’s major distribution center located four miles from the factory, which serves about 80 percent of its accounts in the United States. The company’s goal is to make this factory profitable, but in the short term it’s already paying dividends for the company’s global sourcing operation. Keen execs are becoming more astute about how shoes are made. “We’re learning how to make shoes and that makes

An Anomaly in Arkansas

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unro & Co. was founded in 1972, but the seeds for the business were planted in 1959 when family patriarch Don Munro travelled to Arkansas to manage the factories for New Hampshire-based Connors & Hoffmann Footwear. More than 50 years later, Munro Shoe is thriving, producing all product for its Munro American brand in three factories in Arkansas. “We know we’re Munro Shoe is swimming against the tide,” said company thriving president Bruce Munro. “We’re an anomaly at three in the shoe business, but we’re committed to factories in producing here and have built our business Arkansas. based on that premise.” That premise consists of specializing in the size and width business. Figuring on all sizes and widths for each pattern, Munro produces 74 versions of each shoe in its line (sizes four to 14 from AAAA to EE widths in most styles). Each shoe has 32 different parts, is orthotic friendly and Munro says sourcing product anywhere but in his own factories would be nearly impossible. “The sizes and widths business doesn’t fit in with the supply chain formula most shoe companies use today.” Rigid controls are required in the Munro shoe manufacturing process.

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us much smarter when we visit factories in Asia. We are able to have much better conversations when discussing raw materials, timelines and terms. This will allow us to make better product and be a better company.” Keen is also sourcing shoes in the Dominican Republic and is looking at using solar power to run those facilities. “We’re an eight-year-old company and we are still able to be nimble,” Curleigh explains. “Sourcing here allows us to eliminate a great deal in freight and duty costs and better protect our intellectual property.” l

“It’s complex and there is a lot of chance for error,” Munro says. “But we like that we can control our product from inception all the way through to shipping at retail.” The three factories employ 500 people and Munro estimates that more than 20 percent of the workers have been there for more than 20 years. The company also has tight retail distribution, with a focus on independent specialty stores that focus on fitting. With shoes that retail in the $145 to $185 range, Munro admits the company can never play in the price business. In fact, it moved production for its kids Jumping Jacks brand to China years ago when retail prices on shoes made in America hit the $70 mark. “The consumer flinched at that, so we did what made sense for the business.” Munro’s dad, Don who is 83, is still active in the business. His sister Mollie is VP-marketing and the “face of the business,” according to Bruce. His brother Neil manufactures the Neil M brand in the United States and also sources for other companies. “Making shoes here is not about waving the flag or feeling good, it’s about the best way to do business for our employees, our retailers and consumers.” l

p.w. minor’s Vintage American Style

t’s a vintage story: Started in 1867 and still under ownership of the Minor family, comfort and wellness brand p.w. minor has been manufacturing shoes in its Batavia, NY, facility for more than 140 years. Until this year, most of the shoes being made in Batavia were not made for retail sale, but for direct sale to VA hospitals and medical facilities. The company’s business with the military, which requires product to be made in the U.S., is one of the main reasons the Batavia factory is still open. The facility in New York employs 60 people. “That’s a big reason this factory still exists is because we make shoes for veterans,” says p.w. minor EVP Andy Simonds. “And more than that, ‘Made in America’ has come around now where there is patriotism around it in the general marketplace. There is a global p.w. economy but people take a bit of pride in buying minor is things made in America.” all about With that in mind, p.w. minor is adding a new vintage Vintage line of dress shoes to be made in its Batavia product. facility and to be sold at retail in the $350-plus range. Additional vintage and heritage lines made in the Batavia facility will follow in the coming seasons. The Vintage Collection is hand crafted and features wellness attributes such as long inside counters providing rear foot control and comfort, additional depth to accommodate orthotics and Goodyear welt construction for

16 • Footwear Insight ~ March/April 2011

long lasting wear. With attention to details, the Vintage Collection will offer comfort and style with no break-in needed. “Vintage is popular right now, especially in the cities,” says Simonds. “Most of what we make in this Batavia facility is used on the medical side of things and is not a big part of our retail business, but with this Vintage collection we wanted to show off our shoe making skills to the retail side of the business. We make great shoes and we’ve been doing that here since 1867, so no one deserves to be in this vintage market more than we do.” As vintage looks became more popular in the marketplace, it seemed natural for the brand to participate in that via its U.S. facility, says Simonds. “A fairly significant part of our business is also in selling fairly old styles to the Amish [mostly in upstate New York, Pennsylvania and Ohio],” he notes. “We are vintage, it is not a market position, it is who we are, so to make the Vintage collection anywhere else outside of the U.S. is sacrilege as far as we are concerned.” For its collections made in facilities outside of the U.S., an appreciation for the craft is key, says Simonds. “We pride ourselves on the fact that we are shoe makers. When we go to our factories in China or our suppliers in Mexico, we bring that shoemaking expertise. We are not a marketing company that does design and development. We remain in business because we consider ourselves to be shoe makers.” — Cara Griffin l footwearinsight.com

JUNE 27-29, 2011 • The Navy Pier • Headquarters Hotel: W Lakeshore Chicago

THE FOOTWEAR EVENT 2011 ®

CONTENT • COMMERCE • CONVERSATION

GREAT NETWORKING AND SHARING OF BEST PRACTICES

WE’RE BUILDING A BETTER FOOTWEAR MARKETPLACE

COMFORT OUTDOOR ACTIVE RUNNING WELLNESS WORK

MORE SPEAKERS AND BUSINESS SESSIONS THAN EVER

OUR LARGEST EXPO AND BIGGEST ROSTER OF EXHIBITORS

ril Ap ly r Ea in s n o ti ta vi In ip sh r la o Retailers: Watch for your Sch www.thefootwearevent.com

CONTENT Speakers and business sessions designed to help you run a more profitable business. Wellness

MANAGEMENT

Paul Langer, DPM, Twin Cities Orthopedics Great Feet for Life: Footcare & Footwear for Healthy Aging

Kelly McDonald Come Together: Dealing with generational differences in the workplace

By the age of fifty the average person has walked 75,000 miles or the equivalent of more than three laps around the earth. Healthy feet provide the foundation for overall health and wellness. In fact, research shows that our quality of life is directly related to our ability to maintain an active lifestyle. As important as or feet are though, they are the most neglected part of the human body. Many of the most common causes of foot pain can be directly attributed to shoes. Dr. Langer will discuss causes of foot pain, changes that occur to our feet with age and the role that footwear plays in foot health and overall wellness. Current and future footwear trends will be discussed as well. Dr. Langer practices with Twin Cities Orthopedics in Minneapolis, MN and serves as an adjunct clinical faculty member at the University of Minnesota Medical School.

Why don’t Boomers realize there’s more to life than work? And why don’t Millennials realize that their 5:00 p.m. yoga class does not take precedence over a client deadline? These questions are being asked and grumbled about in every workplace in the country. Any time two or more generations work side by side, there are going to be potential differences in the approach to work and collaboration. But never have the differences between these generations been so profoundly marked as they are now. This presentation will focus on key generational differences and how you can work effectively with someone much older or younger than you – and enjoy it! A complementary copy of Kelly’s new book “How to Market to People Who are Not Like You” will be given to the first 150 retailers who register.

STORE OPERATIONS

BUSINESS STRATEGY, SOURCING & SUPPLY

Jim Dion, Retail Maven The Psychology of Price

Mike Featherston, ICB International China Explained

“Can you do something on the price? I saw it on line for about ten bucks cheaper.” It may appear that price is all customers are focused on today, and the lower the better. Retailers are reacting by slashing prices without realizing that this can be a race to the bottom which only a few stores may be able to return from. Yet, if you look at the psychological reasons behind our obsession with low price, there are some interesting twists in our thinking that can make things appear to be a lot better than they are. Paying full price, for example, may be unthinkable, yet, what exactly is full price today? Is it the real cost of a product or is it more of a “reference price” that outlets and off price stores use to justify a discount and make it look like the deal is too good to pass up? An inflated price, even though the consumer knows it is inflated, makes a product more desirable to them and makes the discounted price seem low by comparison.

What’s happening in Chinese factories is having a major impact on the footwear business from price to product availability and even design. Mike Featherston, a 29year veteran of sourcing footwear in Asia, shares a history of shoe production in China and his ideas on what it means to your business. Mike Featherston is the co-founder and CEO of Innovative Custom Brands, which provides design, development and sourcing for women’s fashion, athletic and active fashion footwear for leading brands and retailers. Prior to starting ICB, Featherston was president of Brooks Sports and later managing director of Lotto USA. He and industry veteran Dennis Ryan co-founded ICB in 1993 and has been sourcing footwear in China since 1988. ICB has more than 300 employees in China and is involved with 40 different factories.

ROUNDTABLES & DISCUSSIONS

• Focused Roundtable Discussions on the Wellness, Comfort and Work categories • Breakout Sessions on Retail Technology, presented by RICS Software • Employee training, presented by 3Point5

Introducing

The Running MBA Program at The Footwear Event.

A special Big Picture Session on the hottest category in the footwear business Seminar and demonstration on Bareform Running by Walt Reynolds Walt Reynolds has been a professional trainer & coach since 1988 and has logged over 28,000 individual & group training sessions during that 22-year period. He is a 1986 graduate of the University of Oregon with a degree in Exercise Science/ Biomechanics and competed for the Duck’s track & field team in the high, long & triple jumps as well as the sprint hurdles. He is currently President and Managing Partner of both NovaSport Athlete Development and The Trainers Studio LLC, based in Lansing, Michigan and has been a member of the Goodform Running development team since 2007.

Inside the Closet of a Runner by Bart Yasso of Runner’s World magazine “To know the heart and the mind of a runner, look inside their closet.” In this entertaining, informative session, Bart Yasso, the chief running officer of Runner’s World will provide a look at how, why and where consumers buy their running shoes and other footwear.

CO-SPONSORS

CONVERSATION A format that allows retailers to share ideas with one another on what’s working in their stores. Special recognition of Retail Best practices at The Art of Retail Awards

Cocktail Reception and Dinner June 28, 2011 / River East Arts Center

TO NOMINATE YOUR STORE FOR ONE OF THE AWARDS, PLEASE VISIT

http://www.thefootwearevent.com/artofretail.html (Or fax us the form enclosed with this brochure to 516-439-4611)

Jill Hathaway

Tarek Hassan

For exhibitor info, contact Beth Gordon at 949-293-1378 or [email protected] For retail information, contact Mark Sullivan at 646-319-7878 or [email protected] For up-to-date information, please visit: www.thefootwearevent.com

COMMERCE

TFE Schedule at a Glance

Time for vendors and retailers to talk about how they can profit together. THE FOOTWEAR EVENT EXPO: Meet with key vendors in the relaxed atmosphere of the exhibition hall at Chicago’s Historic Navy Pier from 10 a.m. to 4 p.m. on Tuesday, June 28 and Wednesday, June 29. Complimentary Breakfast and Lunch both days.

Monday, June 27, 2011 Lunch at noon Conference Starts at 1 p.m. Nighttime networking activity

EXHIBITORS as of MARCH 21, 2011

Tuesday, June 28, 2011 7:30 a.m. Continental Breakfast 8:30-10:00 a.m. Conference Sessions 10:00-5:00 p.m. Expo Hours with complementary lunch 6:30 p.m. Cocktail Reception 8:00 p.m. Art of Retail Awards and Dinner River East Arts Center

EASY ACCESS Join us in Chicago, one of America’s great cities. Centrally located, easy to get to and easier to enjoy. The Footwear Event is the industry’s most convenient event to work. It’s all under one roof and the headquarters hotel is directly across the street.

For exhibitor info, contact Beth Gordon at 949-293-1378 or [email protected] For retail information, contact Mark Sullivan at 646-319-7878 or [email protected] For up-to-date information, please visit: www.thefootwearevent.com

Wednesday, June 29th, 2011 7:30 a.m. Continental Breakfast 8:30-10:00 a.m. Conference Sessions 10:00-4:00 p.m. Expo Hours with complementary lunch

WHAT TO WEAR TO THE

RECOVERY With so much discussion going on in running circles about foot health

and the impact of minimalist footwear on feet, it’s not surprising that there’s also some buzz around shoes designed to help feet recover after workouts. Après sport footwear and sport sandals have been around for years, but several brands now also have footwear lines targeting the post-workout runner with shoes specifically designed for recovery. More than just comfy and cozy slippers, many of these shoes focus on things such as alignment and blood circulation as well. By Cara Griffin

Salomon RX Core A soft, warm, comfortable lace up with fourway stretch softshell fabric. SRP $110.

March/April 2011 • Footwear Insight ~ 21

RECOVERY WEAR

NEW BALANCE

K-SWISS

MBT

New Balance Minimus Wellness: A barefoot-inspired walking shoe intended as a recovery shoe for runners. SRP $100.

K-Swiss Blade-Light Recover Lace: The shoe’s recovery foam footbed provides comfort and stimulates the bottom of the foot to promote nerve and tissue repair. SRP $75.

MBT Meli: The Meli is made for everyday wear, providing comfort and technology. It has a polyurethane midsole with a balanced pivoting section underneath the metatarsus. SRP $265.

22 • Footwear Insight ~ March/April 2011

For example, in addition to barefoot-inspired running shoes, New Balance’s new Minimus collection also includes a recovery shoe called the Minimus Wellness. The shoe is a barefootinspired walking shoe for athletes seeking to help their bodies adjust to a more natural stance by stretching and strengthening their Achilles, arch, gait and core. Intended as a recovery shoe for runners, the slipper-like feel and superior comfort of the Minimus Wellness are also appropriate for casual wear.

We put as much focus into these shoes as our trail running shoes.” Lauren Barra, Salomon Salomon offers a footwear collection called the Relax line. Included in the Relax offerings is the Salomon RX Core, a soft, warm, comfortable lace up with a four-way stretch softshell fabric and DWR for glove-like comfort. Salomon’s Relax recovery benefits are integrated into the oversized tendon and cushioned sole. “The Relax line is an extension of Salomon’s highly technical trail running and hiking footwear,” explains Salomon footwear product line manager Lauren Barra. “We put as much focus into these shoes as our trail running shoes, helping the user to rebound, recover and reenergize after a workout.” The RX Core features an OS Muscle running the entire length of the sole, assisting sore foot muscles to recover with added energy return. The Salomon recovery shoes also feature extra cushion and an EVA molded foot bed that wraps the foot for support and comfort. Built with an extra-wide footprint, the Relax shoes provide easy walking stability and good lateral support. In Fall 2011, Saucony is introducing the AMP PRO2 Reco Moccasin, a recovery shoe that focuses on circulation as well as comfort. The brand’s AMP PRO2 is a collection of compression apparel woven with Celliant — a specially formulated technical fiber. Among other properties, Celliant has been proven to improve blood footwearinsight.com

circulation. Beginning in Fall 2011, the AMP PRO2 collection will move beyond apparel into footwear with the AMP PRO2 Reco Moccasin. The recovery moc is designed to help athletes’ feet – and ultimately their whole bodies – circulate blood and oxygen more quickly and recover more quickly. The moccasin’s upper is Celliantlined and its footbed uses a memory foam technology used in sockliners as well as footbeds for plush step-in comfort and faster recovery. The injection molded EVA midsole offers increased shock attenuation, responsive cushioning and durability properties. K-Swiss also has a footwear collection devoted to recovery. In addition to comfort and alignment, the K-Swiss shoes also place a strong focus on blood circulation. It is a combination of proper midfoot alignment in a shoe that makes it a recovery shoe, explains Mark Sheehan, director of performance footwear at K-Swiss. “This is achieved with our dynamic fit midfoot support band,” he explains. “This proper alignment enhances blood circulation from the heel to the toes allowing blood to move. The next key element of our recovery products is our recovery foam footbed. This helps stimulate the bottom of your feet promoting nerves and tissue to repair itself.

Proper alignment enhances blood circulation from the heel to the toes allowing blood to move.” Mark Sheehan, K-Swiss

Saucony Amp Pro2 Reco Moccasin: Designed to help athletes’ feet circulate blood and oxygen and recover from workouts more quickly. SRP $65.

SAUCONY

SOLE Exhale: The slipper/shoe hybrid has a fold-down heel panel, suede accents and elastic gore panels. Sherpa-lined footbed guarantees maximum coziness. SRP $75

GoLite Euro Lite: The shoe has a roomy toe box and zero drop for comfort and features the Sticky Gecko sole for traction. An EVA midsole provides comfort and stability. SRP $130.

SOLE

GoLITE

As far as defining the recovery category, Sheehan asserts, “these products are best used at the conclusion of workouts and for general everyday wearing. Proper circulation and super comfort and support are the key characteristics of this category. The shoe is built to assist in making your body ready for the next day. To train at the highest level you need rest, nutrition and recovery to prepare you for the next workout. Recovery shoes complement what you are doing everyday.” l footwearinsight.com

March/April 2011 • Footwear Insight ~ 23

TRENDS

Office Transition The minimalist phenomenon in the running shoe world has created a focus on running mechanics, form and efficiency, as well as a need to prepare to run in shoes with less structure, support and cushioning. One aspect of the phenomena that has escaped notice is that the transition to “less shoe” is not limited to running. Here is a look at five shoes designed for the office, or at least at home there, which also assist the body in extending muscle and tendon in a more gentle fashion. This allows an accommodation to run with more efficiency, all while looking sharp, camouflaged in the equally competitive work environment. While we have highlighted shoes from five brands, it is only representative of a recent swell of shoes that feature a low profile, with still more of them coming in the back half of the year.

By Cregg Weinmann / Photo by Frank James

l Sanuk Boardroom. The extremely flexible models from Sanuk provide cushioning but almost no support. Most models are very casual, no surprise as they are actually flip flops with a top. The full grained leather top of the aptly named Boardroom conceals its ability to stimulate the muscles of the foot, improve flexibility and provide comfort, while unobtrusively integrating into the workplace. ($85)

24 • Footwear Insight ~ March/April 2011

footwearinsight.com

l Ahnu Quinn. The Quinn is a low profile model with a flexible forefoot, providing the foot active flexion – and thereby strength – with each step. The fashionable profile, here an ankle high model which has made yet another comeback, and leather upper make it particularly well suited to a business casual setting. ($110)

l GoLite SolLite. GoLite’s “soft against the ground” technology is a lowprofile design that offers good flexibility, cushioned comfort and a low heel to allow the foot to adapt to even lower profile shoes. The SolLite adapts to the office with attractive leather uppers and versatile aesthetics. ($110)

footwearinsight.com

l Terra Plana Vivo Barefoot Dharma. The Dharma features Vivo Barefoot’s tough outersole and flat heel to toe offset, to encourage foot strengthening, flexibility, and efficiency. The appearance is a clean lined loafer style with high quality leather uppers, which completely merge with the office dress code. ($140)

l Patagonia Cardon. Patagonia has two families of low-profile, dressy casual shoes, each with a laced and loafer style offering. The Cardon features the look of classic loafer with a modern twist. Quite low to the ground, with a nicely flexible sole, it allows the foot a good bit of latitude. Available in suede or leather, it has the ability to blend in with the work environment. ($125)

March/April 2011 • Footwear Insight ~ 25

RETAIL

ontheVerge

Ronnie Fieg

T

he nephew of the chain’s founder David Zaken, Ronnie Fieg is now a buyer for New York retailer David Z, a job he grew up on. But he’s really so much more — a 28-year old on the verge of a whole lot, including riding the crest of next generation retailing. Street smart, brash and bursting with creativity, he is the shoe industry equivalent of rock star royalty. But unlike a lot of kids who are born with access, Fieg has sunk his teeth into the role, and through his connections has become equal parts tastemaker, streetwear blogger, go-to shoe guy for celebrity stylists, and designer, having collaborated on designs for David Z with some of the biggest brands in the business. Next up is a Ronnie Fieg for Sebago capsule collection, which will be distributied to major department stores and boutiques worldwide. We decided to take a stroll on the street that raised Fieg, Broadway in SoHo, to hear his opinions on how the block has changed, as well as his views on brands and his generation’s biggest contribution. On your blog recently, you asked your readers to define the meaning of sneakerhead. What’s your answer? It’s someone who cares more about quality than anything else and is willing to do certain things – stand in line, pay extra money or use connections – to get that. And it’s a tendency; it’s a type of person. I grew up collecting Marvel cards, and growing up around the store I applied that tendency to shoes. Seeing iconic figures come in our store – Wu-Tang buying Wallabies, Jay-Z buying Timberlands – made me want to buy them too. In my case, you can take the word sneaker and replace it with footwear. What’s your first memory of this neighborhood? Where did you actually grow up? I grew up in Jamaica Queens and my first memory of [SoHo] was Renaissance. It was on the corner of Bleeker and Broadway. It was half clothing half shoes and that was David’s first venture on Broadway. Style-wise, it had a motorcycle theme with the whole lug sole boot look, back in ’93 or ’94. How has this block changed? It’s changed tremendously. Broadway became a trend-setting area and that always opens corporate eyes and it made them come down and as soon as they started taking over Broadway rents went up and it became very commercial. But it’s still the epicenter with locals, tourists, domestic and international — the best of all worlds. What retailers do you still love on Broadway? I think Uniqlo really changed the game on Broadway. The way they market themselves in the store alone and their pricing and quality is on point. I don’t wear a lot but I respect what

26 • Footwear Insight ~ March/April 2011

they do. People are getting offered denim in current color and cuts and spend a lot less on a block, and they’re doing that on a block where trendsetters are walking around. And that matters because [the customer] feels if they make a purchase on Broadway, they’re in the know. Also, men’s J.Crew. You can go to J.Crew for almost anything now and they’ve really elevated their game. And my all time favorite clothing store is still Atrium. The men’s outerwear — Moncler and Canada Goose, and their denim is on point, they still have brands you can’t find everywhere. Bloomingdales has become more contemporary but I grew up in Queens and I’m still street. I can tone it down and dress up in khakis and a button down, but I still want to wear great denim with a street feel. What was your first collaboration? My first real collaboration was a Timberland boot in ’06. It was a construction boot. It was yellow leather with brown nubuck and a red patent leather color. There were 48 pairs, numbered on the tongue. How’d that come about? Andy Friedman, of Timberland, we sat down with him. He was working on making small quantities in [the Dominican Republic]. He had a sample room over there and was able to make limited quantities. Right after that, my real coming out party was the ASICS project. What’s your favorite collaboration? My favorite so far was the ASICS Gel Lyte III, “The Cove.” We went back and forth on the colorway. It wasn’t in the Pantone book so we had to mix it up and get it right because it had to represent the waters of the Atlantic. That shoe sold out in two and a half minutes and it was a really big deal in the sneaker community. It ended up at No. 7 on Complex’s 2010 top 10 sneaker list. Why is your generation so big on collaborating? Retailers always collaborated with brands through SMUs. David collaborated with Timberland on the first grey boot I’ve ever seen and that lead to the grey Wallaby. We sold 10,000 pairs of that grey construction boot. People were driving from Virginia to buy that shoe. I used to stand in the entrance to our 8th Street store and I’d just ask the customers coming in, “What size?” J74 was the stock number. I’ll never forget. At that time, collaboration wasn’t in the vocabulary and everything was word of mouth. But with the internet there’s a new information highway and it’s so congested that it’s in one ear and out the other, and it’s difficult to make an impact. And that’s why companies are willing to share credit or collaborate because they see it as a way to instill the product that much more distinctly in the customer’s mind and make the impression more lasting. Did Nike blaze the trail with collaborations with Jordan? That wasn’t a collaboration, it was an endorsement deal. Though as far as

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INTERVIEW By Lois Sakany / Photo by Hannah Newberry

collaborations with artists, Nike took it to the next level back in the late ’90s, early 2000s when they worked with people like [graffiti artists] Futura and Stash and that was the beginning of something special. In a way it was a corporate takeover of street. It was a way to let the street get involved and get more in touch with the consumer. If an athletic shoe company is doing a lot of things like technical baseball and basketball, it doesn’t relate to the consumer. When they collaborate, the corporation can build trust and a relationship. Your generation is often accused of not having accomplished anything significant. How do you respond to that? We’ve changed the way people do business and the way companies market themselves and how they relay any messages to the consumer. Social media is a big tool and we made that a tool. We made communicating through social media the standard. When you look at brands, what’s the biggest mistake they make? I’ve seen it over and over, corporate companies aren’t on the street level and that’s the biggest issue. They want to forecast the

www.footwearinsight.com

business — they’re going to do x amount of dollars and sell x amount of pairs, and that really is up to the consumer and if you don’t know what the consumer wants, it’s very hard. And they’re making mistakes with social media. People are seeing stuff at the trade shows instantaneously. So they should do a better job of controlling images? Letting bloggers come to trade shows and snap pictures six months prior to the release date, I never thought I’d see that happen. To the companies, they’re doing anything they can to get coverage and it’s a huge mistake. The consumer feels like he had it, wore it and got rid of it before the shoe actually comes out. And the companies are caring more about new silhouettes and new styles rather than value, which is the new trend to me. When you pick up a shoe and you feel it’s worth more than what you paid for it, that to me is a good buy. That’s why there’s such a turn to classic goods — solid clothes and colors. Those days where the consumer is willing to pay x amount of dollars for a print or a logo are over. Isn’t brand still important? Yes, but I see a lot of inconsistency with offerings from brands that hold value and

then on the other end of the spectrum, using synthetics or charging the same for canvas and leather, which I’ve never understood. Now more than ever after the recession hit, the consumer is smarter and before he makes the purchase, he’s thinking twice or three times. They want to know they’re getting more than what they paid for. Getting what they paid for is good, getting more than what they paid for will be build a following. If I had one message to get across, it’s for people to know me as a person who doesn’t care about the norm and doesn’t care about what I’m supposed to do or wear. I want to give you something – a shoe, a boat shoe, a boot – I want you to know you’re getting quality and substance. So what’s next for you? My Ronnie Fieg for Sebago project has been the focus. My spring line comes out April 1st. Saks Fifth Avenue has built a concept shop. I’ve been working for Sebago for four years now. I’ve been doing SMUs for David Z for a long time and this is my first venture outside of David Z. It’s the real world. It’s the rest of the world — the retail world. I’m in top Bloomingdale doors, top Nordstrom doors, Shoe Gallery in Miami, and a few retailers in Japan bought it, too. I’m looking forward to it. l

March/April 2011 • Footwear Insight ~ 27

NSRA REPORT

Occupany Expenses & Space Productivity Ron Wilson, Contributing Writer

A

ccording to the trade magazine Stores, retailers – at least the ones who managed to survive the trials and tribulations of the last two years – will be looking at a narrower playing field going into the remainder of 2010 and into 2011. Many stores went under during the recession. Store closures and consolidations are expected to continue in 2010 and beyond. Store expansion, where it occurs, will be minimal according to Stores. Retailers will continue renegotiating rents and repackaging deals with landlords. Indeed, there is at least anecdotal evidence that some NRSA members were successful during the recession at renegotiating leases at terms very favorable to them. Occupancy Expense In 2009, average store occupancy expense rose to 9 percent of net sales. This was compared with 7.8 percent in 2007. Breaking this down into the various categories, the percentage of occupancy expense ranged from 6.3 percent to 13.1 percent. The stores with the lowest percentages were: • Free standing at 6.3 percent • Stores with sales between $650,000 to $1 million at 6.8 percent • Street front stores at 7.5 percent. The stores with the highest percentages were: • Companies with 6 or more stores at 13.1 percent • Stores with sales less than $350k at 11.4 percent • Concept/single line stores at 9.9 percent. The high-performing stores (those stores with a net profit over 4 percent – average 8.4 percent) have an average store occupancy expense of 7.6 percent of net sales, while the lower performing stores (those stores with a net profit under 1 percent – average 2.7 percent loss) had an occupancy expense rate of 10.4 percent.

Like what you’ve read? Would you like to see more? The NSRA 2010-11 Business Performance Report, published in cooperation with Footwear Insight, is available to NSRA Members for $295 and non-members for $695. The report is based on in-depth data gathered from more than 100 of the top independent shoe stores in America and features reports and analysis on sales, inventory, management, advertising, occupancy expenses and much more. To order your copy, please visit: http:// store.formula4media.com

Ten-Year Look at Productivity of Space Store Size SF

Volume per Store

$246

2,800

1,071,643

By Number of Stores Single stores reported an occupancy expense of 8.2 percent, higher than the 7.2 percent in the previous survey. Retailers with two to five stores reported 8.9 percent. By Type of Location Street front stores reported occupancy expenses at 7.5 percent while strip/life style centers came in higher at 9.1 percent. Freestanding stores reported the lowest percentage at 6.3 percent, but expenses of freestanding stores are difficult to compare with other store types since many freestanding stores are retailer-owned. Space Productivity Survey respondents in 2009 again reported a smaller average store size than in 2007. The average square footage for all stores in 2009 was 2800-square feet, down from 3192-square feet in 2007. Sales per square foot increased to $246 from $235 in 2007.

9.0 9.0 8.5

8.1

8.0

8.0

2007

$235

3,192

832,635

2005

$259

3,484

897,320

2003

$244

3,372

809,020

2001

$228

3,526

802,954

6.5

1999

$186

3,214

664,374

6.0

7.5

7.8

7.2 6.8

7.0

Survey Year 1999

28 • Footwear Insight ~ March/April 2011

Comparing by Volume of Stores Stores with sales less than $350,000 annually posted an occupancy expense of 11.4 percent for 2009, while the figure for stores in the $350,000 to $649,999 was 9.2 percent, closer to the All Stores figure. For stores with $650,000 to $1 million in sales, occupancy expenses were 6.8 percent of net sales, while stores with sales over $1 million reported 9.2 percent.

Ten-Year Trend in Occupancy Costs

% of Net Sales

2009

Sales SF

Total Store Data Occupancy expense for retailers jumped to 9 percent in 2009, up from 7.8 percent in 2007. Rent, along with CAM (common area maintenance fees), repairs and utilities make up almost the entire occupancy expense figure (8.6 percent) with the remaining portion going to property taxes.

2001

2003

2005

2007

2009

footwearinsight.com

Owner’s Manual. 2010 / 2011

Business Performance Report

w of   sive financial overvie The only comprehen States,   e stores in the United sho ated per er-o own bers on: s and benchmark num lysi ana h ept in-d providing y, gor der, cate n Sales - by gen store and internet enses n Operating exp ry costs n Wage & sala margin n Inventory and n

Profitability

www.nsra.org

Required reading for independent shoe retailers. NSRA members: $295 Non-NSRA members: $695

Order your copy today at store.formula4media.com

NSRA REPORT a new store – are strip centers with a major anchor. The anchor can be a food store, or several big boxes, or even a combination of other retailers. That being said, it is crucial to avoid service retailers who do not add anything to your business. In other words, stay away from centers that have a high “service retail” environment, such as nail salons, dry cleaners or cell-phone stores. Locations that emphasize products rather than personal services are better choices. 2. Another important point to consider is downsizing your store. Regarding opening a new store, business owners should consider that, over the longer term, sales growth is going to be difficult during the next two to three years. Every additional square foot occupied adds to the rental amount that gets paid each month, without necessarily adding to sales volume a store can generate. In the future, it will not be unusual to aim for doing at least $400 per square foot of space volume. Realistically, $400 per square foot is not that high a number -- in a 1200-square-foot store, it would mean $480,000 for the year. Many retailers may occupy more space than is called for. As the old saying goes, “Until you start putting shoes over the rest room, you aren’t really tight on space.” 3. Finally, the last new problem facing retailers today is funds acquisition from the bank. This lack of financing will continue to be a problem unless something happens to allow banks to get back in the business of loaning money. No matter how big or small the business, more banks are simply saying no to any deal. In fact, some banks have lowered the upper limit of their letters of credit even for businesses that are still doing well. Right now, it is easier for the bank to say no than to provide a loan. Since that circumstance is out of a retailer’s control, more retailers are going to look to more tightly controlling their own costs, and to maximizing their cash flow as ways to finance business. Store sizes increased steadily during the latter half of the 1990s. Since 2003, the trend has been going the opposite way. Smaller average store sizes seem to be the current trend, which suggests that retailers will be looking to increase space productivity. One option for that may be by increasing nonfootwear sales, using smaller spaces for impulse and high-turn goods such as jewelry, sunglasses or other accessories. l

The top performers in space productivity were: • Companies with six or more stores ($327 per square feet) • Stores with sales over $1 million ($289 per square feet) • Street front stores ($278 per square feet) • Stores with sales volume of $350,000-649,999 ($270 per square feet) The least productive spaces were: • Stores with sales volume that is less than $350k ($132 per square feet) • Free standing stores ($171 per square feet) • Stores with sales volume between $650k and $1 million ($186 per square feet) The high-performing stores had an average of 2800-square feet. These high-performing stores had average sales per square foot of $275. The low-performing stores had an average of 3200-square feet. The lowperforming stores recorded average sales per square foot of $231. Today’s Retail Leasing Environment With the recession of 2008 and 2009, rents have gone down by approximately 20 percent nationwide. As most merchants realize, rents are determined by the amount of vacancy and the tenant mix in any given center. The more vacancy, the better chance of getting a lower rent; conversely, the less vacancy, the less likely a store operator is to get a low-priced deal. Nationwide, the strip center vacancy rate stands at 11 percent, which is the highest since 1991. Enclosed malls continue to represent a problem for most retailers. Enclosed malls lost roughly 10 to 20 percent of their sales per square foot during 2009. Although they have begun recovering, it will likely be a long time before they get back to sales numbers of the 2007 highpoint. Shoe stores in particular for the most part cannot afford the enclosed mall venue because of the high rent and triple net charges and the high store build-out cost. In addition to the usual parameters of demographics, rent and adjacencies, there are three major new points to keep in mind when the time comes to renew a lease or open a new store: 1. The best locations to consider for any move – whether it’s a relocation or

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www.footwearinsight.com

TRENDS

Daily Deal Sites:

Groupon drives new customers and ticket price with no risk.

Win-Win-Win? By Emma Johnson

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A Few Things to Keep In Mind Before Launching a Group Coupon:

1.

Know your business and what you want the coupon to do. “Customers expect more than average service with a groupon,” Nason says. Be prepared to wow new customer with exceptional service.

2.

Be prepared to handle an onslaught of customers, even if it means hiring temporary extra help for the first couple of weeks.

3.

Rack the results. Groupon offers retailers the ability to track their groupon customers electronically, or simply ask customers if they are new to your store and log their responses.

32 • Footwear Insight ~ March/April 2011

his may be a rare case in which the maxim “if it sounds to be too good to be true, it is” is wrong. Groupon and other group daily discount sites are proving to be one of the most effective and low risk advertising tools -- driving new and repeat customers to retailers who use their pre-paid, discounted store credits to make higher-than-average ticket purchases. Retailers face zero out-of-pocket investment. What’s to lose? Not much, if anything. Just ask Ken Berk, owner of Berk’s Shoes on Harvard Square, Boston. The retailer’s November 23 Groupon deal sold 1665 $30 groupons worth $60 store credit. The store, which sells 85 percent women’s athletic, Euro comfort and fashion brands including Merrell, Uggs, Steve Madden, Converse, Vans, Dansko, Born, Puma, Naot and Alegria, found that groupon customers indulged in pricier purchases like winter boots – driving up average ticket prices for these customers from the store average of $80 to $120. About 80 percent bought more than the $60 groupon value, Berk says. “It really is a win-win,” he says. “There was no risk, a lot of new customers came in, and people got a good deal.” It really is a win-win-win. Not only does the retailer and customer benefit, but Groupon takes a cut of the coupon. In Berk’s case, 10 percent, or $3, of the $30 groupon, though Groupon spokesperson Chad Nason said the split is usually closer to 50 percent. Groupon sent Berk checks for the rest. The system works like this: Retailers make a deal with Groupon to be a featured deal on the Groupon’ site for your city. The post is featured for 24 hours and includes details about the deal and a detailed write-up about the business -- including images and location. This deal is also sent via email to Groupon subscribers, of which the company reports more than 50 million. The caveat is that the deal becomes valid only once a specified number of people purchase it. This motivates members to spread the word about the deal – and by proxy the featured business – via social media like Facebook and Twitter. Customers print out the groupon, or use an app on their smart phone to show the retailer, who receives a list of all the people who purchased their groupon. This list has proven to be a useful tool for tracking new customers. A redemption trend has emerged since Groupon launched in late 2008, allowing retailers to plan for traffic to their locations: 20 percent of people will redeem their groupons within the first two weeks of the promotion, then it slows down to 5 percent per week. There is a surge of customers who will come in to redeem their coupons in the last couple of weeks of the promotion, which in Berk’s case is May. About 20 percent will never redeem their groupon. “Which is fine with me,” Berk says. “That’s money in my pocket.” Very true, though of course Berk and other retailers really benefit from the campaign by building awareness and foot traffic to their stores. “Retailers really want everyone to use their groupon,” Nason says. “You want them to have that great experience and become loyal customers.” Groupon has become a phenomenal success. The Chicago-based firm recently turned down a $6 billion buyout from Google, which has since made plans to launch their own group coupon site, joining competitors including LivingSocial and BuyWithMe — channels worth exploring as the popularity of Groupon means retailers often face wait lists of several months. In fact, there are so many daily deal sites that aggregators have popped up. The leader, Yipit.com, aggregates no fewer than 325 daily deal sites. More than just a source of sweet deals, Groupon is looked to as a trusted local city guide. One of the site’s most successful campaigns was for a architectural boat tour in Chicago, which sold more than 17,000 groupons. “People really do want to go out and try new things in their home city,” Nason says. Berk says he expects to be of the 97 percent of Groupon retailers who become repeat customers. He’s thinking about a $15 groupon worth $30 for the spring when less-expensive sandals and flip-flops are popular, and another $30 for $60 in the fall when he hopes to repeat the boot sales. “You really can’t go wrong,” he says. l www.footwearinsight.com

LINES WE LIKE (AND WHY)

Better Comfort That Keeps Its Promises

3 Le Chameau • Just when we thought we couldn’t bear to see another rubber boot line, we stumbled across Le Chameau, a gorgeous collection of handcrafted boots made in a factory in Northern France that looks like a Chateau. The company is more than 80 years old, so we guess they’re sticking around. Plus, we love that they exhibit at SHOT Show and FN Platform, which means the arch support in their boots works if you’re tracking elk in Montana or waiting in the rain for Nordstrom to open at Garden State Plaza.

1 Mephisto • More than most of its Euro-comfort competitors, Mephisto has managed to step up its style quotient while staying consistent season to season. We especially like the women’s suede boots in the Fall line. The Maggie is a lace ankle boot in dark taupe or black and features Mephisto’s patented SOFT AIR technology that the company says reduces shock, relieves pressure from the spine and joints, and enhances air circulation inside the shoe. The Sarina is a pull-on ankle boot in pewter and black bucksoft. The Sarina also features Soft Air. Both boots sell for about $400 retail.

2 Snipe • You know a promise brands hardly ever keep? We’re going to make good looking shoes that are environmentally friendly. Snipe is one of the few brands living up to that. The German brand, which has been distributed in the United States for the past two years by Kanner, offers a credible sustainability story. The brand has been touting environmentally friendly shoes since the 1990s. And Snipe has some legitimate design chops, as well. The brand’s Web site makes reference to shoes inspired by Bauhaus style — clear lines, no unnecessary seams and no flourishes or ribbons. It’s clear we’d like these shoes in our house.

4

34 • Footwear Insight ~ March/April 2011

Oh! Shoes • You know how certain brands promise high style and comfort and end up delivering neither? We hate that. Oh! Shoes seems to be demonstrating some staying power and delivering on its dual promise. The brand, led by industry veteran Greg Van Gasse, has a range of boots, flats, platforms and heels, all of which feature premium materials, leather linings and a patented footbed that the company says works like a prescription orthotic. The company also touts its shock absorbing outsole and heel. Prices range from $175 to $250.

www.footwearinsight.com