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FOOTWEAR NEWS MAY 18, 2009 VOL.65 NO.19 WWW.FOOTWEARNEWS.COM $10.00
POWER TALKS
Traffic. Trade Shows. Product. Price. At the FN CEO Summit,
the industry’s biggest players tackled the hot topics and searched
for opportunities in a dramatically changing environment.
N E W S P A P E R
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June
FFaNY
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PM
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FN MAY
29, 2006
MAY 18, 2009 NEWS
BREAKING
FN
CEO
SUMMIT
INSTANT
MESSAGES
FN Summit Photos by HARVEY BILT.
Now is the time for opportunity. Sure, there are lots of reasons to predict
doom and gloom for retail, but few of those forecasts made their way into
the Footwear News CEO Summit, held May 6-8 at the Four Seasons Resort in
Palm Beach, Fla. During the event, which brought together 135 high-ranking
footwear executives, attendees networked and shared candid opinions about
navigating the new business terrain. On opening night, Patricia Field set the
upbeat tone, speaking about the opportunities of a down market. “These
times are good because they level the playing field — they allow young
designers to get in the game,” she said. And Jim Estepa, president and CEO
of the Genesco retail group, urged retailers and wholesalers to work more
closely to develop specially made product, while Zappos.com CEO Tony Hsieh
talked about building a company culture that makes employees — and,
ultimately, customers — happy. “It’s worth your time to think about the
actual signs of happiness,” Hsieh said during the second night’s keynote
speech. “You can apply that not only personally but to your business and
your brand.” For the full story on the FN Summit, check out pages 20 to 29.
FN0518P18.indd 18
5/14/09 2:21:01 PM
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20
FN MAY
29, 2006
MAY 18, 2009 NEWS
BREAKING
FN
CEO
SUMMIT
Field Day: Pat on Style
Patricia Field never intended to be a fashion trendsetter.
“I just wanted to start a business,” she recalled of her decision
to open a Manhattan-based store in 1971. But her eclectic assortments resonated with consumers and paved the way for
her career as a stylist.
Thirty-eight years later, Field is still intrigued by the business
of fashion. Calling herself a “little CEO” addressing the “big
CEOs,” she engaged FN’s summit audience with an openingnight conversation about her take on the recession, her affinity
for footwear and the “Sex and the City” phenomenon. Here are
some highlights:
On getting her start:
“I didn’t [intentionally] go into fashion. I just wanted to start a
business. In 1971, I opened my first store and then moved to a
bigger store about five years later.”
On the economic downturn:
“I’m not feeling this doom and gloom at all. These times are
good because they level the playing field — they allow young
designers to get in the game. We’re all in the same boat and
we’re feeling the waves together.”
On the “Sex and the City” tipping point:
“At the end of the first season of ‘Sex and the City,’ we realized it
was generating a lot of buzz, but it was really in the second season that we realized that this show had blown out of the box.”
On how shoes stole the show:
“It was me, my team and Sarah Jessica Parker, who is also
shoe crazy. She is crazy about every shoe ever created for her
to wear — so it became a thing. They didn’t write the show for
fashion, but they realized it was the hook and latched on to it.”
On her partnership with Payless ShoeSource:
“I love the people — great to work with, calm, down-to-earth.
It’s amazing how far we’ve come. We started when [Collective
Brands CEO] Matt Rubel brought this team together and I started
to do domestic advertising with them. Then, I was nominated for
an Oscar [in 2006 for “The Devil Wears Prada”] and got to make
my own shoes for the red carpet. [That turned] into a boutique
collection [for Payless] that grew and naturally developed.”
On how hot styles turn up in unexpected places:
“I’m wearing the [Dior gladiator] shoe that created the storm
of trends for the last three years — from Manolo to Louis Vuitton. I put it on Sarah Jessica Parker’s foot in the [‘Sex and the
City’] movie and I knew what was going to happen. I had found
it in New York before Christmastime — it didn’t get any visibility
because it must have been a late delivery or something — and
bought it because I loved it. I brought mine in to show her, but
it was six months later. So we searched and searched, and we
finally found it at the outlets in Westchester County in New York.
It became a heavy trend.”
On the next “it” shoe:
“I don’t necessarily go trendspotting. I just put things together
that I think look nice. But I am getting tired of these heavy
shoes. I’m ready for nice, refined shoes. I’m wanting that Halston simplicity. But that’s just a feeling.”
On future aspirations:
“I’m not sure. Maybe directing a movie or having a TV show. [I’d
like to] move on from the styling thing. So hopefully new things
will come along.” — By REGINA SMITH POPP
Martinez: Don’t Fear the Future
Angel Martinez calls on wisdom from
the Dalai Lama, Gandhi and Rocky Balboa to
navigate today’s uncertain business world.
In a philosophical speech at FN’s CEO Summit, the Deckers Outdoor Corp. CEO presented a jolting picture of the future. He set the
stage with a four-minute video clip about
the exponential growth of technology, with
statistics such as “the top 10 in-demand
jobs for 2010 did not exist in 2004” and “the
number of text messages sent and received
every day exceeds the total population of
the planet.”
“Welcome to the world you never saw
coming,” said Martinez, “where there is no
comfort zone, safety net, collective wisdom,
right answer, or reliable formula.”
So what’s an executive to do? Martinez
suggested a cerebral approach to facing the
challenges.
“First, admit you are helpless to control
anything other than what you already have
your hands around,” he said. “Make the absolute most of what you have right now.” That
includes cutting out everything and everyone mediocre and recognizing limitations.
It also means taking an honest look at oneself and one’s company, he said. “How many
[shoes] can you really sell? How many can
you really make? How many should you sell
or make?” The questions should address
issues of consumer demand and pricing,
among others, he explained.
For Martinez, everything should go back to
a purpose-driven mission statement, rather
than a day-to-day checklist of tasks or opportunities.
Specifically, the CEO called on the crowd to
invest in young talent, the human resources
who may be best prepared to face today’s
challenges. “To them, it’s not scary, it’s not
different, it’s just their future.” And success
FN0518P20.indd 20
in this strange new world may require delegation, outside help and a healthy serving
of humble pie, he added.
But Martinez advised that public companies should release themselves from the
stranglehold of Wall Street. “Only narrow
self-interest drives the ethics of the Street,”
he said. “We have taken all their shots — including the cheap ones — and like Rocky
Balboa, we will not be denied in achieving
our goals.”
In closing, the Deckers exec called to mind
the great innovators in footwear who were
industry outsiders: Nike co-founder Bill
Bowerman, basketball star Chuck Taylor,
the Aussie surfers behind the Ugg phenomenon. “Are we still open to that? Can we
suspend our disbelief, fear and cynicism
long enough to give someone a shot?” he
asked. “I hope so, because our collective
future depends on it.” — By MEGHAN CASS
5/14/09 1:16:01 PM
05142009131704
THANKS TO OUR PARTNERS
Tony Hsieh
helpdesk@zappos.com
www.zappos.com
Gina Sanders
gina_sanders@condenast.com
www.luckymag.com
Seymour Ubell
jcedwards@aol.com
www.jcedwardcorp.com
Tina Aldatz
tina@footpetals.com
www.footpetals.com
Elyse N. Kroll
ekroll@enkshows.com
www.enkshows.com
Joseph C. Moore
jmoore@ffany.org
www.ffany.org
John Jonas
jjonas@jonasgrp.com
www.jonasgrp.com
Chris Goddard
chris@cgprpublicrelations.com
www.cgprpublicrelations.com
Chris Lambiase
chris.lambiase@rodale.com
www.runnersworld.com
Keith Woodley
keithw@soles4souls.com
www.soles4souls.org
For names and titles of those pictured please contact Jennifer Macaluso
at 212-630-4947 or jennifer.macaluso@fairchildpub.com
''
FN MAY
29, 2006
MAY 18, 2009
7G:6@>C<C:LH
FN
CEO
SUMMIT
Diesel USA
Fuels Up In
Down Economy
From left: Jim Gabel,
Blake Krueger, Ron
Fromm, Jim Issler,
FN’s Neil Weilheimer
Opportunity Knocks
O
Never waste a good recession.
That’s the advice Wolverine World Wide CEO Blake Krueger gave footwear executives during the summit’s opening panel, which also featured three other top execs: H.H Brown chief Jim Issler, Brown Shoe
CEO Ron Fromm and Reebok North America head Jim Gabel.
Here are some excerpts from their discussion, which covered diverse topics, from the digital storm to the importance of full-price
retail to the new mergers-and-acquisitions climate.
On finding the upside in the downturn:
JI: We’ve got an economic recession and the continuation of retail
consolidation, which has been going on for 10 years. On top of that,
we have a lack of consumer consumption. But there is opportunity.
[This time period] gives all our companies a chance to take a step
back, 30,000 feet up and reorganize and redeploy our capital and reduce expenses and focus ... on what’s working for the consumer.
RF: We think a lot about our partnerships. Anything that’s happening
at Brown is a result of the great vendor community that has stepped
up. At Famous Footwear, where the family is the customer and trust is
so important ... it should be no surprise that the biggest and the best
brands, Nike and Converse ... are leading the way. They have great
value and come to us and work with product offerings. The more time
we spend with our vendors, the more opportunities they create for
our customers.
BK: Our industry as a whole is less volatile than most. It isn’t all
doom and gloom, especially when you see what’s happening in other
industries. Someone once said, “Never waste a good recession.” A
couple of the big opportunities that are coming out of this are, first
and foremost, people. We need to increase our talent base.
JG: We’re trying to reshape our business as fast as possible and reallocate a lot of people within the organization. With that, you have the
ability to reengage the staff and communicate. They are starved for
information about what’s going on. If you’re going through a reshaping exercise, you have to be candid with them and, more important,
you have to involve them in that decision-making process.
On potential in the M&A market:
BK: There was a time when money was free and unlimited and a
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lot of nonstrategic players were able to outbid a lot of the strategic
players in this room. We’ve now entered a time when that has flipped.
Crazy multiples are not being paid. Brands are being valued for what
they are. We have a pretty good plug-and-play model. We constantly
go through a pretty disciplined white-space analysis to see what is
out there and what fits with us. You have to work hard sometimes to
do an acquisition — you have to work three times as hard to integrate
[a new brand] into your culture.
JI: For us, we’ve got a unique business model where we’re pretty lean
and narrow. We’d like to find a lot of extra things, but it’s not always
easy to find something that fits.
On the dramatically changing consumer:
JG: The customer is changing so rapidly right now. People are so
brand-aware, but they’re not brand-loyal right now. There are so
many ways you need to be touching the consumer. We have moved
so much to the digital piece. With blogging, the success or failure of
the product is instantaneous.
RF: We probably spend more money on research to make sure we
understand every consumer segment. We think we’ve got three
distinct women who come in to shop and we need products to address their individual needs. Understanding the consumer on a very
personal level is what’s going to drive it. The digital world is going to
change the way we shop. It’s about how fast we can embrace that.
On when the business will turn around:
BK: We take a global view. The U.S. has felt its way to the bottom.
There are some other regions that are trying to find the bottom.
RF: We have to be a little careful. The next quarter is going to be a
tougher one. We’ll get into the fall season cleaner. There will be some
good things happening in the back half. [But] we need some real help
with the consumer. Unemployment is still a big driver, credit is still
getting tightened.
JI: We’ve got another 12 to 18 months that are going to be tough. Until
you start seeing key elements in the economy change, we’ve got to
be prepared to hunker down, take our assets and redeploy them in a
different way. There are things happening that are very positive, but
we’ve got to find them. — By KATIE ABEL
$33529(':,7+(55256
While the economy has slowed down
many firms, for Diesel it’s full speed ahead.
“Playing it safe is not part of our culture,”
said Steve Birkhold, CEO of Diesel USA. “We
see opportunities, we are opening stores. ...
[Founder] Renzo Rosso doesn’t really care
about the economy. We are very aggressive
in our expansion.”
And after taking its footwear
production back
in-house in 2007,
the category is on
the top of Diesel’s
agenda.
“We see tremendous growth in
emerging [segments], and footwear is one of our
largest opportunities to grow in the
U.S.,” Birkhold said.
The U.S. division
has
revamped
its distribution to represent a wider range
of footwear. For example, as part of a bigger move into the upscale arena, high-end
styles debuted under the Diesel Black Gold
label for spring.
“We are one of the only brands that can sell
a $95 sneaker at Journeys and $500 shoe
at Neiman Marcus,” said Birkhold. (While 70
percent of Diesel’s overall sales are through
its own retail and 30 percent via wholesale,
footwear sales are the opposite.)
The brand also is ramping up on a broader
scale. Diesel’s largest store, Diesel Planet on
Manhattan’s Fifth Avenue, bowed in February.
All of Diesel’s initiatives are supported by a
series of edgy marketing campaigns.
“We try to integrate irony and humor into everything we do,” Birkhold said between video
clips of retro disco dancing and provocative
comedy sketches.
In addition, Diesel has a big presence both
at hipster-havens such as the South by
Southwest music festival and the Cannes
Film Festival. It also sponsored its own series of parties last year around the world to
celebrate its 30th anniversary. “It’s all driven
off creative,” Birkhold said, “and events are a
huge part.” — By MEGHAN CASS
5/14/09
PMPM
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Getting Lucky
Lucky magazine has turned the iPhone
into a pocketsize shoe boutique.
Launched in March with the publication’s
spring shoe guide, the application — Lucky at
Your Service — is a digital concierge service
that, according to Lucky VP and Publisher
Gina Sanders, takes the guesswork out of
tracking down a specific shoe.
“What we’ve done,” Sanders said on the first
day of the summit, “is move from magazine
[editorial] to purchase to in-store, all with the
tap of a finger.”
How It Works
• A consumer downloads the free application
to her iPhone or goes to the Lucky at Your
Service Website.
• Searches for shoes by brand, trend or color
option.
• Once a shoe has been picked out, she clicks
to find it online or at a local store.
• Store is found using the iPhone’s GPS tracking system or by entering the zip code.
• Consumer sends size, color option and email address to the store of choice.
• Within 10 minutes, via a third-party call
center, an alert notifies her that the shoe is
being held at the shop.
The program garnered more than 200,000
users in its first eight weeks, with about 40
percent using the iPhone application and the
remaining using the Web version. And if Apple
features the application in one of its national
iPhone commercials, Sanders said, it could
see another 3 million downloads.
The service, which has been ranked as one of
the top 10 free lifestyle applications on iTunes,
also includes a handbag platform and is set
to add denim in August. Though she wouldn’t
release the details, Sanders revealed she also
is looking to create a paid application.
“It’s multitasking on parallel tracks,” she
said.
Looking Forward
While Lucky’s service is doing its part to
usher in a new era of shopping, the unstable
economy has left lingering questions about
how women’s buying habits have changed.
Patty Nasey, the magazine’s executive director of marketing, said a recent survey by
the magazine showed the outlook isn’t all
bad, with 93 percent of women saying they
plan to shop for new items this spring. “For
Patty Nasey
Gina Sanders
a lot of women, shopping is a form of recreation and pleasure,” she said. “It’s a passion
point that will not and cannot be denied.”
Still, she added, the recession has forced
shoppers to reexamine how and why they
spend money. “It’s a new reality,” Nasey said.
“[Shoppers] are being more mindful.”
The survey, which polled 2,500 women
nationwide last fall and this spring, was conducted online and included in-depth interviews with shoppers in New York, Los Angeles and Chicago. Lucky found that:
58% of “passionate” shoppers have cut back
on purchases, but can’t wait to start shopping this spring.
62% plan to buy as much or more than last
year. Of those, 90% will buy new shoes.
90% are cutting back on expenditures
other than shopping, including going out
and traveling.
87% are glad to be more responsible about
what they are spending.
74% are trading down to less-expensive versions of at least one item.
84% agreed new shoes bring the biggest
“pick me up.”
82% are not buying pre-season.
77% will pay full price if it inspires, expresses
a personal style and is at risk of selling out.
— By MARCIE YOUNG
Basic Training: Execs Focus on China, Retail
The economy is ransacking corporate
profits, but a few business executives are
not afraid of what’s to come.
Foolish? Not really. Industry leaders, speaking on a panel that addressed footwear fundamentals at the CEO Summit, said they are
focusing on long-range opportunities.
Bob Campbell, founder and CEO of BBC International, said he’s pressing ahead overseas.
“The international market has got to be a big
part of your business today,” Campbell said.
“The globe is getting much smaller.”
He said, for instance, that for every new
license or brand BBC considers taking on, a
global opening must exist. Currently, Campbell is in the process of expanding three
brands internationally next year. Topping his
list of countries is China.
Others agreed about mining the Chinese
market. While that nation’s economic growth
has stalled along with the rest of the world’s,
China still has 1.3 billion people — all potential consumers. What’s more encouraging is
that the majority of retail is mainly in major
cities such as Beijing and Shanghai. That
means firms have yet to dent the smaller
regions.
For Joe Ouaknine, CEO of Titan Industries,
China also is filled with ample sourcing opportunities. “A lot of factories we couldn’t
get to [before because they were too busy]
are now trying to do business with us,” said
Ouaknine, who, in partnership with Campbell,
is relaunching Charles Jourdan next month.
“Yes, factories are closing, but there are good
factories that are now available. It’s a time for
opportunities. These can be good times.”
Panelists also stressed the importance of
maintaining candid retail relationships.
“The key to being successful right now is
to have transparency between our two businesses,” said Rick Graham, SVP of sales at
FN0518P22,23.indd 23
From left: Dan Bazinet, Rick Graham, Joe
Ouaknine, Bob Campbell, FN’s Katie Abel
Skechers, who joked about Chairman Robert
Greenberg’s desire for rapid expansion into
new categories. “The more transparent we are
with each other, the better our business is.”
Dan Bazinet, CEO of Birkenstock USA,
added, “Our relationships with independent
stores are the most important relationships
we have.”
He acknowledged his firm had misman-
aged some of those relationships in the past,
comparing Birkenstock’s actions to the Japanese worldview wabi-sabi. “It’s the art of imperfection, which we’ve mastered in the last
five years,” Bazinet said. “Now we’re back
on track to improving those relationships,
managing inventory and doing what we can
locally and nationally to support branding.”
— By NEIL WEILHEIMER
5/14/09 6:53:14 PM
05142009185436
FN MAY
29, 2006
MAY 18, 2009 NEWS
BREAKING
FN
CEO
SUMMIT
24
Retail Journeys
When the lead singer of the rock band Dead-
Banking on Buzz
Marcia Kilgore knows what women
want.
The FitFlop Inc. founder and creative
director has a history of translating
small ideas into runaway successes.
And on the summit’s opening day, she
shared her secret: Find a good angle
and run with it.
“[Women will go for] a fantastic marketing story ... because we all hope a
product is going to make us a little bit
better,” Kilgore said. “[That’s] one thing
to remember. Hope goes shopping.”
In the two years since she launched
her wellness flip-flop brand, Kilgore
has grown FitFlop into a company with
its toes in 28 countries and nearly $80
million in annual sales. She’s done it,
she said, by tapping into the common
female desire for lean legs, through a
sandal designed to give women a lower-body workout while walking.
“What I’ve found, with both footwear
and face cream, is that women are always on a quest for self-improvement,”
said Kilgore, who made a name for herself as the founder of Bliss Spa before
selling the final shares of the company
in 2004. “Women will try anything,
[and] I knew a flip-flop would be a
great item to throw out there.”
While having a great product is the
first hurdle in building a successful
business, Kilgore said creating a savvy
marketing plan goes a long way.
One ad for FitFlop, for example, is shot
from the ground up and shows three
pairs of the sandal in varying colors attached to three sets of long, toned legs
and shapely buttocks. Another billboard advertisement simply features a
pair of the sandals below giant letters
reading, “Does my bottom look smaller
in these?”
Kilgore also stressed that getting
people talking about what’s being sold
is the No. 1 way to save on traditional
advertising mediums. At Bliss Spa, for
instance, she developed such unique
names as the Triple Thighpass cellulite treatment and the bronzing cream
Glow Job.
“We know women love to be connected through brands and products,” Kilgore said. “They love to have something
to talk about by the water cooler and at
the pub.”
As a result, FitFlop has amassed more
than 100,000 testimonials from wearers of the flip-flops and has yet to unveil an extensive advertising campaign.
Much of the attention to the brand,
Kilgore said, has been driven through
newspaper articles e-mailed repeatedly, online accolades and FitFlop consumers telling their friends about the
shoes and the results they’ve seen.
“If the benefit is actually there, people
will talk about it,” Kilgore said. — By
Marcie Young
FN0518P24.indd 24
sun fainted, fell off stage and cracked his skull during a live concert at last year’s Journeys Backyard
BBQ in Nashville, Tenn., it could have been tragic.
Instead, the performer bandaged his head, belted
out a few songs and became a fan favorite.
Ironically, the singer’s collapse became one of
the hottest Internet videos after a spectator captured the incident on a cell phone. For Deadsun
and event sponsor Journeys, it turned into marketing gold. Journeys’ Backyard BBQ tour — a
mix of skate demonstrations, food and live music
— garnered more than 37 million media impressions last year.
For Jim Estepa, president and CEO of the Genesco retail group, which owns the Journeys chain,
the family-friendly event is an authentic way to
target customers. “Everything you do has got to
be relevant to your core customer, no matter what kind of business you’re in,” Estepa said
in a presentation on the second day of the summit.
That aggressive pursuit of young shoppers has helped the retailer grow over the years.
In 1986, the first Journeys door opened. Now there are more than 1,000 locations in every
state in the U.S. And with that real estate expansion came a handful of brand extensions,
such as a direct-to-consumer business, catalogs, Journeys Kidz and Shi by Journeys.
Estepa said the company has been successful because it focuses on “culture, celebration, recognition, partnerships with our vendors and giving back to the community. The
Journeys culture is what really sets us apart from other retailers.”
Of course, having edgy product also helps.
“No matter how good of a marketer you are, product development is everything,” Estepa
said. “We work diligently with every one of our partners to develop product that is unique
and relevant to the teen customer.”
To get a feel for what consumers want, Journeys relies on hundreds of employees, from
store managers to district managers, to offer insight and feedback on product.
Estepa said the company stores are designed to be basic and let the product speak for
itself. “There are no radical shifts here,” he said. “Everything we do is an evolution; it’s not a
revolution.” — By neiL WeiLHeiMer
Hire Learning: 5 Tips
John Jonas, president of executive search
firm The Jonas Group, shared his tips for
hiring and retaining top talent.
key. Jonas recommends behavior-based
interview questions to ensure a good fit.
1. “a” Players
Jonas advises companies to partner with
an industry-specific search firm to target
and recruit the crème de la crème.
“When business is as tough as it is now,
only the companies with the best talent
will survive and thrive.”
2. Top grading
Replacing “B” and “C” players with “As” is
crucial to a company’s success because
“eagles fly with eagles.”
3. Smart Hiring Techniques
A well-defined and transparent process is
4. How to Best get “a” Players
5. retention Tips
Check in regularly with staffers, give
them generous praise and encourage ongoing development. “If you promote the
growth and self-discovery of your people,
you maximize them, your company and
your ability to retain them,” Jonas said.
5/14/09 7:00:40 PM
05142009190221
FN MAY 29, 2006
7G:6@>C<C:LH
'*
33FACES
Between panels and presentations, attendees at the summit in Florida
had fun in the sun. At a poolside cocktail party sponsored by WSA and FFANY, execs
mingled and sipped exotic drinks called “wingtip-tinis” and “golden stilettos.”
Representatives from every end of the industry attended, including ASG chief Tom
O’Riordan, independent retailer David Zaken and Sterne Agee analyst Sam Poser.
Kids’ shoe kings Bernie Leifer and Bob Campbell rubbed elbows with style setters
such as designer Faryl Robin Morse and Modern Vintage’s Rick Cytrynbaum. NSRA
prez Chuck Schuyler was on site, along with Foot Petals’ Tina Aldatz and Margie
Floris. Thursday evening kicked off with a 1980s-themed soirée, and after dinner,
power players like Sonny Shar toasted Zappos’ 10th anniversary. 11 Meghan Cass
Fred Mossler
and Steve Hill
Matt Powell
Eran Cohen and LuAnn Via
Nine West’s
Irene Fitzgerald
Steve
Madden
Jim Biolos
and Faryl
Robin Morse
Rick Muskat
Don Wilborn, Sonny
Shar, Bob Campbell
Chuck
Schuyler
Greg Tunney
Tina Aldatz,
Seymour Ubell,
Margie Floris
Scott Sessa
and David Zaken
John Jonas and
CGPR’s Chris
Goddard
Rick Cytrynbaum
Sam
Poser
Bernie and
Susan Leifer,
Tom O’Riordan
Matt Priest
Danny Wasserman,
Michael Rupp
FN0518P25.indd 25
Thomas Bata
Scott Savitz
5/14/09 6:43:05 PM
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FN MAY
29, 2006
MAY 18, 2009
7G:6@>C<C:LH
FN
CEO
SUMMIT
Talk of the Town: What’s Next
Retailing is a tough business. And with
dramatic cuts in consumer spending, increased competition and a lack of fresh
product, selling shoes has become even
more daunting.
Still, with challenges come great opportunities. On the first day of the CEO Summit,
six executives — Jim Estepa, president and
CEO of Genesco’s retail group; Ron Halls,
president and CEO of Foot Locker International; LuAnn Via, president and CEO of
Payless ShoeSource; Diane Sullivan, president and CEO of Brown Shoe; Tarek Hassan,
president of The Tannery; and Isack Fadlon,
owner of Sportie LA — gathered for a Town
Hall meeting to assess the lay of the retail
land. Here are the highlights:
From left: Jim Estepa,
Ron Halls, LuAnn Via,
Diane Sullivan, Tarek
Hassan, Isack Fadlon
LV: The challenge for us all, as retailers,
has been traffic. Over the last 18 to 24
months, the traffic patterns have significantly declined, more so in off-mall than
there and if it sticks, they make more of it.
on-mall formats. It started with single-digit
Our business also has that sense of anticidecreases to double-digit decreases. In
pation, reading [those trends] on a daily if
apparel and accessories, we’ve been a bit
not hourly basis. The reality is, how close
luckier. But overall, it’s a significant chalcan we get to the consumer, because a kid
lenge. With that challenge comes an opthese days doesn’t want to see a massportunity. There’s a significant opportunity
merchant approach; they want to feel spefor when those customers do come into
cial, they want to be different.
stores to convert them.
TH: With consumer [spending] way down,
DS: We’ve seen that traffic has been really
the biggest challenge to retailers is how to
challenging for the last 12 to 18 months.
offer the customer a compelling reason to
Those issues have
buy. This is one of our
recently ramped up.
biggest challenges
we face today. But
So I ask myself: How
much [of that] is refor us, that’s also an
ally economic? How UÊ Foot traffic
opportunity. Many
much is behavioral? UÊ Speed of innovation
retailers have lost
Is this something UÊ Department store markdowns
confidence;
they
that’s going to change UÊ Product sameness
are cutting down on
permanently, or is it UÊ Lower consumer spending
staff and on product
going to pass? The UÊ Retail buyer hesitation to experiment
assortment. This is
flip side is the oppora great opportunity
tunity side of all this.
for retailers like us to
There is no one secret formula. The opporstep up to the plate and make a difference
tunity is in how we communicate and leand offer that special service.
IF: As an independent with six stores, one of
verage this digital and direct-to-consumer
aspect in the marketplace today.
our main issues is maintaining and sustainRH: One of the biggest challenges today is
ing credibility culturally. For our consumthe speed of the marketplace and the way
ers, it’s an experience to come into Sportie
it’s changing. We’ve seen two big retailers
LA. It gets difficult [to keep that experience
in Europe — H&M, which is over here now,
intact], especially now, when there is a
and the Inditex Group — they work on a
mass exodus of goods you can find in difvery simple formula. They put product out
ferent levels of distribution. How does one
Top Challenges:
maintain that sense of
LV: For the fall, we’re
experience when you
going to be shiftcan go to stores in Los
ing into new types
Angeles, Tokyo, London U Converting customers
of media that we’ve
and see that same ex- UÊÊMore communication with shoppers
never been in beUÊ International expansion
fore. Another opporact product?
tunity in the marketJE: The sameness UÊ Lower media costs
place is that the cost
that’s going on in every UÊ Mobile retailing
store has absolutely UÊ Designer collaborations
of media is a little
created chaos in our
bit less. Your ability
industry. It’s what has
to try new things is
more open than it has normally been.
caused a lot of the discounting to go on.
We have to turn up the volume on working
Also, price compression from the department stores has absolutely affected all
with our suppliers and vendors on product
development. At our company, we probably
our businesses. The Payless consumer is
do more special makeups than before bevery cost-conscious, and there were sevcause we have to create some point of diferal times during the fourth quarter I’d
walk into the department stores and they
ference. We have to take a long hard look at
what we can do to help our resources be
would have price points for our customer.
That price compression really impacts
more innovative and to create a reason for
our customers to buy.
those moderate- to low-cost providers. But
IF: The most effective means for connectthere’s an opportunity now because they
ing with consumers today is through Twitpulled back their inventories. All of us are
ter and Facebook — they are so powerful.
doing that. We have to use a laser focus on
That’s where everything is going. As a reour expenses and our inventory levels.
tailer, you can’t succeed in this environDS: No doubt there was a tremendous
ment without those outlets. The consumer
amount of price compression in the marwants a dialog. They don’t want to come
ketplace. The jury is still out as to where
into our stores, go to a wall and have an
everybody is going to position themselves.
empty experience. There has to be someSo we really need to be thoughtful about
thing relative, whether it’s through blogs
how we make sure our concepts are relbeforehand or the follow-up communicaevant and well differentiated. — By NEIL
tion afterward.
WEILHEIMER
Top Opportunities:
FN0518P26.indd 26
5/14/09 5:45:33 PM
$33529(':,7+(55256
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Show Business: Kroll, Moore Open Up
Just mention the words trade show and
JM: In New York, the majority of people have
showrooms. At the Hilton Hotel, we have the
opportunity for closed booths.
you get everyone in the industry talking — a
lot. So it’s no wonder that when Footwear News
convinced the biggest show operators in the
business — ENK founder and Chairwoman Elyse Kroll and FFANY President Joe Moore — to
sit down together for the first time on stage,
the impassioned audience was riveted. The
pair gamely addressed concerns about dates,
traffic and the outlook for trade shows. Here,
excerpts from their conversation.
On the future of trade shows:
JM: I am sure there is a future. The exposure
alone makes them more and more important
for people [who want to grow brands].
EK: There better be one, or I am in very big
trouble. I’m a trade show dog. I believe in trade
shows. [They] are a very important part of
the business. It’s an opportunity to bring everyone together under one roof. It’s where retailers get their best opportunity to see what’s
going on at a glance.
On the date dilemma:
JM: Dates rule. FFANY is 30 years old this
year, and that’s been a 30-year topic. Our industry doesn’t have the same needs, even
within our board. It’s a difficult dilemma to
appease everyone. We have a committee now
on dates, which we never had before.
EK: Every industry seems to have a particular
favorite. At Coterie, the show must, for the most
part, be on Tuesday, Wednesday, Thursday. In
men’s, it has to start on a Sunday. Choosing
dates is not always as easy as it would seem.
We’re dealing with a great deal of real estate
and we need to work with whatever facility
to get the dates we want. If I know there is a
unanimous decision to start on Monday, that’s
what we would shoot for. I need to reach out
and touch people and find out: Are the dates
right? Maybe the timing that everybody’s
been convinced is correct right now isn’t correct. Buyers are buying differently.
On WSA and FFANY working together:
EK: Joe is already working with me. I don’t
want to be a competitor, I want to be part of
the industry. FFANY is an organization that has
been set up by the industry to help and protect
the industry, and I want to be a part of that. I’m
not trying to compete as much as provide a
different service. FFANY is for the fashion segment of the footwear industry. ENK specializes
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On creating identical booths:
EK: The cost for many exhibitors is in the building of the booths. If people agree they want an
equal playing field, we’re happy to do that.
On running WSA and Magic together:
From left: Joe Moore, Elyse Kroll, FN’s Michael Atmore
in that [with our other shows]. WSA, now that
we’re in every category, we don’t feel that we’re
competing. There are many things we can talk
about that will adjust the tension. I don’t have
the long history that Joe has with WSA, or that
some of the people in this room have with WSA,
but I’m out there talking to people.
JM: There is one basic philosophy difference,
and we have to learn what that means. You’re
dealing with a not-for-profit company and a
profit company. But that makes it possible
for us to work in unison. What the goals are
going to be aren’t defined. The relationship is
new. This is the first time we’ve picked up the
phone and called each other and both talked
about how we can help the industry. There’s a
desire. You can’t be mad at WSA if they want
to make a profit. Everyone in this room wants
to make a profit. But maybe there’s still a
price issue or operational issue that has to be
addressed.
On intellectual property concerns:
EK: We will make every effort and do what-
ever is necessary to eliminate [intellectual
property violations] from happening. There’s
no reason you should be in that position or
anyone else should be in that position.
EK: It’s a matter of space. The fact that WSA
hasn’t been able to fit into one venue is the
first issue we need to deal with. For WSA and
Magic to be together, it seems simply impossible. The two shows are too large. One of the
things ENK is trying to do is organize the show
more efficiently. If we can condense it to a size
that would allow that ... we can certainly open
that door. — By KATIE ABEL
On boosting traffic:
EK: We need to use the same methods every-
one else is using. There’s advertising, direct
mail, e-mail, your Website, whatever you can
think of. What works best for us is getting on
the phone. We want to talk to someone when
we make a call. We have a whole retail communication department. We’ve started a lot of services that we didn’t have several years ago. We
have a VIB [Very Important Buyers] service,
we have a VIP retailers service. Or we act as a
concierge. For us, the most important thing is
communication, speaking to the attendees.
JM: The manufacturer has to work harder
and harder to make appointments. I was talking to Macy’s VP and DMM of shoes Tony Pell
the other day, and he said that five years ago,
they had 14 buying teams around the country and they all came to New York. Things are
changing.
5/14/09
5/14/09 5:42:14
5:39:04 PM
PM
28
FN MAY
29, 2006
MAY 18, 2009 NEWS
BREAKING
FN
CEO
SUMMIT
Choo Moves Ahead
When the going gets tough, get going.
That’s the strategy Jimmy Choo CEO Josh Schulman is using to steer the high-end label through what he calls “the
most challenging climate in the history of modern luxury.
“No one’s resting on their laurels,” said Schulman during a
presentation on the final day of the summit. “We’re actively
managing the situation. ... The customer is the most important player in our story, and we have to be sensitive to the
changes in these women’s lives.”
So what’s working in the difficult environment? Delivering exceptional customer service, managing inventory and
reducing expenses are paramount, but Schulman said the
company is “turning down the volume, not changing the
channel.”
To drive sell-throughs, Schulman and Jimmy Choo President Tamara Mellon have evolved the footwear mix so that
half of the season’s offering is sold in a pre-collection made
up of a higher proportion of “iconic” Jimmy Choo styles. The
label also is offering more styles at a variety of price points,
from entry-level jellies and espadrilles to big-ticket exotics.
“This strategy was put in place before the recession, but
we’ve benefited from stretching the pyramid up and down,”
Schulman explained.
No matter the price point, Schulman said both value and the
emotional connection for consumers have to be considered.
“How we define value in terms of the customer experience is
very important. A python sandal at $1,395 can have value for
a customer, and it’s a different kind of value than a jelly at
$175, ” he said.
Another success for the company has been Jimmy Choo’s
collaboration with Hunter to create the co-branded croc-embossed Wellie rainboot. The waiting list hit 17,000 after the
boot was featured in the April issue of Vogue.
Schulman also emphasized the importance of reacting
quickly to capitalize on buzz from blogs. For example, one Japanese blogger featured the brand’s star-studded wallet, and
sales jumped 26 times above normal. The company had to act
fast to expedite product development in the factory, but came
back with renewed supply to meet the consumer demand.
This year, Jimmy Choo plans to relaunch its own Website as
part of a visual overhaul, but already online business is up 80
percent over last year.
The company also continues to expand its retail presence
and will open its 100th location this year, with an updated format to accommodate new categories such as eyewear and
scarves. Jimmy Choo’s recent launch of a travel retail shop
in Hong Kong also has been a high point. “This store is a little
jewel box,” Schulman said, “We’re selling both casual shoes
and the most fashion-forward styles at the highest price
points, which is counterintuitive at an airport location.”
As Jimmy Choo continues its global push, Schulman addressed the differences between the U.S. and international
recessions.
“The fundamentals are just as bad, if not worse, in Europe,
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but consumer spending hasn’t slowed down as much,”
Schulman said. The relatively cheap pound and depressed
yuan have attracted customers to shop in London and Korea, respectively, but Spain, Italy and France are challenging markets, Schulman said. Japan is also very difficult, he
added, but “we’re in a different cycle there, so we’re taking
market share.” — By REGINA SMITH POPP
Happiness Incorporated
Everyone wants to be happy.
It’s the big goal in life — and should be a big goal at work, too,
Zappos CEO Tony Hsieh told summit attendees in a keynote address on the second night. Creating a happy workplace is crucial
to building a successful company, he said.
“Having a vision that everyone is passionate about can make a
huge impact on business,” said Hsieh, who has cultivated a corporate culture encouraging employees to embrace their weirdness,
Twitter about argyle socks and join impromptu office parades.
Making the job about more than just work, Hsieh stressed, creates an environment that employees care about and that helps
build a business they want to see succeed. That’s why, he said,
Zappos — which celebrates its 10th anniversary this year — is
evolving its mission beyond customer service and office culture.
Now, Hsieh said, the firm is all about delivering happiness.
“Scientific research ... shows that people are very bad at predicting what makes them happy,” Hsieh said. “The reality is, if
they ever get to that point, they might be happy for a moment,
but it’s almost never sustained.”
FN0518P28,29.indd 28
After looking at research on human behavior, Hsieh said, he
found that happiness is about four things: perceived control,
perceived progress, connectedness and vision, or in other words
“being part of something bigger.”
He has taken those concepts and begun implementing programs
at Zappos that, scientifically speaking, could lead to happiness. For
example, he established a system that allows Zappos employees
to increase their pay by learning new skill sets and incorporated a
program that promotes staffers to slightly higher positions every
six months rather than a larger move every 18 months.
Ultimately, Hsieh said, he wants Zappos employees to be invested in their jobs and committed to the company for the long
haul. And since most people, he said, are simply looking to be
happy — whether through finding a girlfriend or building a career — creating an office environment that contributes to that
goal is a winning situation.
“It’s worth your time,” Hsieh said, “to think about the actual
signs of happiness and how you can apply that not only personally but to your business and your brand.” — By MARCIE YOUNG
5/14/09 6:17:50 PM
05142009181904
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— By—MEGHAN
By MEGHAN
CASSCASS
MAY
FN 29, 2006
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