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Hot Talk: Inside the FN Summit

The industry's change agents sounded off on top issues.

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Rania Masri

Photo By George Chinsee

Ivanka Trump

Photo By George Chinsee

Sam Edelman

Photo By George Chinsee

It was the ultimate strategy session.

The FN Summit, held last Monday at the Asia Society in New York, brought together top vendors, retailers and designers who are shaking up the industry.

The executives sounded off on everything from building powerful brands and compelling retail concepts to keeping up with the fickle consumer through smart digital programs and product initiatives.

To find out how these change agents are leading the way, read on for highlights from the event.

Retail Revolution

In a complex, rapidly shifting footwear market, innovation is the key to success. That was the message from executives at three leading retailers — Famous Footwear, Pedder Group and Level Shoe District — who took the stage to discuss their diverse strategies.

Staying fresh and constantly looking for engagement points online and in-store is critical to ensuring Pedder’s future growth, said Peter Harris, president of Hong Kong-based Pedder Group.

“The fascination now is in modernity,” he said. “Our challenge is to not be complacent. There isn’t one retail format. There isn’t one size fits all.”

The company, which manages more than 250,000 square feet of retail space in the eight cities in Asia, is moving fast to meet the demands of an evolving consumer.

“In China, the middle-class customer upgrades to luxury quickly, which is a big challenge for us. By being a part of the fabric of the community and on the ground, we can reach them. The customer in China is modernizing, not Westernizing,” said Harris.

One way the retailer partners with brands is through its Blitz collaboration program, which has featured labels such as Manolo Blahnik and Stubbs & Wootton, in special spaces at Lane Crawford.

Beyond exclusive product, the firm is pumping up its digital presence, too. For example, Pedder recently created a music video with Korean pop star CL as part of its Kenzo launch.

Famous Footwear has been focusing more heavily on digital efforts as well. President Rick Ausick recalled that as part of parent Brown Shoe Co.’s repositioning, Famous put the brakes on store expansion three years ago, turning its focus to developing a mobile app, which launched last year.

On the broader topic of omnichannel, Ausick pointed out the movement is nothing new for the family footwear chain. “It’s one of those things that everyone is talking about today, but we’ve been in that business for years. The next evolution of having our dot-com orders ship from stores is happening as we speak.”

He noted that is crucial to help the retailer compete against e-commerce players, and the firm is working to cut its delivery times to hours from days. “[Online sellers] have the capability to move faster and build their whole business model around speed. We don’t know that we’ll ever be able to compete that way,” said Ausick. “But we can at least be in the game. If we’re not there, we’re going to lose to our competitive set.”

The chain also has culled its real estate footprint to boost profitability. “We’ve had negative store growth. We’ve closed more stores than we’ve opened,” he said. “We’ve relocated bigger spaces into smaller spaces, so we’ve been able to take our sales per square foot up about 15 percent or 18 percent over the last three years.”

But store growth could ramp up at Famous Footwear. Ausick said the firm plans to bow five to 10 additional doors in 2014 and ’15. “And in the next two or three years, you could see a little more rapid store growth,” he added.

One of the chain’s target markets is Canada, where it added a second location last month, in a Tanger Outlets Center on the northern side of Niagara Falls.

Ausick pointed out the store is performing well so far, even though Famous already has a presence on the American side of the falls. “Yes, we’ve lost a little business on the U.S. side, but the volume we’re doing in Canada is much more than compensating for that,” he said. Later this year, the retailer will debut four more doors in Canada, with seven additional stores planned for 2015.

On the product front, Ausick said Famous had a big win this spring with canvas footwear and has doubled down for the all-important back-to-school season.

“It’s a business we’ve invested in for 10 or 12 years,” he said. “We built that customer around the idea that the key brands would be represented in our stores, with new product and colors and sizes. Sometimes you go get the trend and sometimes it comes to you, and that happens to be the case here.”

Level Shoe District in Dubai has been working to fuel growth across all product categories, from luxury and contemporary to men’s and sneakers, according to Rania Masri, GM of retail for parent company Chalhoub Group.

Dubbed the largest shoe store in the world, at 96,000 square feet, Level, which opened in the Dubai Mall in 2012, capitalized on the market’s accessories-driven shoppers, Masri said. Indeed, Middle Eastern consumers spend $2.8 billion on fashion each year, and 20 percent of that is on footwear, according to the executive.

“We considered this an opportunity,” she said. “We haven’t reinvented the wheel [with our large format]. ... The most important thing is offering a luxury experience, but don’t limit the offering to that. We want [to provide that] even if you are buying Havaianas.”

Part of the firm’s strategy calls for a comprehensive selection of brands from a variety of tiers. Uniqueness is also a priority, and the store launches 100 exclusives each season.

Additionally, Level has backed a number of emerging designers and looks to social media to promote a busy schedule of in-store events.

“We don’t have a heritage [to fall back on], so we need to be innovative with social media,” Masri said, adding that the interactive relationship has informed the inventory. “The challenge was to talk to consumers and curate the space [based on those conversations].”

And while Chalhoub Group does not plan to take the concept to any other international locations, e-commerce will launch in the next year.

“We want to focus on omnichannel and offer the same experience [online that you would get in the store],” Masri said.

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Paul Andrew

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Edoardo Caovilla

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Edgardo Osorio

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Louis Leeman and Erica Pelosini

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Footwear attendees at the summit

Photo By George Chinsee

Brand Architects
In today’s crowded market, it isn’t easy to build a powerful brand.

But Patrik Frisk, Ivanka Trump and Sam Edelman are creating formidable businesses by staying laser-focused on their consumers.

“First and foremost, the customer we have in mind is the millennial. They are incredibly powerful and they’re going to be more so going forward,” said Trump, EVP of development and acquisitions at the Trump Organization, and founder of Ivanka Trump Collection.

“We’re looking through digital to create a platform where we can speak to this woman,” she said. “It’s a mixture of content and commerce.”

(Trump boasts about 1.6 million followers on Twitter, 335,000 on Instagram and more than 800,000 on Facebook.)

She explained that a strong online platform allows her company to capture a larger consumer age range. “My mother’s generation is the first generation that actually buys what their daughters are wearing, not what their mothers are wearing,” Trump said.

Noting that her target shoppers tend to be more influenced by peers than traditional advertising, the designer was quick to point out that her digital strategy is carefully tailored to each platform. Instagram serves as a curated, intimate experience; Twitter — her first foray into social media — underlines the brand’s authenticity; and Facebook is a voice for Trump Collection.

Trump said she ventured into footwear after noticing an underserved area of the market, for chic and sophisticated shoes — and comfortable shoes — at an affordable price.

“One of the biggest surprises is the complexity of making a great shoe,” she said. “So few can do it. Even with some of the great designer brands that nail it on the aesthetic side, the shoes aren’t wearable.”

Trump credited her business partner, Marc Fisher, founder and CEO of Marc Fisher Footwear, with translating and executing her vision. “It’s so key to find the right partner,” she explained. “Marc and I met each other and, two weeks later, we had a deal. He understood my aesthetic and he was able to translate and execute it.”
The polished entrepreneur noted it was her father, Donald Trump, who shared the best career advice: Love what you do.

Still, she admitted her public profile is markedly different from his: “I admire [my father’s] candor and honesty ... but for me, [social media] is about reinforcing the message of what I’m doing, what I’m building.”

While Trump created a brand from scratch, Frisk — president of the Outdoor Americas Coalition at VF Corp. — took on a different kind of challenge when he was charged with overhauling Timberland.

“We focused our brand strategies and decided to grow our men’s casual footwear division and develop men’s apparel,” Frisk said, noting that he adopted a pragmatic timeline for the brand’s realignment to get things right.

“We needed to slow down to speed up. ... We also decided to build a solid foundation in women’s footwear and realign our entire product structure to better portray how the consumer saw our footwear,” added Frisk, who was promoted to his current position earlier this year after a stint as Timberland president.

To ramp up awareness, the brand — which uses the tagline “Best Then, Better Now” — started engaging with bloggers and stylists, began hosting more customer events and became more active in the social media arena.

On the lessons learned during the image overhaul, Frisk said, “We have to lead with the consumer and do our homework, set the plan through formulating a vision, strategy, structure and process, with a focus on collaboration and culture. Next, we have to stay the course.”

Staying the course also has been important for Sam Edelman, founder and president of his namesake brand.

The footwear veteran, who returned to the industry when he launched the business 11 years ago, said he remains true to his original vision: to create affordable, trend-right shoes.

“My [bright green, square] business card is a little introduction to my whole thought process — it’s different, it’s unique, it stands out,” said Edelman, who works alongside his wife, Libby, and son, Jesse.

After many years in the business, Edelman and his team still draw inspiration from the same sources.

“We are influenced by the runway,” he said. “But I don’t look at the shoes. I look at the clothes, the hair, the makeup. I believe shoes are the accessory to fashion.”

Edelman’s trend-spotting abilities have been a big asset for his parent company, Brown Shoe Co., which first took a stake in the label in 2007 and acquired the brand fully in 2010.

“Diane Sullivan has become one of my closest friends, even though she hates when I call her my boss,” Edelman joked.

But the designer and Sullivan are serious about growth: Edelman will open an L.A. store by the end of the year, and 50 to 100 branded locations are slated to roll out over the next few years.

The label also will launch an apparel line for fall. “Today, Sam Edelman has a lot more potential than just shoes,” said the founder.

The New Class
They are the future of footwear.

The creative talent behind Aquazzura, René Caovilla, Louis Leeman Paris and Paul Andrew sounded off on topics ranging from social media and celebrity placements to competition in the market and battling copycats.

They started by expounding on the virtues of innovative digital strategies.

“Access to designers was limited years ago, but with social media [that has changed],” said Edgardo Osorio, president and creative director of Aquazzura, who said he operates the label’s Instagram account himself. “It’s an amazing tool. It becomes something so much more personal.”

But can it affect sales? “When a celebrity wears the shoes [and it goes online], customers will ask where to buy them,” said Erica Pelosini, co-creative director of Louis Leeman Paris.

Things got heated when the conversation turned to companies that imitate their designs. Osorio said he is working to get patents and has even initiated a couple of lawsuits.

But Edoardo Caovilla, COO and creative director of René Caovilla, was more pragmatic.

“The soles are part of the recognition of our shoes, but there is no way to protect [ourselves] from this kind of copying,” he said. “The shoe designer must be very fast-moving with his creativity and change every season.”

For now, carving time in their busy schedules is the biggest problem facing these designers, they said.

Paul Andrew, president and chief creative officer of his namesake label, also runs a consulting business. “It has been ingrained in me how to build a calendar and stick to it,” the designer said, alluding to his past work at Donna Karan and other fashion labels. He noted he crisscrossed the globe during the last month, and visits his Italian factory sometimes three times in a month.

Expansion — especially in branded retail — is the next step for many of the designers. Louis Leeman will soon open a store on Madison Avenue in New York. Construction starts next month, Leeman said.

For his part, Osorio will debut his first store and a company headquarters in Florence, while René Caovilla will continue to develop its chain of shops.

And Andrew said Leeman might soon have competition in the men’s market, as he is considering expanding his collection, as well as adding accessories.

Key sponsors of the FN Summit included 24Seven, First Insight, American Apparel & Footwear Association, Shoefitr, Castanea Partners, TSG Consumer Partners, Cohn Reznick and Two Ten Footwear Foundation.

 

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Marshal Cohen

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NPD’s Cohen: Break the Rules

When it comes to meeting the needs of today’s savvy consumers, storeowners need to change things up, advised Marshal Cohen, chief industry analyst for The NPD Group Inc.

“[Retailers] are steeped in tradition and [must] see how to change things,” he said. “They must learn what consumers want.”

Cohen pointed to the shifts in consumer spending, particularly for the back-to-school season. “It’s no longer a June/July/August business,” he said. Today, it stretches through early fall, with October the biggest month of all. In response, retailers are buying more product, but not necessarily up front.

While innovation drives purchases, said Cohen, consumers can be creatures of habit, and they want to know they can find their favorite items time and again. “Don’t make products obsolete,” he said. “Don’t leapfrog out of [something] they like. Add the new with the old. Keep it long and strong.”

Cohen also dispelled some popular footwear myths, particularly weather-related ones. “Ten to 12 months of the year, consumers want in-season product,” he noted. “Let’s take some of our key items and allow [shoppers] to buy them when they want,” instead of giving up the sale to online retailers who can provide seasonal goods.

And just who is doing all the buying today? It’s not just the kids, Cohen said. Instead of courting the millenials, he encouraged the industry to go after the lucrative baby boomer market, especially since young consumers spend an average of $1.3 trillion yearly, and their combined debt totals $1.1 trillion. “They don’t spend the way we think they do,” he said. “The big growth is with the boomers; however, we’re not going after them.”

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Rob DeMartini

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Advocacy Matters

Rob DeMartini isn’t afraid to speak up. While presenting at the FN Summit, DeMartini — vice chair-man of the American Apparel & Footwear Association and president and CEO of New Balance — outlined the trade organi- zation’s advocacy efforts in Washington, D.C., which remains in a state of gridlock.

“The AAFA is an advocate for important issues impacting the footwear and apparel industries, such as corporate social responsibility, the environment, increasing business efficiency andcommunicationsstrategies,”DeMartinisaid. “Ourmotive for lobbying in Washington is to help influence laws and regula- tions to help your bottom line.”

In addition to providing actionable solutions, the AAFA achieves its mission by providing members with valuable intelligence to make informed business decisions that enhance earnings and mitigate risk, according to DeMartini.

Another way the association wields influence is by communi- cating the industry’s goals and needs to the public to deepen its understanding and knowledge about the sector, DeMartini said. Most recently, he added, New Balance benefited by teaming up with the AAFA to force the recognition of a law stipulating that U.S. soldiers must have American-made uniforms, including footwear.

DeMartini said the law, called the Berry Amendment was passed in 1941, but stopped being followed in 2011 in regard to footwear. Following lobbying efforts in Washington by the AAFA, New Balance and its competitors, the law was again implemented in May to include athletic shoes.

“The AAFA was very helpful in working the back channels about this business issue, and it’s a great example of what this powerful organization can help you do,” DeMartini said.

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