Sneak Peek at Fall 2011 Clog Styles

NSRA Report China Explained Israeli Comfort Running Stores An Exclusive Excerpt Sourcing is Changing Milk, Honey, Footwear The Four Best in America CLOGS 2.0

Ariat Bella and Rockport Katja Studded Mule

Fall Fusion: Sneak Peek at Fall 2011 Clog Styles

A Formula4 Media Publication • November/DECEMBER 2010

Editor in Chief Mark Sullivan [email protected] 646-319-7878

Editor at Large Cara Griffin November/December 2010 Art Director Francis Klaess

Contributors Michael Jacobsen Mike Kennedy THE FOOTWEAR EYE...... 6 Nancy Ruhling Report from The Footwear Event; Fall 2011 Trend Forecast Is Simple Tim Sitek Emma Johnson TREND INSIGHT...... 10 Publisher Pac Boots Help Drive Increased Boot Sales. The “other” boot is hot. Jeff Nott [email protected] 516-305-4711 THE LAND OF MILK, HONEY AND FOOTWEAR...... 12 Israel is making a name for itself in the international comfort-fashion market. Advertising Beth Gordon INVENTORY, MARGIN & OPEN-TO-BUY...... 17 [email protected] 949-293-1378 Inventory is the largest asset on a retailer’s balance sheet; it can also be the least productive. Our exclusive excerpt from the 12 Jeff Gruenhut soon-to-be-published NSRA Business Performance Report. [email protected] 404-467-9980 CLOGS 2.0...... 20 Troy Leonard A blend of classic clog style with funky, fashionable touches is a hallmark [email protected] of new clog collections for the Fall 2011 season. 352-624-1561

Sam Selvaggio [email protected] 212-398-5021 Ariat Stella: Page 20

Production Michael Jacobsen 201-396-7005 [email protected]

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Naot Ashley: Page 12

CHINA EXPLAINED...... 42 What happens in Chinese factories today will impact the shelves of footwear retailers in the next 18 months. PO Box 23-1318 Great Neck, NY 11023 Phone: 516-305-4710 IMPLUS’ POWER PLAY...... 48 Fax: 516-305-4712 The North Carolina company has a portfolio of brands to plug into its www.formula4media.com high-tech sales and distribution machine.

Formula4 Media Publications Sports Insight LINES WE LIKE (AND WHY)...... 50 42 Footwear Insight Ecco’s BIOM trainer; Blundstone’s Winter Boot; Keen’s Utility line and Outdoor Insight Tsubo’s spy-inspired look. Cover photo: Frank James Team Insight Textile Insight Running Insight Soccer Insight

Footwear Insight® is a trademark of Formula4 Media, LLC, Great Neck, New York. ©2010 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.

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Finding the Right Tone

his month marks my 15th year covering the shoe business. No need to send flowers. I T have thoroughly enjoyed it and feel fortunate to be working in a lively, dynamic business, but I am concerned that the tenor of how business is done is changing and not for the better. When I attended my first FFANY Show 15 years ago, two things struck me about the industry. First, the industry was a little dysfunctional about its trade shows. And secondly, the people were incredibly nice and placed a real value on relationships and doing business in a civilized manner. A decade and a half later, the industry is still goofy when it comes to trade shows. But of far greater concern than that, the civilized tone that has always characterized the shoe business seems to be changing for the worse. Admittedly business is challenging. And everyone who is sufficiently fortunate to have a job is doing the work of two or three people. Everyone is stressed and pressured. But I would say that’s no excuse to behave badly. Vendors tell me retailers do not return calls in a timely manner or don’t return them at all. Retailers say vendors only care about shoving product down their throats. Whatever happened to asking “How’s Business?” and just letting it flow from there? A well- respected exec who runs the American division of a global brand told me about a trip he recently took to California. He was travelling with his West Coast rep and visited about a dozen stores in a week. He said they never took the sample bag out of the rep’s car and had great meetings. “We just talked about business,” the exec told me. “How things were going for them, how we could help, and what the future held. It was a great trip.” In fact, he said as one store owner was walking him to the door, he stopped and shook his hand and said “Thanks, that was a great meeting.” As an industry, we need more great meetings where execs from both sides of the fence get together and share ideas on how to move the business forward. Product is part of the conver- sation for sure, but not the only part. People are ticked off and scared for their jobs, their pay- checks and their ability to provide. At times like this, the human touch is required. Not e-mails or texts or unreturned phone calls. Technology has clearly become a barrier to efficient, effective communication. Sure we send tons of info to one another, but for the most part I feel like we’re not getting a lot done. I also realize that the tone in the country has changed and maybe what we’re seeing in the shoe business is merely a reflection of that. The political debate in our country appears to have taken on the substance and tone of a high school sporting event. “You guys suck,” says one side. “You suck worse,” says the other. When it comes to politics, I firmly believe that both sides suck. But when it comes to the footwear business, I have higher standards. I still believe retailers and vendors can work together for the mutual benefit of the industry. With politics, the situation in Washington seems beyond our control. But in our business, we can control the debate and we can certainly control how we treat one another. Happy Holidays and my best wishes for a healthy, prosperous and civilized 2011. l

The Footwear Eye TREND SPOTTER: Trends are really more important than ever. We create need with trends, by creating products that people feel they need to buy. Industry Vets Introduce Shoes With a Twist

everal industry veterans are behind the new iTwist line, which allows consumers to change Sthe look of their shoes by swiveling its tongue. The iTwist brand is being produced by the partners at U Turn Sports, which include Ray Tonkel, Lindell Jones and Don Cox, who have all worked at major shoe brands during their careers. The swivel technology was used on The K-Swiss Tongue Twister collection, which the U Turn partners say sold more than 20 million pairs. The K-Swiss line was a high-end leather line of athletic shoes, but the iTwist collection features shoes with two color canvas uppers, high-cushion comfort sockliners and vulcanized construction. The iTwist line will begin shipping to retail in 2011.

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While a large part of Leow’s presentation focused on key Fall 2011 color palettes – metallics, pinks, purples, oatmeals, olives, among others – perhaps the most prescient information came in the form of cultural Fall 2011 Trend Forecast influencers. “We need to really understand what is driving consumer decision making because at the end of the day if consumers aren’t buying it, then it is not going to be a trend,” he said. Simplicity Leow was speaking on behalf of his client, Mudpie, which is the UK’s largest trend forecasting service, with an international network spanning 50 countries and branded offices in 17 locations, including & Clever Asia, Africa, Australia, the Americas and Europe. Mudpie publishes forecasted color information two years ahead of season. An overarching, global Design Michael Leow feels cultural trend that that a focus on Leow focused on was simplicity and the idea that environmentalism consumption and decadence and earth-friendly are “out,” while motifs such as minimalism, simplicity, issues is being functionality and clever counterbalanced by design are “in.” Leow used an apocalyptic fear. the example of IKEA and its simple, functional designs rands may already be looking ahead to 2012 and beyond when it as one touch point for this Scandinavian trend of simple beauty that comes to trend forecasting for product design, but for retailers is forecasted for Fall 2011. B deciding what to bet on in their buying decisions, understanding On the flip side, another key word that Leow bandied about was key trends for Fall 2011 is timely. That was the message delivered during “primal.” Here, he noted that a focus on environmentalism and earth- a talk by Michael Leow, founder and CEO of Hong Kong-based Creative friendly issues was counterbalanced by an apocalyptic fear. This balance Trends Services, during a presentation at the Sports Source Asia trade brings to mind words like natural and raw. He noted that the worldwide fair in Hong Kong in late October. popularity of Mixed Martial Arts (MMA) fit into this theme and predicted “Trends are really more important than ever,” noted Leow. “When the that an MMA fashion influence would be felt more strongly in sportswear economy is strong, if you put a product on a shelf, people will buy it. But for Fall 2011 — loose designs for spa wear and gym wear, along with now, due to the global financial crisis, people only go out to buy things MMA style fusing with urban apparel looks, too. that they need to buy. It’s very apparent to most people that they do not Another key factor of note is that of global social networking, which need new clothes. They do not need new shoes. So the industry must Leow noted is serving to break down barriers and further reduce create the need for the consumer. And we create need with trends, by differences in fashion style across continents and cultures. creating products that people feel they need to buy.” — Cara Griffin

8 • Footwear Insight ~ November/December 2010

TREND INSIGHT The ‘Other’ Boot is a Hot Category, Too Pac Boots Help Drive Increased Boot Sales

inter boots, growing every year for the past 10, have become sales will most likely return to more normal levels. Sales for the Pacific the outdoor industry’s darling children. With specialty store Northwest, however, where more snow and cold is expected, could surge. W sales surging tenfold between 2001 and 2009 it is obvious why The growth was systemic and across the board. While major players retailers and Wall Street lavished their attention on the wildly popular, such as Sorel, Itasca, and Kamik all saw growth, so did many others. In fashionable all-leather boot category. However, over the past 12 months fact, nine of the top 10 Pac boot brands had double or even triple digit the leather category’s less glamorous sibling, Pac boots, deserves some gains over the past 12 months. of the attention, too. Best described as the “classic” insulated winter boot When stocking a winter boot wall this year, don’t forget to promi- with rubber soles, these warm boots, up 50 percent in the rolling year, nently display junior Pac boots, which surged 119 percent across all were some of the hottest sellers this past winter. channels and brought in one-third of all Pac boot dollars. Junior Pac After strong holiday sales in 2009 Pac boots only continued to pick up boots outsold junior leather boots four to one and while they had a steam the rest of the winter. Leisure Trends Group’s Outdoor RetailTRAK™ significantly lower retail price ($34 versus $64), still brought in nearly reports that this past holiday season, Q4 2009, all outdoor winter boot dol- twice as many dollars at retail. In adult styles, women’s Pac boots lar sales in all three channels grew 14 percent over Q4 2008. Pac boots brought in 55 percent of the dollars compared to men’s 45 percent. shot up 26 percent in units and 33 percent in dollars. Compare that to Specialty retailers look poised to capitalize on this upward trend. At all leather boots, which fell 2 percent in units but still managed to gain 6 the end of this September, specialty stores had approximately 72,000 percent in dollars thanks to higher retail prices. Since January, Pac boot Pac boots already on-hand, a 21 percent increase over last September dollar sales surged 88 percent, moving from 24 percent to 32 percent of all and the largest early season stock in at least four years. This winter, winter boot dollar sold. Demand was so high that in Q1, specialty retailers the ugly duckling of the winter boot category will almost certainly turn maintained a 44 percent margin, the highest in at least four years. At the out to be the golden goose instead. l end of April, sell-through stood at 86 percent, up from 84 percent last year and just 80 percent the year before. “Pac boot sales increased across all three outdoor store channels but PAC BOOT GROWTH YTD (%) have been especially strong at core outdoor chain and regional sporting good stores,” says JJ Rudman, a retail analyst with Leisure Trends. Sales at chain stores, which made up 58 percent of all outdoor boot dollar sales in All Channels* PAC Boots 2009, increased an impressive 113 percent this year-to-date. Internet sales increased 80 percent year-to-date and specialty stores 43 percent. 113 Southern states, which shivered through one of the coldest winters on record this past year, helped drive many Pac boot sales. Year-to-date, Southern specialty store sales shot up a head-turning 190 percent, but the West, up 50 percent, and Mid-West, up 33 percent, also saw significant specialty store growth. A La Niña weather pattern is predicted for this winter so the South should return to its usual balmy temps and Pac boot 87 80 PAC BOOT SALES (%) 86% Sell-through at the end of April—up from 84% last year and just 80% the year before. 43 JR. MEN 42 33% 33%

WOMEN 34% BOOTS Winter PAC TYPE CHAIN INTERNET SPECIALTY Boots

*Specialty Chain, Intrernet

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Trend Insight is a feature in Footwear Insight that includes consumer research and retail point-of-sale data from The Leisure Trends Group. Data in this issue’s report are based off of Leisure Trends Group’s LeisureTRAK® report. The LeisureTRAK report is developed from a quarterly poll of 1000 American adults ages 16 and over. The results are projectable to the U.S. population. With over 20 years of historical data, the LeisureTRAK report is the definitive source for information about Americans at play. For more information on Leisure Trends Group or its LeisureTRAK report contact Julia Day at 303-786-7900 ext. 107 or [email protected]. For additional information on Trend Insight, contact Jeff Nott at 516-305-4711 or [email protected].

10 • Footwear Insight ~ November/December 2010

TRENDS

Israel is making a The Land of name for itself in the international Milk, Honey comfort-fashion market & Footwear

By Nancy A. Ruhling The company, which was founded in 1981 and is based in Tel Aviv, pairs an Israeli team of designers with an Italian designer to create styles ention Israeli products and footwear is not the first thing that that are in sync with those of the major fashion cities of Europe. The comes to mind. Despite the fact that shoe manufacturing long limited-edition collections are divided into four main categories — Trend, has been a vibrant part of the nation’s history and economy, Night-Line, Casual and Israeli Fashion. They are introduced in March and Mit is only recently that brands have started to make real September and are marketed through the company-owned chain as well strides in the U.S. market. as through a national distribution network. Since the late 1980s and early 1990s, a handful of Israeli companies have “The Israel Fashion line is tailored exclusively to the Israeli woman,” been ahead of the heel in the comfort category, producing shoes that feel says Efrat Akron, marketing manager. “It addresses the special nature and look good at a time when those two traits were of her special local needs. This solution is not deemed incompatible. available from other competing companies. “Israel still doesn’t get recognized as a large BeautiFeel’s And our Israeli factory allows us to produce Fall 2011 producer of shoes,” says Ayelet Lax Levy, product collection fashionable shoes quickly.” and marketing manager of Yaleet, the distributor includes The company creates brand loyalty by offer- this set of Naot footwear in the United States. “But in the of stylish ing innovation. “Our customers like the sur- Euro-comfort category, Naot is considered one low heels. prise effect and build an emotional connection of the leading lines of in the United States. In the with the brand,” Akron says. “We bring them Euro-comfort category, Israelis are particularly the values of fashion, luxury and quality.” knowledgeable since most people in Israel do a lot of walking, which requires comfortable shoes.” Naot Primes its New Pump Israeli brands like Naot have established savvy When it comes to Israeli Euro-comfort brands, design teams to create comfort-fashion footwear that most U.S. consumers immediately think of Naot is catching the eyes of the international market. sandals and slip-ons. Following are profiles of some of the major players. Next year, however, the brand is introducing a fashion pump for the first time. BeautiFeel Dresses Up Comfort “We’re very excited about this,” says Yaleet’s BeautiFeel’s name says it all: The 21-year- Ayelet Lax Levy. “We hired a set of experts old brand, whose main factories are in Rishon from around the industry to develop a line for LeZion and Haifa and whose U.S. unit is based in us, and they created Prima Bella. It has all of Chatsworth, CA, offers a variety of dressy heels the technology that is in our other Naot shoes, and casual flats that look as beautiful as they feel. including our famous cork and latex foot bed.” The brand, which is sold in more than 1000 Naot, which is carried in more than 200 high-end shops in Israel, the United States, Canada, stores in Israel and is sold on five continents, Australia and New Zealand, is made of natural counts the United States as its biggest market. materials imported from tanneries and factories (In Israel, the brand is known as Teva-Naot; in Italy. Teva, an unrelated performance shoe brand that introduced the world’s When president Ami Bar-Nahor established BeautiFeel in 1990, a few first sports sandal in 1984, is part of the California-based Deckers Outdoor. manufacturers were making shoes that were comfortable and stylish, but It is manufactured in China and is not sold in Israel.) he says that no other company had created a line based on the concept “In 1989, when we started in my parents’ basement, we were among of “dressy comfort.” the first to combine fashion and comfort,” says Levy. “When women first “BeautiFeel women don’t have to compromise,” he says, adding that he try on our shoes, the first response is usually, ‘oh, my gosh!’ They are came up with the concept after noticing a void in the U.S. market during shocked to find they can get cute, comfortable shoes.” business visits. “They can have the best of both worlds.” Most of the brand’s sales come from specialty retail stores, many of which also sell on the Internet. Although the brand includes men’s and Caligula’s Fashionable Footprint children’s shoes, 80 percent of the buyers are women. Caligula, which is Latin for “little soldier’s boot,” has made a place for The brand, which looks to American and European fashion trends for itself in the market by designing, manufacturing and marketing limited- ideas, introduces two to three lines a season. “We are currently experienc- edition, high-style footwear, including a fashion-conscious lace-up military ing a large growth with our current retail mix,” Levy says. “And we expect boot, for Israeli women. this trend to continue next year.”

12 • Footwear Insight ~ November/December 2010

TRENDS

From left: Caligula’s limited-edition high heels; Source’s Ibex, top, and Capra are new to the U.S. market; Naot’s Karenna Platinum, top, and Mona Flame Shimmer are fashionable flats.

Source Bringing Sandals to U.S. Market “Other sport sandals are notable for looking busy and have lookalike Source, the Israeli-based maker of hydration systems for the con- designs,” Brown says. “And they appear to be jammed full of technical sumer and military markets and consumer sport sandals for more than features. Source sandals, by contrast, are free of clutter.” 20 years, will dip its toes into the North American consumer market Source sandals are a cut above, Brown says, because: next year with its new adventure sandals. • The non-slip rubber foot beds are comfortable but are designed to be “While the brand has been very successful at home and in Europe, unnoticeable, keeping the look stylish. the only U.S. business to date has been in military hydration, including • The X-strap is a simple and effective way to stop rubbing and tightening the U.S. Marine Corps,” says Tracey Brown, head of North American as the wearer walks. “Source elects not to make it a design element,” sales at Source. “But many consumers and retail merchandising teams Brown says. “You know it’s there when you wear a pair.” are already familiar with the Source hydration brand’s being the origi- • Flip-flops, which are a big sales category in the United States, are made from nal equipment manufacturer partner with top outdoor brands like The cheap hard plastic and are known for being very uncomfortable. Source’s North Face.” Balbalas are made of rubber, which is softer and more comfortable. Source sandals, including the new adventure collection, stick out in “Source’s new adventure sandals have gotten a great reception from a crowd because their design is functional and technically savvy yet retailers and consumers,” she says. “They love the innovation, quality simple and beautifully designed. and designs.” l

A Shop With a Well-Heeled History Khalifa Shoes, a Jerusalem Icon, Has Been Fitting Feet for More Than Half a Century

the heart of Jerusalem on Jaffa Street across from Zion Square, there’s a little shoe store that has a big reputation. Khalifa Shoes, a family-run shop that has In been in business for more than a half century, is one of the larger comfort shoe stores in Israel, a monumental feat considering that of the shop’s 1550-square feet only 322 of them are devoted to customer service. Sharon Khalifa-Gueta, whose grandfather, Meir Khalifa, started the shop and whose father, Jacky Khalifa, is known as a “doctor for shoes,” says the comfort category, always a good seller, has taken off ever since manufacturers began pairing comfort and style. “Our service is known all over the world,” she says. “We have the experience of more than 55 years – my grandfather, who is 93 and still comes to work every day, had a different store that he established in 1935 – and we put all of our knowledge and experience into trying to find the best shoes for each customer. We know that each person’s needs are different, and we are not afraid to tell people not to take something if it is not right for them.” Some 75 percent of sales come from Israeli brands, notably Teva-Naot (the Naot brand in the U.S. market) and BeautiFeel; the other 25 percent is international brands. “We are proud to say we carry the largest selection of Teva Naot in the world,” says Khalifa- Gueta. “Even Teva-Naot itself doesn’t have such a selection in its dedicated chain stores.” Most customers come to the store, which is a tourist destination, and there are no plans for expansion. Some three to five percent of sales come from the Internet. “I have to honestly tell you that my father and grandfather are totally in love with Jerusalem and with this specific location,” Khalifa-Gueta says. “That’s why we aren’t moving to a different location or bigger store.” — By Nancy A. Ruhling

14 • Footwear Insight ~ November/December 2009

ANALYSIS The Greater Outdoors. Chapter Excerpt from the NSRA Business Performance Report 2010

A FORMULA4 MEDIA PUBLICATION • JULy/AUgUsT 2010 A FORMULA4 MEDIA PUBLICATION • MARCH/APRIL 2010 The Time is Right For Inventory, MarginOwner’s Manual. Accessible Adventure

2010 / 2011 Business The only comprehensive financial overview of owner-operated shoe stores in the United States, & Open-to-Buy providing in-depth analysis and benchmark numbers on: Performance n Sales - by gender, category, store and internet Report n Operating expenses n Wage & salary costs n Inventory and margin Paul Erickson & Ritchie Sayner, RMSA n Profitability cashing in or a typical shoe retailer, inventory is the largest asset on the balance sheet. on Bike Unfortunately, for the typical shoe retailer, inventory is also the least productive on commUteRs the balance sheet. With turn rates averaging just above 2.0 a year, this means the F average shoe store has almost six months’ supply of unsold inventory at any given time over the course of the past twelve months. Racking it Up CAmping new playeRs in the categoRy It is obvious from the lack of increase in inventory turnover that shoe retailers as a group The new FAmily Business were more or less complacent with the status quo, as opposed to pushing the envelope, the gReenest Rep gRoUp in ameRica hydRATion Review when it came to maximizing upside performance from their inventory. Studies have shown that, depending on the type of shoe store you own, anywhere from 70-80 percent of your sales come from inventory that is less than 13 weeks old. Consider that number carefully: Stock that is less than 13 weeks old may represent only 20 percent of your stock, but 70-80 percent of your sales come from that portion. Outdoor Insight was introduced to the market in 2009 as a special section of Sports Insight focused on www.nsra.org New goods always trump old. What sells best? Freshly unpacked new merchandise, outdoor retail. Interest in Outdoor Insight has steadily grown along with its advertising base. Moving forward, Required reading for independent shoe retailers. received just before customer demand peaks — or inventory left over from last year that Outdoor Insight will publish as a stand-alone magazine in 2011. Outdoor Insight remains focused on the big picture complimented by articles featuring trends on consumer purchases and analysis of the latest in NSRA members: $295 footwear and textile innovation that only Formula4Media publications can offer. We call it a fresh perspective Non-NSRA members: $695 on the outdoor retail market. Published four times each year — Jan/Feb, Mar/Apr, Jul/Aug, and Sep/Oct — Order your copy today at Inventory Turns of Survey Participants store.formula4media.com we reach the retail stores that drive the business in the outdoor category whether or not they attend all the NSRA Ad (8.5x11)-01.indd 1 shows. And for advertisers, we’ve increased our circulation and held our ad rates. We give good insight. You get greater results. Find out more by contacting your account manager. 2.50

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To subscribe: storeformula4media.com 0.75 Inventory Turnovers 0.50 Outdoor Insight Seminar Series No. 2 0.25

Insight and Analysis on Consumer Trends in Outdoor Purchases 0.00 7:15 AM – 9:00 AM, Salons A-C, Friday, January 21, 2011 Marriott Downtown, Salt Lake City

Speaker: Julia Day, Leisure Trends Group; Moderator, Lou Dzierzak, Managing Editor of Outdoor Insight Concept 2-5 Stores Single Store Street Front FreestandingFamily Store Knowing who is coming into your stores and what is driving them there is footwear, and accessories to more effectively shop the winter market. 6 or More Stores High PerformersLow Performers Less than $350,000-$649,000$350,000 Combination Stores a key to meeting their needs and ultimately getting them to buy. Perfectly Breakfast will be available at 7:15 AM with an opportunity to network with Traditional Multi-Line $649,000-$1,000,000 Strip or Lifestyle Center timed for the start of Day 2, Outdoor Insight gives attendees a birds-eye the editors of Outdoor Insight and the executives of Leisure Trends Group Greater than $1,000,000 view of the latest consumer shopping trends of the outdoor consumer. prior to the presentation. Presented by Julia Day of The Leisure Trends Group, with their point-of- sale data combined with a quarterly poll of 1,000 Americans adults aged Retailers and brands are welcome. 16 and over, attendees will hear about current trends in outdoor apparel, Seating is limited. Please RSVP to [email protected]. November/December 2010 ~ Footwear Insight • 17

OI AD 11-2010.indd 1 11/4/10 5:30 PM ANALYSIS

you didn’t clear because you thought it would sell this year? Independent footwear retailers took an average initial mark-up of It is not just how much inventory you have. It is how much new 54 percent in 2009, down from both 2007 and 2005 when the numbers inventory you have. The financial health of your business is in direct were 57.4 percent and 56.8 percent, respectively. On maintained mark- proportion to the percentage of inventory that just arrived. up, the news was a little better: 47.5 percent in 2009, versus 48 percent The old rule book has to change. You have to give the customer a in 2007 and 46.5 percent in 2005. reason to shop your store. If you only deliver new merchandise twice However, inventory turn decreased from its 2007 high of 2.4 – or a year, if you only turn your inventory twice a year, then there is only 21.6 weeks of supply – to 2.1, the same rate as in 2005. The faster a reason for your customers to come to the store twice a year. turn in 2007 may, in retrospect, be more reflective of consumer

Retailers’ Use of Vendor Websites (%)

5 Do Not Use 8 10 Use to Obtain Marketing 68 55 Information and Images 57 84 Check Stock Availability 43 47 61.3 Check Status of Shipments 57 63 79.8 Place & Check Orders 50 59 17.7 Pay Online 14 15 0 10 20 30 40 50 60 70 80 90

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20.0 17 and non-members for 14.7 $695. The report is based

% of Initial Orders Placed % of Initial Orders on in-depth data gathered 7.9 10.0 7.5 from more than 100 of the top independent shoe 0.0 stores in America and fea- 1999 2001 2003 2005 2007 2009 tures reports and analysis on sales, inventory, management, advertising, 1-2 months 3-4 months > 4 Months occupancy expenses and much more. To order your copy, please visit: http:// store.formula4media.com

18 • Footwear Insight ~ November/December 2010 spending patterns than of retailers’ strategic efforts to move inventory more quickly. Yet it is important to remember that an improvement of a Key Inventory Performance Indicators single week in annual inventory turnover typically increases cash flow by approximately one percent of annual sales. 2005 2007 2009 Interestingly, use of technology to record inventory is increasing. The number of retailers using UPC codes or vendor barcodes was 37.3 Inventory Turnover 2.1 2.4 2.1 percent, up from 31.1 percent in 2007 and compared to 44.9 percent in 2005; the number using their own bar codes rose to 59.3 percent, Maintained Margin 46.5% 48.0% 47.5% showing solid growth over 2007 (45 percent) and 2005 (43 percent). An accurate open to buy (OTB) is where better inventory management Initial Markup 56.8% 57.4% 54.0% begins. OTB is a tool that, in the hands of a fully committed retailer, can profoundly improve financial performance. It is arguably the most important Markdowns 23.6% 22.0% 10.0% tool for keeping inventory levels in line with realistic sales forecasts. OTB plans are typically done for a single season, say Spring or Fall, and generally – though not always – in six-month increments, depending on the commitment requirements of the particular classification. A good typically can lead to fashion miscalculations and aggressive discounting planning program is not static. It should revise itself monthly, based on that kills profits. the rate of sale in each classification, amount of markdowns needed or Going forward, shoe retailers need to set their OTB plan turn rates taken, and other factors. A good rule of thumb for the current economic closer to 3.0 times a year. If we plan for 3.0 and achieve 2.5-2.7, what a climate would be to consider spending no more than 60 percent of the huge improvement on cash flow and profits that would be. season’s OTB upfront, reserving 20 percent for fill-ins and 20 percent for Not using an open-to-buy plan in today’s retail environment is like opportunity buys. Obviously, this guide will vary, based on type of store driving a car without insurance or building a house without a blueprint. and the classification involved. It is dangerous — and sometimes the outcome can be disastrous. l Results of poor OTB planning or no planning can be quite costly and generally lead to inventories that are out of balance. Under-planned Paul Erickson is senior vice president for client services, and Ritchie Sayner is classifications lead to missed sales, whereas over-planned categories vice president of business development at RMSA, www.rmsa.com. CLOGS 2.0

Ariat Bella CLOGS 2.0 A blend of classic clog style with funky, fashionable touches is a hallmark of new clog collections for the Fall 2011 season. While traditional clog silhouettes and a focus on comfort remains key, the style quotient is also a major part of the puzzle, with a push towards the clog boot and other clog fusion styles from several brands. fall Materials trends to watch include stitched details in genuine leather, pop colors, as fusion well as animal skin prints, earth tones, black and white motifs and funky looks with prints, buckles and studs. a Dansko’s Fall 2011 line sees the trend moving towards a fusion of styles. For example, sneak the Rylan, the latest style from Dansko’s popular Rio collection, is a marriage of an American Western-inspired boot meets Danish clog — with a fashion twist. Another peek style, from the Sanibel collection, is a clog-inspired rain-boot in a Frogs in Clogs pattern. at Comfort and functionality are also stalwarts for 2011, of course. “Unique, fun and fall wearable” is the design vision for the Alegria Fall/Winter collection in 2011. The goal is to present new colors and materials that are wearable and are a natural choice for 2011 the woman who wants comfort and fashion. Alegria is introducing several styles in the clog Professional collection because of the brands’ following among nurses, who say they love their Alegrias because there’s no break-in time. The Alegria memory foam molds to styles the unique contours of the wearer’s foot, offering a custom fit every time.

Also, the Massachusetts-based, Swedish-made clog brand Cape Clogs is offering a Limited Edition Vasa line of clog boots that hits retailers for Fall and Spring 2011. Inspired by the simple wooden clog, the Vasa, along with clog boot styles from other manufacturers, meshes well with the modern fashion trend of skinny jeans or tights with boots. Also look for the clog boot trend to be evident in collections from brands such as Rockport and Merrell.

November/December 2010 ~ Footwear Insight • 21 CLOGS 2.0

ROCKPORT ROCKPORT

The Katja Studded mule, style K59108 in black, is part of The Katja Shearling mule, style K59106 in dark brown, Rockport’s Fall 2011 line. It marries a fashion-forward combines comfort and fashion thanks to its cozy liner, silhouette with interesting stitching details. color accents and studded detailing.

ALEGRIA ALEGRIA

“Unique, fun and wearable” is the design vision for the For Fall 2011, Alegria is introducing several styles in its Alegria Fall/Winter collection. The goal is to present new Professional collection, where the brand has a following colors and materials that are wearable and fashionable. among nurses who appreciate the lack of break-in time.

ARIAT ARIAT

The Aurora print mule is an addition to Ariat’s popular Tesoro Also part of Ariat’s Tesoro collection, the Stella print clog exemplifies collection. It features a unique combo of materials and stitch details. the Fall 2011 “funky comfort” trend with its animal skin print.

22 • Footwear Insight ~ November/December 2010

CLOGS 2.0

MERRELL MERRELL PATAGONIA

The Encore Clog is fashionable and The Encore Clog Boot provides lightweight The Better Clog Boot is part of Patago- functional with pigskin lining for comfort durability and has an oiled nubuck nia’s Fall ’11 Better Clog collection. It uses along with an air cushion in the heel leather upper along with an air cushion in environmentally conscious leathers and and a sticky rubber sole. the heel and a sticky rubber sole. an up to 20 percent recycled rubber sole.

DANSKO KEEN PATAGONIA The Chambers Clog puts a focus on The Better Clog Jane is lightweight and New for Fall 2011 in Dansko’s new Sanibel comfort. Lined with microfleece, it also has a full grain leather upper, along with collection is this clog-inspired rain-boot has leather stitches across the instep and a latex footbed and pigskin linings for in a fun Frogs in Clogs pattern. a rugged rubber outsole. comfort and durability.

FLOJOS ECCO

Known for its flip-flop line, Flojos recently The Kimberly Clog has a wood base, but is in- launched into the clog category as well. Shown fused with comfort technology to ensure feet here is the Albany, a faux-sherpa lined clog. stay comfortable and supported all day long.

DANSKO CAPE CLOGS FRYE

The Rylan is the marriage of an Made with Northern European wood and The Candy Lace clog from Frye American Western-inspired boot meets genuine Italian leather uppers, the features a top-stitched leather upper, Danish clog — with a fashion twist. Limited Edition Vasa Clog Boot features braided detailing, a durable rubber Shown in Crazy Horse leather. chic styling and 2.5 inch heels. sole and quick slip-on access.

24 • Footwear Insight ~ November/December 2010

Thank you for helping us build a better footwear marketplace

2010 Retailers in Attendence: Abbadabbas Alamo Shoes OUR BLUEPRINT LEavEs Alan’s Shoe House Bananas Inc. Big N Little Shoes Boulder Running Company Buck’s Shoes a mORE ImPREssIvE fOOTPRINT. Cleary’s Shoes & Boots Comfort One Shoes Comfort Shoe Specialists Comfortable Soles Conns LLC Cool Comfort Shoes Cornblooms Country Shoe Shop Dick Pond Athletics COmfORT Discovery Prom & Merch Dunhams Sports Easton Shoes Elements Eneslow, Foot Comfort Finish Line Fit To Be Tied Fit2Run Foot Solutions, Scottsdale Foot Solutions, St. Claire Shores WELLNEss Footwise Fosters Shoes Golden Shoes Golden Legs Goodfeet Hanigs J. Hathaway Shoes Jensen Shoes Karavel Shoes Kaufman Shoes Lamey-Wellehan Shoes Lasser’s Shoe Fly Laurie’s Shoes Littles Shoes RUNNING Lucky Shoes Luke’s Locker Mephisto Great Lakes Shoe Co. Naperville Running Company OUTDOOR New Balance Shoes, Crystal Lake Nordstroms Playmakers Schnee’s Boots & Shoes Sears Shoe Mill Shoelace, Inc. Sikes Shoes Sole Survivor Sound Feet Shoes Stan’s-Fit For Your Feet WORK The Bootery The Country Cobbler The Shoe Crate The Shoe Galley The Shoe Market The Tannery Tops For Shoes Uncle Dan’s aCTIvE Urban Sole V&A Bootery Vernon Powell Shoes LIfEsTYLE VIM Vince Canning Shoes Vose-Sanders Bootery Waxberg’s Walk Shoppe Wesley’s Shoe Corral Wilson’s Shoes Working Person’s Store

2010 Brands: The Footwear Event 2011 will have specific conference content for best practices in six featured categories. Aetrex Aravon Arcopedico Avia Discover what these retailers alreaDy know. Blundstone CAT Chaco Cushe “Great opportunity to network with the industry leaders” Dansko Doc Martens Doctor Specified Hosiery “An unexpected fantastic event” El Naturalista Foot Petals “We’ll be bringing on new lines at our store because of this event” Harley-Davidson Hickory Brands “This is the most convenient beneficial event for the retailer I have been involved with” Hi-Tec Hush Puppies Jambu “Enjoyed talking to vendors and spending time with them” K-Swiss Karnan Associates Keen Klas Shoes we’re builDing a better footwear marketplace. be part of it. K-Swiss Mephisto Merrell Naot June 27-29, 2011 New Balance New Balance Performace Socks The Navy Pier and W Lakeshore Hotel • Chicago pw minor Sanita Exhibitors contact: Beth Gordon, Show Director Sebego 949-293-1378 [email protected] Soles 4 Souls Spenco The North Face Retailers contact: Mark Sullivan 3Point5 646-319-7878 [email protected] Treksta Wigwam Mills www.thefootwearevent.com

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INSIGHTOn WELLNESS

EARTH

5 MAJOR DANSKO BRANDS BIRKI’S INTERPRET AETREX TODAY’S ROCKPORT HOTTEST TREND

November/December 2010 INSIGHTOn WELLNESS

sn’t it amazing that consumers now believe

that shoes can actually contribute to leading

a healthier, even longer life? So the new

mantra may well be, eat well, get plenty of sleepI and buy a good pair of shoes. The toning shoe boom jump-started the consciousness of consumers regarding the

Wellness Footwear Movement. But now the idea has expanded to include shoes of all kinds. On the following pages, five leading brands share their ideas on Wellness and what it means for their brands and the footwear business overall.

In an effort to share this information with retail sales people as well as store owners and executives, Footwear Insight and 3Point5 will post a digital version of Insight on Wellness on the

3point5 Web site: www.3point5.com

3Point5 is an online campus where retail sales associates can learn about product and interact with key brands. The company got its start in outdoor and sports retailing and now has a growing presence in the footwear business.

Mark Sullivan 3Point5.com is an online campus where retail sales associates Publisher, Footwear Insight can learn about product and interact with key brands.

Insight on Wellness • November/December 2010 Retailers Talk About The Wellness Footwear Movement

l EDITH JAMES, President / Comfort Shoe Specialists, St. Louis l BRIAN JONES / Playmakers, Okemos, MI

“Comfort and wellness is here to stay. It’s addictive. Once “From our perspective we have always sold wellness with people experience true support and comfort, they want that Birkenstock Sandals, Adidas Adilette Sandals, MBT and other all the time. Two of three Americans experience some degree brands as a complement to our customers’ running shoes. In of foot discomfort every single day, according to the Institute the past year the label has been attached to the footwear as for Preventive Foot Health. It’s beyond pandemic! We change WELLNESS. We are addressing this new category with caution in our customers relationships to the ground and that’s good for many areas and with open arms in others. From our perspective the business. We sell comfort whether in dress (the toughest) or minimalist shoes are very much wellness footwear as much as they walking or slippers.” are an option for running. But in all cases we try to communicate “We focus on doing all we can to maximize our customers’ that the “wellness” productive is a tool to achieve one’s goals and experience. If shoes with arch support feel good, usually a little by no means a silver bullet to cure all aches and pains.” more arch support feels even better. Inspiring my staff to go the “In 2011 I think it is going to get very interesting as more and extra mile is challenging since we have fewer salespeople, running more vendors join the category. It will be our role to sort through “lean to the bone.” But customers appreciate the “extra” and all the confusion and find those items that make the most sense come back for more. Noticing a leg length discrepancy or heel for our local market that we truly believe in and can sell on their valgus and adding heel straights are two examples of “extra.” own merits.”

l JOHNNY HALBERSTADT / Boulder Running, Boulder, CO l ROBERT S. SCHWARTZ, C. Ped. / Eneslow Pedorthic Enterprises, NY

“It seems that the term ‘wellness’ may mean different things to “Wellness shoes are available for multiple lifestyles and different people. seasons. The category includes rocker sole shoes, wobble board “To us it refers to more than the stable, rocker profile shoes, but shoes, and minimalist shoes. It includes work, casual, sport, encompasses any active footwear that promotes health (wellness) sandals, boots, slip-ons, Mary Janes, and lace-ups. We analyze it and injury prevention through efficient movement due to proper by brands and lifestyles. Consumers have many brands and retail alignment, stability and balance. This is different from ‘toning’ distribution channels to choose from. It will take a lot of marketing footwear, which is specifically designed to be unstable and and store level pushing to make the category grow in 2011.” inefficient so that the wearer needs to work harder to overcome the instability and inefficiency, but on the downside may make her more vulnerable to injury. Because of the above we welcome and We change our customers embrace the growing trend towards wellness footwear.” relationships to the ground and that’s good for business.

l PJ CALHOUN / Shoe Market, Greensboro, NC

“Our customers expect shoes that are sensible. In many ways, these campaigns have European or orthopedic in design. healthy and comfortable, regardless of if they eliminated the stigma of wearing comfortable “The category of wellness footwear is going are looking for shoes for casual everyday wear, shoes and replaced it with the more fashionable to continue to reach out to the younger or for shoes for social events and special concept of wellness footwear. We have always consumer. I also feel that we are going to see occasions. The category of wellness has been focused on healthy footwear. We are finding, a shift in our customer demographics as the propagated by recent media campaigns that however, that more of our customers are demand for healthier footwear becomes more have targeted the younger consumer and receptive to trading in the traditional, pointed, acceptable and fashionable to all types of presented healthy footwear as fashionable and leather soled dress shoe for one that is more customers.”

November/December 2010 • Insight on Wellness INSIGHTOn WELLNESS

he Earth® brand’s approach to wellness is simple. While on the Earth, Inc. beach, you may notice the footprint that’s created while you walk in the sand. You’ll see your toes settle into a position that’s slightly higher than your heels at an incline of 3.7°. That’s about everything there is to know about the wellness principles that make up Earth®. “Wellness to us is simple — it’s walking as nature intended,” says David Aznavorian, Vice President, Marketing, Earth, TInc. “It’s thinking about the walking experience as if we didn’t have paved roads or hard surfaces. We’d all simply walk the way we do when we walk on sand, and our bodies would position themselves in this natural way.” The Wellness Continuum Understanding that there are wearing occasions that the Earth® concept doesn’t cover, the new Earthies® line embraces wellness within classifications where the word doesn’t often apply: heels and wedges. Embedded within the new Earthies® tagline is the concept of elevated—elevated wearing occasions, elevated styles, and even elevated expectations. Comments Aznavorian, “With Earthies, we saw a clear opportunity to deliver a wellness experience within a category of footwear where the consumer doesn’t expect it. We knew that everything we’ve learned about treating the body well had legs, and we wanted to apply it to styles that tickle the higher-end of fashion. We just didn’t think embracing wellness needed to ® ® Earth to Earthies stop at casual silhouettes.” It’s a story that’s “grounded” in a history dating back For Spring/Summer 2011, the Earthies® Wellness. Elevated™ concept will more than 40 years. Earth®, the iconic good-for-you brand, was among the first to reward consumers with be displayed in a collection of 14 styles. The line is a playful yet sophisticated a true wellness experience, designing footwear with collection of fashion-forward silhouettes—headlined by colorful, abstract a slight sole incline to re-position body weight back details as found on the wooden-heeled Tropez, and elegant draping as found naturally over the frame. With an ever-growing appetite to adapt contemporary fashion, the Earth® design team on the ankle-strap Veria. Retail price points will range from $119–$149. increasingly sought to incorporate more sleek and tapered looks, and has now done so by developing Reasons to Believe new sandals, slides, walking shoes and even boots. Whether it’s Earth® or Earthies®, within the Earth Brands’ expression The original Earth® wellness concept has effectively grown and expanded to cover a wide range of casual of wellness there’s a fundamental lack of techno-speak. The best sales wearing occasions.

Amassing years of “good-for-the-body” know-how, the Earth, Inc. product development team has recently Strappy leatherwork and taken on a new challenge: designing a line of short bold color details, as shown heels and wedges. Welcome Earthies®, an eye- here in the new Exquisite, ® popping, fashion-forward line of women’s work, dress thrust Earth into a more and casual styles, new for Spring/Summer 2011. From contemporary design realm for Spring/Summer 2011. its original roots in wellness, Earth, Inc. has stepped it up for the new year, launching the new Earthies® collection as the embodiment of Wellness. Elevated.

To learn more:

Learn more about Earth® and Earthies® by visiting the official Earth Brands Web site at www.earthbrands.com

Insight on Wellness • November/December 2010 The ankle-strap Veria, from the debut l TESTIMONIALS Spring/Summer 2011 Earthies® collection, features a draped Consumers Speak forefoot and wrapped Some of the most interesting stories about Earth® heel that embody ® come from the consumers who wear “Wellness. Elevated.” and Earthies them. Here’s a sampling of testimonials from the company’s Facebook page:

“It’s great knowing there’s a shoe that not only aligns my body, but also aligns with my values as someone who cares deeply about the environment,” — Alanna, NYC yoga instructor and Earth® brand enthusiast

“These are the kind of shoes you could wear all day and feel super-cute. No more carrying around an extra pair of shoes!” — Hannah, LA graphic designer and fan of the new Earthies® collection

tool, says Aznavorian, is simply walking in the shoes. “The wellness sets the foot into a properly supported position, unlike ordinary high experience – with both Earth and Earthies – is better felt first-hand than heels that can leave the heel unsupported. spoken,” he says. “A lot of times, we’ll simply say ‘feeling is believing.’” • Every Earthies® style also features anatomic arch support. Many For retail sales associates, here’s the best ordinary high heels without arch contour force way to communicate the wellness features of the weight-bearing unnaturally down onto the Earth® brand: underside of the toes. • Think of Earth® brand’s tagline “3.7o to • A cradle toe area rounds out Earthies® wellness Wellness” as an invitation. Consumers may ask features. A gentle curl evenly distributes weight, “why 3.7o?” This is the perfect set-up for how the unlike many ordinary high heels that can create brand’s signature inclined sole mimics walking toe and foot fatigue. barefoot in the sand. • If the consumer doesn’t feel it initially, let them Naturally Speaking know that the sole incline is re-distributing their While it’s true that innovation happens at body weight back over their frame. There’s a warp speed, some of the most tried-and-true slight adjustment, but the benefits, including conventions – particularly when it comes to improved posture and reduced joint stress, will taking care of our bodies – remain rather pure come right away. and simple. • Beyond treating their bodies right, wearing Earth, Inc., a company with more than 40 years Earth® also means leaving a lighter footprint on of understanding the body, knows that wellness the environment. Earth® footbeds are made with doesn’t have to be complicated. Whether it’s 70% recycled content and outsoles are specially the Earth® collection of casual footwear with treated to biodegrade. its slight 3.7o incline that naturally re-positions For retail sales associates, here’s how to best communicate the body weight back over the frame, or the new Earthies® collection of wellness features of Earthies®: dress casual footwear that includes a unique wellness footbed in every • Earthies® Wellness. Elevated concept is rooted in Earth, Inc.’s more style, there’s something for everyone from the company that’s all about than 40 year reputation for designing footwear that’s good to the body. being “good to the body” and “good to the planet,” right from the • What upholds wellness with Earthies® is the footbed. A cupped heel very beginning. n

November/December 2010 • Insight on Wellness INSIGHTOn WELLNESS

nyone who has ever stood for eight to 12 hours a day knows Dansko the benefit of wearing comfortable, supportive shoes. That’s what Dansko is all about — exceptionally constructed footwear designed to absorb the abuse of hard surfaces, so whether it’s for 12 minutes or 12 hours, the wearer’s body is supported. ADansko has been a pioneer in comfort footwear since the introduction of its first clog 20 years ago, delivering on a unique formula of superior fit, supportive contoured footbeds and rocker bottoms. Today, Dansko offers an extensive collection of women’s, men’s and kid’s styles, which include sandals, boots, heels, wedges, flats and many, many clogs, in styles appropriate for both work or casual wear. Regardless of style, collection or product line, all Dansko footwear follows this blueprint, advocating the importance of long-term foot health. Standing Up for Healthy Living Dansko’s selection of properly fitting, supportive footwear not only alleviates immediate discomfort, but reduces the wearer’s chance of developing painful foot ailments. Foot problems generally stem from two main categories: heredity and Consistent Comfort footwear. Shoes that are too tight, pinch in the toes or have a heel that is too Dansko strives to make each day a little easier by high can lead to a range of foot problems, from calluses to bunions. While providing the best in all-day comfort footwear. To heredity is predetermined, much can be done to prevent ailments caused by ensure that each pair they design delivers on this promise, every Dansko shoe has a similar “DNA” or improper footwear. Shoes should have a firm and supportive sole, a wide blueprint for comfort. toe-box, plenty of arch support and shouldn’t rub or pinch. Choosing properly fitting, supportive footwear, such as Dansko shoes, The Dansko approach is centered on proper foot literally provides a base for a healthy lifestyle. Not only do Dansko shoes help health and all-day comfort. Every shoe is designed to reduce impact on the body and improve posture. sidestep future foot problems and protect your feet, knees, legs and back Features like a contoured foot-bed, built-in arch during the day, they leave you feeling more energetic at day’s end. support, and an exceptional shock absorption and energy return system are critical in the design of every shoe. Beautiful Inside and Out It has been a long-held myth that one must suffer for beauty, but All Dansko shoes endure rigorous testing both at with technical advances that allow designers to practice their art while their onsite SATRA-approved laboratory and through accommodating comfort elements, this adage no longer holds true. Dansko SATRA-approved external testing facilities. Most Dansko collections have been recognized by the American Podiatric Medical Association (APMA) for promoting proper foot health. The Vegan Professional Starburst, with its one-of-a-kind upper design of breathable canvas, is made entirely of vegan materials built on the same frame as the classic Dansko clog. Many Dansko devotees work in industries that require long hours on their feet, such as health care, hospitality, transportation and education. Styles may change, but the brand’s philosophy remains the same: Dansko thinks about your feet so you don’t have to!

To learn more:

Visit the official Dansko Web site at www.dansko.com

Insight on Wellness • November/December 2010 l SUCCESS STORIES

From the Fans Real life experts weigh in on their experiences with Dansko shoes: “As a full-time RN I have spent years trying to find shoes that are comfortable after 12 hours,” says Melissa A. of Riner, VA. “I was hesitant to try Dansko just because I didn’t want to spend money on another pair of shoes that didn’t help. Boy was I wrong! It was the best money I have ever spent and I am on Dansko’s Sapphire sandal, featuring a laser-cut lace pattern in veg-tan leather and my fourth pair. I can wear them for 12-hour shift, three or four a pillow-soft contoured footbed, is part of its new Sausalito collection. days in a row, and my feet, legs and calf muscles do not hurt or ache. I am so glad I made that initial investment.” The Dansko comfort prescription works in everyday life as well. customers, for example, can both enjoy all-day comfort and embrace for “I the was foot, pregnant often and to ahaving similar sciatica degree problems. as a purchased Walking, standing orthotic. To and even sitting was painful,” reports Nicole R. of Santa Fe, NM. their sense of style by choosing from a variety of beautifully designed “I had heard about Dansko and decided to try a pair on. I stood women’s, men’s and kid’s collections. up and was amazed. I couldn’t even feel the pain. It was gone. From the classic Professional series and the modern Sausalito to the I love the style of the sandals, the colors of the clogs and the outdoors-inspired Arcadia collection, the stylish Rio, and the rugged comfort I get when wearing them. I can walk forever.” men’s Walden, Dansko’s commitment to meeting the demands of its growing customer base will expand for Spring/Summer 2011. Four carryover collections (Stapled, Sausalito, Capri and Rio) will feature this end, Dansko shoes are routinely prescribed for patients suffering new styles, while two new collections – Sanibel and Caneel Bay – will from more serious foot and health ailments, such as plantar fasciitis, be added. arthritis, over-pronation and diabetes. Sanibel, Dansko’s first-ever vulcanized collection, is part sneaker, part Almost all eligible Dansko collections carry the APMA Seal of clog, featuring Dansko’s signature anatomical footbed with a flexible Acceptance, meaning a group of certified podiatrists has scientifically construction for greater movement. Caneel Bay, a new heeled sandal determined that these styles promote normal foot function and are collection, offers Dansko enthusiasts a dressier option. All Dansko beneficial to foot health. Dansko has been working with the APMA children’s shoes also incorporate the Dansko DNA – contoured footbed, since 1992 when it received its first Seal for the Stapled collection. rocker bottom and roomy toe-box – and are specifically designed to “Dansko has been proven to promote quality foot health year after meet the unique needs of the child’s growing foot. A children’s version year,” says APMA president Kathleen M. Stone, DPM. “They have also of Sanibel will complement the current line of stapled clogs. managed to combine fashion and comfort in a very unique way, with their quintessential clog styles.” Key Points About Dansko Footwear In addition, Dansko was recently featured in Podiatry Today, where There are several key features that make Dansko footwear unique. Dr. Mark Reeves singled out the Dansko clog as the preferred option Here’s what every sales associate should know: for those standing for a prolonged period of time, noting they “function • Dansko’s contoured footbeds are ergonomically designed to fully better than any other shoe.” n support the entire foot. Not only will the wearer notice the exceptional arch support, but they will also experience better posture. Better yet, Volley, a lightweight, flex-bottom clog in the new Sanibel collection, has a slip- over time they will experience less pressure on the lower back. resistant rubber outsole and is available in an array of colors and prints. • The roomy fit, which gives toes plenty of space to move, is intentional; this allows for proper circulation, reduces fatigue and enables the toes to spread naturally. • Premium natural fibers, such as top-quality leathers, let the foot breathe and provide comfort and durability. • Ma ny styles also feature a rocker bottom, which keeps the wearer’s foot and leg moving forward in a natural motion.

Doctor Recommended The rigid construction, contoured footbed with exceptional arch support, and rocker bottom provide a supportive yet protective frame

November/December 2010 • Insight on Wellness INSIGHTOn WELLNESS

or Birki’s, wellness is a simple concept: The more its products are Birki’s worn, the more the wearer will benefit from a footbed construction designed to allow feet to exercise and recover naturally. Birki’s thinks healthy feet are pretty cool, which is why its product team creates sporty, colorful patterns that are appealing to a broad cross-sectionF of consumers, for a variety of wearing occasions. The 20-year- old brand designed and engineered by Germany’s Birkenstock family lives by a “natural fit” principle that underlies every clog and sandal in its line. The brand believes that today’s consumer, constantly bombarded by gimmicks, is actively seeking genuine benefits that will simplify and enhance their feeling of wellness. Selfish Comfort There is nothing wrong with being selfish — at least when it comes to foot comfort. Birki’s believes in this concept because it’s delivered through every one of its products. Natural motion is what makes it one of the most authentic brands in its category. In fact, each Birki’s insole is a champion of one essential task: providing a natural, stabilizing environment for the foot. Parallel and in proximity to the ground, the anatomically correct and Personality with a Purpose neutral footbed keeps the body’s posture aligned so minimal compensation With today’s consumer being better informed and or adjustment is needed. making more conscious decisions regarding quality The Soft Footbed provides support yet gives feet ample space to expand, and performance, Birki’s delivers underfoot. letting toes function naturally to properly transfer force and pressure. Arch Birki’s takes a no-nonsense approach to wellness, supports secure proper alignment, helping prevent pronation and supination, standing behind more than 200 years of German while toe grips exercise the foot, improving blood circulation to muscles engineering and research. With this authentic DNA as throughout the body. Improved circulation, in turn, increases the body’s the foundation, Birki’s footwear provides the benefits of strength and recovery every time they’re worn. ability to recover from physical exertion and normal everyday activity. What makes Birki’s Soft Footbed meet expectations is the exceptional The brand’s lifestyle-driven clogs and sandals deliver cushioning support from heel to toe. A layer of permanently elastic latex just what it calls “Active Recovery.” Active Recovery beneath the footbed liner provides ongoing comfort. A layer of cork, two means the consumer, who wants his or her feet to be healthy, will enjoy both immediate and lasting benefits, layers of moisture-wicking jute and a shock-absorbing EVA outsole complete especially while going about daily activities. the biomechanical equation, allowing Birki’s Soft Footbed to offer a healthy

Birki’s believes delivering their version of comfort doesn’t have to be boring. The brand’s focus on Kick back: Birki’s casual Easy Two-eyes and Slip-ons, available for both women and men, unique patterns and colors sets its products apart in a feature a cotton upper and durable EVA outsole and weigh a mere 7.3 oz. highly competitive marketplace.

Birki’s lets the wearer do more, again.

To learn more:

Visit the official Birki’s Web site at www.birki.us

Insight on Wellness • November/December 2010 Personality with a Purpose: Birki’s 3D leather sandals with a Soft Footbed are available in many styles and colorways, including Skorpios, shown here.

environment for any walking occasion. • The Birki’s signature toe grip exercises the foot, assisting in recovery But that’s not all. Birki’s Soft Base Midsole is made of a dual-density by improving blood circulation to muscles throughout the body. EVA that provides flexibility, shock absorption, support and stability. • Birki’s neutral footbed ensures a normal walking gait. This midsole helps neutralize the impact of walking and repetitive • Arch support provided by Birki’s footbed secures proper alignment, motion while supporting the natural flexing movement of the foot. helping eliminate significant foot pronation and supination.

It’s in the DNA Voting Yes Retail sales associates selling Birki’s men’s, women’s and children’s For Birki’s, science is time. The company’s premise of a parallel footbed sandals and clogs know that consumers are drawn to the brand’s in proximity to the ground has promoted wellness worldwide for more colorful, active styling. But more importantly, Birki’s success is in its than two centuries. The same German engineering that introduced and DNA — its family history of superior comfort technology. Here are key refined the Birkenstock anatomic footbed is behind the Birki’s footbed. points to pass along to consumers: It’s simple, really: The footbed’s unique features—the deep heelcup, • Birki’s footbed delivers long-term satisfaction because of its signature toe grip and cork-latex fabrication—allow for the natural rolling anatomically correct design. motion of the foot, properly transferring force and pressure. Consumers • All Birki’s sandals and clogs provide position and proximity parallel have voted yes for more than two centuries because they recognize this to the ground for optimal physical efficiency. construction gives them the freedom to do more, again. n

l SUCCESS STORIES

Birki’s Believers path toward healing. Birki’s continued benefit difficult to measure, but so Nothing makes retailers happier than shoes innovation is what sets them apart.” important to overall well-being.” that sell and satisfied customers who come “Aside from the great benefits of the Penny Montague, owner of Montague back for more. Retailers who believe in Birki’s footbed, the brand brings a great and Son in Herndon, VA, notes, “Many Birki’s products have plenty to say: deal of fun and joy to consumers with Professional and Super Birki wearers “Because of the footbed, we find that our its colorful prints and patterns,“ reports (chefs, nurses, landscapers) find the customers avoid foot problems,” says Dee Charles Moulton, owner of Simply metatarsal arch support in the footbed Mooney, owner of Footwise in Corvallis, Birkenstock, with locations in New enables them to endure long hours of OR. “But if they do have them, Birki’s is Hampshire and Utah. “The happiness this work, providing great support and all where they’ll find relief and ultimately a brings to the Birki’s wearer is a wellness overall body comfort.”

November/December 2010 • Insight on Wellness INSIGHTOn WELLNESS

etrex may be 65 years old and have deep roots in the pedorthic Aetrex shoe market, but its recent product introductions are definitely not your grandfather’s (or grandmother’s) footwear. Its Gramercy Dress Casual collection for men delivers stylish urban attitude, while its EssenceTM collection for women spans five important Alifestyle categories, including comfort casuals, comfort casuals double depth, wedges and heels (new for Spring/Summer 2011). Beneath these 21st Century aesthetics rests the secret to Aetrex’s growing consumer awareness: a game-changing dedication to biomechanical design, innovative materials and custom-fit principles that make its products unique in the market. Wellness Never Looked So Good Socrates once said, “When our feet hurt, we hurt all over.” Aetrex CEO Larry Schwartz is the third generation in his family to know that those ancient words are just as true today. Yet unlike in the past, today’s interpretation of wellness goes far beyond mere pain-prevention. “Our shoes have to meet a higher standard than simply being comfortable,” he says. “To us, comfort is just a component. A shoe also needs to be intrinsically healthy for your feet The Healthiest Shoes You’ll Ever Wear® and meet the consumer’s ever-evolving fashion expectations.” That’s the Aetrex promise. This 65-year-old footwear Building on its trademarked tagline that Aetrex makes “the healthiest company isn’t shy when it comes to touting the shoes you’ll ever wear,” the company has in just a few short years expanded wellness benefits of its lifestyle footwear products — which range from strappy casual sandals to high-tech the concept of wellness well beyond the fitness and casual categories. running shoes. That’s because the science behind “Our new Spring 2011 Essence™ Heel Collection for women have that wow every Aetrex product is geared to providing superior factor,” Schwartz says. “A very comfortable heel has long been the Holy Grail design, a healthy foot environment and a custom-fit of footwear design and with Essence Heels we are pretty darn close.” with a sleeker, more stylish look.

Committed to foot health for three generations, family- Aetrex Exacting Criteria owned Aetrex’s recent focus on fashion-forward, All Aetrex products are the result of diligent attention to three essential high-performance sport, dress and casual shoes has wellness criteria derived from the company’s extensive experience with pushed it to the forefront of the market just as aging Baby Boomers are seeking footwear with both style pedorthic footwear. and substance. Aetrex offers five collections for men – The first is proper biomechanical design. This takes into consideration from the fitness-focused High Performance line to everything from last shape and toe box construction to arch support and width the work-suitable Lexington Dress Oxfords – and five selection (C/D to 4E for men and A/B to 3E for women) as Aetrex designers for women — from casual stretch-fabric BerriesTM to toning-oriented BodyWorksTM. All deliver comfort strive for the correct combination of flexibility and firmness necessary for technology packaged in appealing silhouettes and a optimal foot health. A prime example, says Schwartz, is the new Double modern palette. Rocker Sole on the sport lace BW31 in the women’s BodyWorksTM series. The second factor is material selection. Aetrex created buzz in the market this past year with its BerriesTM collection for women, incorporating four-way stretch uppers that gently conform to the wearer’s feet, breathable IQ150 memory foam and built-in arch support. Available in easy slip-on clogs and stylish mary janes, BerriesTM are as equally fun as they are functional. A second example of Aetrex’s superior material technology: the triple-layer construction of its Sandalistas Cork Comfort series, featuring shock-absorbent cork, cushioning IQ150 memory foam and an antimicrobial liner to foster a healthy To learn more: foot environment. The third essential component is customization — the footwear features Visit the official Aetrex Web site at www.aetrex.com and technologies that make Aetrex shoes unlike any other. These begin with fit innovations such as an adjustable thong on the Labella, Catalina and Emily styles in the Sandalistas women’s series and an Adjustable LockdownTM Heel

Insight on Wellness • November/December 2010 Aetrex’s custom-fit features include (from left) double rocker soles on its women’s BodyWorksTM series, men’s High Performance Edge Runner and women’s BerriesTM stretch-fabric clog.

Strap on the men’s High Performance Edge Runner, which lets the seconds uses 3,744 gold-plated barometric sensors to measure foot wearer customize rearfoot control. size, arch type and pressure points. This attention to customized fit For the past three years, Aetrex has also pioneered optimal fit via not only educates the consumer but also differentiates the retailer its MozaicTM Customization Technology. With the MozaicTM Insole, from the ever-growing ranks of e-commerce outlets out to steal wearers can identify the areas of their feet that experience pressure market share without delivering service. or discomfort and then peel away the MozaicTM pieces in those areas. • Post scan, when sales associates bring out a selection of Aetrex The now-customized insole can be inserted back into the footwear, shoes, they should also present the orthotic that was custom selected instantly relieving pressure and elevating foot comfort to an entirely by the iStep. One shoe should be tried with an orthotic, one without. new level. By far the most visible tool in the Aetrex custom-fit arsenal is its Three Essentials of Comfort iStep Comprehensive Digital Foot Scanner. Introduced in 2002, the The science behind the Aetrex custom fit makes it the #1 choice more than 5,000 iStep in-store screening devices now in operation of pedorthists across the U.S. With 20 board-certified pedorthists on worldwide allow retail personnel to easily (in 15-20 seconds) pinpoint its own staff, the company actively reinforces what it calls the “three three specific dimensions – foot size, arch type (low, medium or high) essentials of customized comfort:” Shoe Size, Arch Type and Pressure and pressure points (unique to each person) – and give customers a Points. Says Schwartz, “The more we have focused on consumer- detailed digital footprint and a customized selection of Aetrex styles friendly fashion without compromising the health and wellness features and orthotics that suit their foot profile. we are known for, the more we have grown.” Innovation is in Aetrex’s genes. It is also evident in its unique line of Strategies for Sales Success socks with copper sole technology, which has been clinically proven Aetrex’s innovative design approach, custom-fit technology and to help prevent bacteria, fungi and odor while improving skin texture extensive footwear and orthotic selection make it easy for retail sales and appearance, and its new GPS Shoes by Aetrex, designed with associates to find their customers the perfect shoe for their foot. Here’s heel-embedded tracking technology to ease the burden on care-givers what sales staff needs to know: whose loved ones suffer from Alzheimer’s or other debilitating forms • Every customer should be given an iStep scan, which in a matter of of dementia. After all, peace of mind is a mighty comforting thing. n

l SUCCESS STORIES

Aetrex Raves a product that I believed truly made a difference doing great. It’s quite an innovative collection: With its six decades of pedorthic footwear and in a customer’s overall well-being more than the stretch and memory foam in the uppers, the orthotics expertise, Aetrex is at the forefront of Lynco’s. Thanks for giving me something I can Mozaic insoles—they are uniquely comfortable. providing custom-fit footwear that delivers a true sell that I feel fantastic about!” — David Bryan, Our customers are really responding to them. wellness benefit to today’s consumer. Here’s Mosser’s Shoes, Champaign, IL And it’s a colorful collection, so it looks great on what retailers who carry the brand have to say: “Aetrex has really helped us capitalize on the floor!” “I have sold Aetrex Lynco’s for six years now our customer’s desire for health and wellness — Maurice Breton, founder and CEO of 24-store and in 16 years of selling shoes have never found products. Berries by Aetrex, for instance, are Comfort One Shoes, Washington, DC area

November/December 2010 • Insight on Wellness INSIGHTOn WELLNESS

ockport knows that the typical day for a metropolitan professional Rockport involves an obstacle course of subway stairs, cement sidewalks and pot-holed crosswalks. But thanks to the company’s focus on biomechanics, the mad urban dash doesn’t have to result in aching feet. Rockport wearers can put in a 12-hour day and still have their heels and toes feeling as if it’s 7:00 a.m.

RWellness That Rocks For Rockport, wellness is a state of being — a sense of consumer confidence from head (“I look great”) to toe (“I feel great”). Credit goes to the decades-long collaboration between Rockport’s design staff and full-time biomechanical scientist. Add in adiPRENE technology, developed by parent company adidas Group, for an extra-soft heel strike, followed by a smooth roll through the arch and forefoot flex for an energized push-off, and you have Rockport’s latest innovation: truWALK. “We were very excited to introduce truWALK to the Rockport customer,” says Rockport CEO Michael Rupp. “With truWALK architecture, busy professionals feel like they can walk all day long in the shoes. It’s technology they can see, and more importantly, feel.” Walkability City life can be hard on the feet. Rockport, a leader The truWALK Talk in the lifestyle/comfort footwear market, understands Customers can identify truWALK footwear by its distinctive rocker-sole. that. Its shoes for busy professionals combine contemporary styling and cushioning technology, Available in nine men’s styles for Spring/Summer 2011 – including the lace- making them look and feel right — at a business up Cooper and slip-on Tyson, both retailing for $125 – the ergonomic design meeting and on the 20-block walk home. lets wearers walk with improved mechanical efficiency. In other words, a truWALK shoe is a shoe that moves with you not against you. Key is the With products distributed in 55 countries, Rockport is the go-to brand in its niche, a message recently driven four-part architecture: a beveled heel, which cushions impact; forefoot flex home during a “Rockport task” on the hit NBC show grooves, which bend with ease; adiPRENE by adidas in the heel for added “The Apprentice.” The debut of its newest innovation, shock absorption; and a contoured sole to stabilize every step. The result is truWALK architecture, pushed the comfort envelope a stride with a soft strike, smooth roll and easy flex. even farther, with a definitive focus on what Rockport calls “walkability.” Tyson, a men’s full-grain leather slip- on for Spring/Summer 2011, is built on Rockport’ truWALK architecture with its rocker sole, forefoot flex grooves, beveled heel and adiPRENE for shock absorption.

To learn more:

Visit the official Rockport Web site at www.rockport.com

Insight on Wellness • November/December 2010 WALKing Points Rockport’s truWALK technology puts a new focus on the dynamics l SUCCESS STORIES of a balanced stride. Retail sales associates should know the following: truREVIEW • TruWALK lets the wearer walk with the heel striking first — as feet are “Rockport’s TruWalk is one of the few products available that meant to do. This allows the foot to be reflexive and relaxed, making offers instant gratification when a customer tries it on,” says walking seem effortless. Robert Galante of Orva in New York City. “There is no break-in • TruWALK shoes feature a rounded heel that mirrors the foot’s natural period, and no hesitation from the consumer. It is one of the few shape and provides superior walking comfort. brands that you can put on and say, I gotta have these!” • Proper shoe fit is essential to total body health: Wearing shoes that fit properly provides optimum back support and spine alignment; improperly fit shoes can lead to lower back degeneration.

Scientific Strides Rockport takes every step seriously, relying on science to back its guiding principle that walking does wonders for your health. According Walkability to Dr. Keith Pyne, managing partner of SportsLab NYC, metropolitan professionals who walk to and from work live, on average, 10 years Performance technology makes style comfortable. longer than those who take trains or buses. They also burn about 1,000 calories more per week — which could result in 14.2 pounds lost in a year. He calls this “a quality of life change that is essential for optimum health.” Dr. Pyne also notes that walking burns calories without stressing joints or muscles. When the heel strikes the ground first, as it does with truWALK, it helps eliminate discomfort in the ankles, knees, hips and beveled heel cushions impact flex grooves lower back. Also, the extra cushioning in truWALK styles decreases bend with ease the force applied to the lower legs, providing greater stability and eliminating the likelihood of repetitive injuries such as plantar fasciitis and IT band syndrome. The ultimate benefit to the wearer: Being able to walk farther and more often — without discomfort. n

Cooper, shown here in dark brown leather, is another truWALK men’s style for Spring/Summer 2011 that provides the wearer with a integrated adiPRENE natural full range of foot motion. contoured sole stabilizes every step

STRIK oft E s sm oo sy th ROLL ea

November/December 2010 • Insight on Wellness RETAIL Four Best Running Stores in America 2010

By Bob Babbitt, Competitor Magazine

The Each year, Competitor Magazine and Footwear Insight embark on a year-long search for The 50 Best Running Stores in America. The process starts when consumers nominate the store via www.competitor.com. The nominees are then analyzed and rated through a mystery- shopping evaluation by Franklin Resource Group. Franklin sends in a secret shopper who rates the store using 20 different criteria. That score is then combined with vendor rankings and community involvement scores to determine the 50 Best Running Stores in America. Below are profiles of Playmakers, The Store of the Year, and the other finalists.

Playmakers Okemos, MI Fleet Feet Sports, Syracuse urt Munson originally ran to stay in shape for football at d Griffin and his wife Ellen were never what you would call Augustana College in Sioux Falls, SD. He enjoyed the running hardcore runners. Which is one of the reasons Ed feels they so much he gave up football to focus on cross-country. He have been so successful with Fleet Feet Sports in Syracuse. Cbought the Playmakers store in Okemos, MI, back in 1981. E “The key for us is that we weren’t competitive runners,” he “When we first bought the store it was 1500-square feet,” he recalls. says. “We came from a business background and were just recreational “Over time we expanded to 2000, 4600 and finally 6400-square feet.” runners. I think that allowed us to be more inclusive and more in touch Eventually it was time to really go big. When Barnes and Noble with the average person when we opened our store.” moved out of a 15,000-square-foot former grocery store location in With 35 employees and a 10,000-square-foot building that they 2001, Munson and Playmakers snatched it up. purchased a year ago, Fleet Feet Syracuse is on a major roll in Playmakers makes an effort to showcase great customer service. the region’s specialty running retail community. Because the town They put on entry-level running clinics every Wednesday evening and has a population base of less than one million, Ed, Ellen and their partner with more than 100 local events each year. And the fact that 20 team feel it’s important to reach out to everyone in the community of their 55 employees have been on board for at least 10 years shows to enhance the growth of running. Local how well they treat their staff. running clubs and charities, corporations The Griffins’ Which translates to a great relationship with their customers. “Our and high school teams all look at Fleet Feet business Team Playmakers motto is ‘Any distance, any pace,’” says co-owner Sports as their go-to running and comfort background has Brian Jones. “We work with high school cross-country and track shoe headquarters. They also work with a suited them well. athletes as well as the 50-year-old looking to run his first 5K. Our goal number of medical professionals to make They have great is to help everyone and anyone reach their running goals. In October sure their patients are well taken care marketing we launched our ‘From the Couch to a 5K’ training program for women of. “Our medical market is huge,” Griffin programs, over 50,” Jones says. continues. “We work with the orthopedists, great financial Seventy-five percent of their business is in shoes and 15 percent is in podiatrists and chiropractors, and every management accessories. “Running is our core business,” says Jones. “But we also fall we host a clinic at the store to show the and a major carry the comfort brands and sandals from Ugg, Keen and Merrell.” medical professionals what we do and how focus on staff Curt Munson, who is in the Running Specialty Hall of Fame, is a we can work together.” About 120 medical development. firm believer in creating a great shopping experience. His new store professionals attend each year and gather in showcases 28-foot-high ceilings, 24 skylights, a waterfall and three the Fleet Feet Sports Community Room. Not surprisingly, that outreach aquariums. “When it comes to the shopping environment, the product has paid huge dividends. “We get 10-15 referrals from the medical is important, our people are important and the look and feel of the community every day,” Griffin says. store is important,” insists Munson. The Griffins’ business background has suited them well. They have With the success of the book “Born to Run,” people wanted to great marketing programs, great financial management and a major know more about the pros and cons of barefoot running. As usual, focus on staff development. “We also have made a conscious effort to Munson was right there at the cutting edge. He is the perfect example grow our database,” says Griffin. “We’re up to about 16,000 people on of teaching an old runner new tricks. “Our Good Form Running clinic our newsletter list, and we add about 3000 new names per year. We has been amazing,” says the 59-year old. “We are doing three classes send out a newsletter to the list every Monday, and we make sure the a week for runners and one for walkers. New Balance is rolling out content in it is second to none.” Good Form Running nationally this spring. This is definitely the most At the end of the day, Griffin doesn’t feel that they are in the running revolutionary time in the history of our industry. Running is truly all or retail business. “We’re in the business of helping people feel better about form.” about themselves,” he says. “What I love,” says Griffin, “is to see that When it comes to success at retail and at Playmakers, it’s obviously look in someone’s eyes after he has finished his first-ever 5K. That’s all about form as well. l when I know I’m in the right business.” l

40 • Footwear Insight ~ November/December 2010 Clockwise from upper left: Playmakers is located in a building that once was home to a grocery store. The Griffins of Fleet Feet Sports Syracuse just moved to a new space that has a large Community Room; Luke’s Locker now boasts nine locations throughout Texas; Dave Reynolds and Eddie Johnson, owners of A Snail’s Pace in Southern California, met on a run.

A Snail’s Pace — Four Locations, Southern California Luke’s Locker — Nine Locations in Texas hen Eddie Johnson first started working at A Snail’s Pace he was hirty-five years. That’s how long Luke’s Locker has been around. also waiting tables, bartending and attending the Fire Academy. Don Lucas started running in the late 1960s and early 1970s at a time But it didn’t take him long to realize that he had found a home. when it was hard to find running shoes. He tracked down shoes for W“I fell in love with it right away,” he insists. Before he knew it, he T himself and his buddies from a company called Blue Ribbon Sports had partnered with the store’s founder Dave Reynolds, and the 1400-square- up in the northwest that eventually became Nike. So many of his friends in foot outlet in Fountain Valley was doubling in size. “We started a grassroots the growing Dallas running community wanted shoes that Lucas eventually marketing program and went to small running events every week,” he says. started selling them out of the trunk of his car. Lucas and his wife Sharon “Then we created a triathlon club and added swim, bike and run workouts.” then opened up their first Luke’s Locker store, which was 4500-square feet. Johnson has run 30 marathons and completed four Ironman triathlon With the help of their three sons – Matt, Andy and Mike – Luke’s Locker, the races, but he still remembers his first triathlon vividly. The former baseball ultimate family business, has expanded to nine locations in Texas (Allen, and football player started running during his first year in college and did Colleyville, Fort Worth, Houston, Katy, Plano, The Woodlands, Dallas and his first triathlon on a dare at UC-Irvine. “It was a short run, bike and swim Austin). event,” he says. “When I got out of the pool at the Matt Lucas is the youngest of the boys and he remembers getting into end, I remember thinking that the sport was insane The Running running when he was about five years old. “I’ve pretty much run all my life,” and all I wanted to do was puke.” He laughs. “Two Academy says Matt. “Even when I got into basketball, running was still at the heart of weeks later I signed up for another one.” 100 Program, everything I did.” Matt admits that managing multiple locations is not easy. There are now four A Snail’s Pace stores in Snail Steps, “We are very hands-on, and we still go to all of the stores as often as possible,” Southern California (Fountain Valley, Laguna teaches the he says. “But with nine stores I just can’t be there all the time. I have to count Hills, Brea and Pasadena) and Johnson feels he basics. Over time on good people to be successful.” knows the reasons for their success. Number their customers The running marketplace has specialty retailers, big-box retailers and one: He got into running by trying to make it once graduate online retailers. “People can buy shoes from just about anywhere,” says Matt. around the block, then twice around the block — to Running “There is more competition than ever before. We really consider ourselves just like so many of his customers. “I can totally Academy more than just a running store.” relate to anyone just getting started and so can 101, 201 and, Luke’s Locker has training programs based out of their stores year-round. One our staff. It’s tear-jerking when people who have eventually, 301. of their employees came up with the idea of the 9-5 Program. Basically, it’s a nine- gone through our training programs come back week program to complete your first 5K. “We pride ourselves on the fact that we to the store to show us their bib number after they finish their first-ever train a lot of people who really didn’t know how to exercise,” says Matt. 5K, 10K or marathon. What could be better than that?” Their half-marathon training program is 26 weeks long, and they have Their Running Academy 100 Program – Snail Steps – teaches runners the expanded beyond running to Pilates, yoga and cross-training. “We find that a basics. Over time their customers graduate to Running Academy 101, 201 and, healthy mix of fitness options is better for the body,” says Matt. eventually, 301. “Each one of our stores has a running club,” says Johnson. At the end of the day, though, for Luke’s Locker it’s all about taking care “It’s for everyone and each one has a weekly training run. Once a month we of the customer. “It’s important to us that everyone feels welcome at Luke’s have a club race, and we set up the A Snail’s Pace canopy and have everyone Locker,” says Matt. “From the time they walk into the store until the time they wear a uniform. The support for each other is amazing.” walk out, that experience has to be great. We are very passionate about our There are now 70 employees, and this year alone six are celebrating their customer experience as well as supporting our community.” 10-year anniversaries with A Snail’s Pace. The day we chatted, Johnson had Speaking of community, consider the case of Chris Greene. He was spent two hours that morning helping a 93-year-old woman find comfortable overweight and signed up for a training program at Luke’s Locker. He made shoes. “She comes in once a year and was literally in tears because she was so it through the training, fitness became a huge part of his lifestyle and the happy,” says Johnson. “She kept thanking me over and over again for taking next thing he knew he was working for Luke’s Locker. “Chris now runs a half- so much time with her, but the fact is that I appreciate her more than she marathon training program for us and is a great yoga instructor,” says Matt. knows. I love it. Those are the moments that I’ll never forget.” l “Those are the stories that I really enjoy.” l

November/December 2010 ~ Footwear Insight • 41 By Mark Sullivan places to shop, as well as better environments in which to work. The net result of this is increased worker mobility from one factory to ike Featherston is the co-founder and CEO of Innovative another as well as one industry to another. Custom Brands, which provides design, development and sourcing for women’s fashion, athletic and active What are some of the specific issues you’ve encountered in the past Mfashion footwear for leading brands and retailers. six months when it comes to having shoes made and delivered on a Prior to starting ICB, Featherston was president of Brooks Sports timely basis? and later managing director of Lotto USA. He and industry veteran In the past factory owners were largely accommodating. However, Denis Ryan co-founded ICB in 1993 and have been sourcing product now they are extremely selective because of the uncertainty of labor in China since then. ICB has more than 300 employees in China and availability. Factory owners are very focused on the margins they is involved with 40 different factories. He sat down with Footwear can attain and the efficiency and clarity of producing product. For Insight recently and discussed the dramatically changing nature of every order going through their production lines, they are asking sourcing in China and the impact it will have on product availability themselves “How can my workforce handle it?” Traditionally, a and pricing. customer’s relationship with the individual who ran the factory was critical, but today that’s no longer the primary variable. All these What are the major changes you’ve observed when it comes to other factors are taken into account. sourcing shoes? During the 1970s and ’80s, Asia shoe production for export to Talk about the factories specifically. What’s going on inside the Western countries was primarily based in Taiwan and South Korea. factories and what do you observe happening with the labor force? Subsequently, due to a combination of unfavorable currency During the past two years, there has been a discernible shift of exchange rates, rising labor costs, non-availability of labor and a both awareness as well as attitude of the workers within Chinese shift in government industrial policy, footwear production migrated factories. Their views on job transportability and geographic to China in the late 1980s and early ’90s. dispersion have changed. This has made the labor force less reliable In China, during that timeframe, there was a massive impoverished and more difficult to manage. Will workers stay in shoe factories or population that was under-employed, but had a great cultural leave to work in an electronics plant? In the past, the Chinese work tradition of a strong work ethic. Further, there was, and remains, force was very compliant and readily organized for mass production, a one-party political system that needed to provide employment but that has changed. growth for its people in order to maintain stability. For brands and retailers who have sourcing programs in China, What has ensued is a massive build-up of infrastructure as well quality assurance initiatives need to be intensified. Previously as rising income for approximately 400 million of the 1.3 billion factories were motivated to produce the shoes well because they people living in China. In addition, with the advent of the Internet were intent on generating repeat business. Now much of the onus and the phenomenal growth of handheld devices, there is far greater for quality assurance has become the realm of the customer’s awareness of what is going inside China and globally. sourcing organization. There are an estimated 600 million handheld devices in China Footwear factory employment has been concentrated along the and SMS (short messaging service) is the primary mode of coastal regions of China, but now many of these jobs are migrating communication, especially among those 30 and under. Workers in to interior and northern provinces. In general, factories are China can now exchange information on entertainment, brands and experiencing labor shortages, so running production lines efficiently is a major challenge. The factory owners are smart and understand their businesses and what it takes to make margins and be profitable. Right now, they are electing to have production lines sit What’s happening in Chinese idle rather than running inefficiently due to lack of sufficient labor. Currently, Chinese workers have employment flexibility they’ve factories is having a major impact never had before. They are in demand and there’s a great deal of movement from one factory to another. However, one key point on what will happen in footwear worthy of noting is that factory owners with close ties to the local Chinese government seem to have better resources to both find and stores in the years ahead. A 20-year retain workers. veteran of Chinese sourcing offers Can you offer your opinion on what’s happening with factories moving inland? his thoughts on why it’s happening The permanent objective of the Beijing government is social stability, and the means by which they plan to maintain that is and what it means to your business. through rising incomes and geographic dispersion of income. At

42 • Footwear Insight ~ November/December 2010 EXPLAINED

this point in time, it’s evident that the central government envisions much of the coastal provinces to ultimately resemble South Korea and Taiwan, which means they’ll be focused on commerce, financial markets, information technology, biomed and autos, not apparel and footwear. China’s current population is 1.3 billion. Yet only 400 million people have been impacted by the industrial and commercial build-up. Consequently there is under-employment in the interior and northern provinces, and local governments in those respective areas are demonstrating a willingness to support a build-up of production facilities for what is referred to as “low value- added industries.” To ensure the success of these new production facilities, there also needs to be the development of a related supplier cluster in these areas for tooling, componentry and materials.

What’s happening with other infrastructure in China as far as roads and shipping capabilities? China has an impressive network of roads and expressways and is currently extending them to the far Western provinces. In addition, during the past five years China has invested heavily in high-speed rail. I recently rode on a high-speed train in China for the first time and the efficiency of this investment is truly impressive. So the supply chain physical infrastructure is being put in place to allow for efficient shipping from a geographically dispersed industrial production base. Several years ago there were intermittent, fairly frequent power outages in factories. China has now invested in a significant buildup of its power grid and power outages are not a significant factor these days. Generally speaking, China has what I refer to as a “mentality of facilitation.” Simply put, the government and other interests work rapidly to facilitate production and commerce, and this Mike Featherston , co-founder and mentality is abetting the migration of CEO of Innovative Custom Brands factories to the interior and the north.

November/December 2010 ~ Footwear Insight • 43 CHINA 1.15 Billion 1.34 Billion

How will all this play out in terms of worker attrition after the Chinese New Year in the coastal provinces, product, availability and pricing in the workers did ultimately return. next six months? Product is still being made and All of these changes in China have caused problems for the footwear shipped; it’s just more of a challenge business. What are some of the positive developments? than it’s ever been before. Factories You can’t talk about all this without talking about some of are demanding longer lead times, so the positive impact. Rising wages mean more disposable income. the days of hustling for a quick fill-in or And the growth of mobile technology means more awareness of goods. a re-order are extremely challenging. China is a burgeoning consumer market unlike anything we have ever In addition, factories are reluctant to seen. More domestic consumption means less reliance on exports, so commit to pricing until the last possible the nature of China as a producer nation for the rest of the world will minute because of appreciation of the change. Wages are going up, and that will improve living standards RMB exchange rate. I have read various and domestic consumption. The creation of a social security safety net reports that the China Central Bank would will also mean that workers in China will save less and consume more. like to maintain the annual appreciation Domestic production as a percentage GDP is currently 36 percent in of the Yuan in the three to five percent China, while in the developed world this percentage is typically in the range. That said, there are numerous range of 65-70 percent. So there is a great deal of upside for domestic forces related to how this will play out consumption in China which will serve to provide more balance in the in the coming three-to-five years, and Chinese economy and increase employment in the service industries. the outcome is far from predictable. However, one issue is clear and that is that So what’s next with China as a sourcing center and what countries do uncertainty creates challenges in dealing you see growing in the future? with factory owners on price and delivery During the foreseeable future, China will remain the primary venue for export customers. for footwear manufacturing. There is too much installed capacity Conversely, if the RMB continues to and too great a need for employment for that to change quickly. The rise in value, in my opinion factories will footwear export business is too massive to not continue in the near- shift more focus towards producing for to-mid term. Beyond that, it’s challenging to say what will happen. the domestic Chinese market. Secondly, All companies should be seeking longer term solutions. In evaluating an issue that has become an annual rite any alternative production in Asia or Africa, you need to assess of passage in the footwear industry is the variables such as population scale, infrastructure, ethnic and religious question of whether workers will return composition, education, worker mentality, and government policy and to the factories after the Chinese New future economic priorities. Beyond that, you have to evaluate rule of Year’s holiday break (in February). So this law, property rights, the banking system and how capital flows into variable needs to be factored the country and within the country. Essentially, I am referring to a into the product availability combination of culture and mentality that will allow for issue for the coming season. 240 the same type of development that occurred in China. During the past two years, while Laos and Cambodia contain a good deal of what is 270 there has certainly been overall required, but they don’t have the population that will

Country Comparative Population Labor Costs Average (in Millions) (Wages Per Month in USD) 180 156 150

125 125

87 BANGLADESH 80 65 ETHIOPIA CHINA (COASTAL) INDONESIA INDIA VIETNAM CHINA (INTERIOR) ETHIOPIA VIETNAM BANGLADESH INDONESIA INDIA CHINA 1

Source: Liquidnet: The World’s Institutional Marketplace

44 • Footwear Insight ~ November/December 2010

26.5 Billion China

4.1 Billion allow for scale. Other countries like Vietnam have the – rising wages and appreciation of the currency – ability to scale, but not the government focus. And actually benefit the domestic Chinese economy because then there is India, which has the population, but it they are leading to higher disposable income and lacks infrastructure and has a 60% adult illiteracy rate. growth of employment in the service sector. As long In addition, outside of the knowledge industry and as wages don’t rise too rapidly or the currency doesn’t the capital intensive industries, which are both highly appreciate too quickly, China will have the opportunity successful in India, the government to date has not for a more structurally balanced economy. focused upon developing employment through the Secondly, there is little doubt that China wants to build-up of export-oriented low value added industries transform more toward “indigenous innovation.” They like footwear and apparel. In fact, a large number of want to own the brand or the idea and the related shoes are produced in India, but more than 90% of that higher margins, rather than solely producing for other production is for domestic production. parties with brands and ideas. They are very aware that knowledge and ownership have lasting economic value. What about Indonesia and Bangladesh? Finally, the Chinese consumer is emerging as a major Indonesia has a population of 240 million and in force and this trend will both continue and expand. the past two years footwear factories have begun Retail in China remains largely fragmented, but this will to percolate more actively there. The country has a change as roads and autos increase. Right now, large history of shoemaking, but the main ongoing factors format retail represents only 11 percent of retail sales, so related to conducting business there are political and transportation build-up will provide for a great upside. social stability. Given 600 million handheld mobile devices, you have Bangladesh has a significantly under-employed to think that e-commerce will also develop in China. For population of 160 million and has experienced success that to happen, credit mechanisms also need to grow. with apparel factories and relatively low complexity IT. They have been dramatically lacking in China until The government desires to expand employment, but recently, so e-commerce currently represents only one the country is severely lacking in road and shipping percent of retail sales. However, with the increased use of infrastructure. There’s also a shortage of housing that’s credit cards, as well as the advent of Paypal-like services, suitable for a build-up of industrial centers that would e-commerce is forecast to grow to five to seven percent of offer scale. It should be noted that these two countries consumer sales by 2012. hold meaningful financial advantages relative to Finally, my observation is that Chinese consumers are shipping to the EU, Japan, Mexico and Brazil. not necessarily brand loyal, but they are brand aware. Visible brands are considered a real status And what do you see for China’s future? symbol and their growth prospects, particularly The dynamic in China represents flip sides of a coin. in the affordable space, will continue to have 1.7B Factors that present a challenge for the export industry very positive growth prospects. l

1800

Labor Costs in China 1650 Footwear Export Footwear Factories are Volume by Escalating 2000-2010* 1500 Country (2009) (RMB monthly average wages) 1300 1.3B

1100 1150

1000 980 795M 920

820 750

115M CAMBODIA

108M INDIA THAILAND BRAZIL INDONESIA VIETNAM CHINA

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Total production of 2.1 billion pairs; 95% domestic consumption

*Guangdong Province

Source: Liquidnet: The World’s Institutional Marketplace

46 • Footwear Insight ~ November/December 2010 * Total production of 2.1 billion pairs; 95% domestic consumption STRATEGIES

Investing in Technology & Brands

President Todd Vore and CEO Seth Richards have worked at implus since graduating college. Opposiite page: The implus distribution center can handle shipping crates of 3000 to individual Walmart stores as well as dozens of items to even the smallest sports specialty shops.

he Raleigh-Durham area of North Carolina is known as The is not to let that happen.” The company’s ability to ship quickly is based Research Triangle because it’s home to three major universities to a large extent on its ability to quickly process retail orders. Implus and numerous high-tech companies. Footwear insoles and shoe receives more than 90 percent of its incoming orders through Electronic T care products are not known as high-tech items, but Durham- Data Interchange (EDI) programs with the remainder of orders placed on based Implus, LLC has done plenty of investing in technology. The 22-year- its B2B Web site or over the phone. old company has spent heavily over the past 10 years on logistics and The company’s investment in sales and distribution goes beyond infrastructure with a focus on getting product to retailers as quickly as forklifts and hand-held scanners. Implus employs a team of analysts who possible. comb through retail sales data on a daily basis to see exactly what’s sell- That investment crystallized a little over a year ago when the company ing, where and the status of inventory levels at its retail customers. moved into a new 250,000-square-foot sales and distribution facility that For two of its major customers, The Sports Authority and DSW, Implus the company is already looking to expand. The goal of that spending, uses that data to create Vendor Managed Inventory (VMI) programs. according to president Todd Vore, was to get product on retailers’ shelves With the VMIs, Implus works with the retailers’ buying staffs to develop as fast as possible in exactly the manner they want it. an assortment that makes sense and then handles the shipping, replen- “Retailers are like snowflakes,” Vore told Footwear Insight on a recent ishment and, well, inventory management. “We own the inventory, and tour of its facility.”No two are the same in terms of how they want their we ship direct to the retailers,” Vore says. “The goal is to make sure the product shipped to them.” So the Implus distribution facility was built to stores are never out of stock and if we do our job, these are very profitable handle the needs of every retailer on the company’s diverse customer programs to retailers.” list. It can ship pallets of boxes featuring multiple SKUs to 3000 Wal-Mart The focus on shipping and logistics is clearly working for Implus. The stores as well as dozens of a single item to a small running store anywhere company’s sales have just about doubled from 2007 levels and are pro- in the U.S. “We can ship to retailers’ DCs (distribution centers) so they can jected to hit $140 million by the end of the year. The company is owned by handle shipping to stores, or ship directly to the stores so staffers can AEA Investors, a private equity company that has investments through- unpack and get it onto the sales floor. Our belief is that if a store is out of out the world ranging from a company that runs hospital outsourcing stock on a size or item, we’re losing a sale and so are they. And our goal programs in the U.S. to another that owns car dealerships in China. AEA

48 • Footwear Insight ~ November/December 2010 By focusing on speed to market and building a diverse portfolio of brands and products, Implus aims to be a power player to sports specialty retailers.

bought Implus in May 2008 from its previous owners, another private and food, drug and mass. “We believe strongly in channel segmenta- equity company, FDG Associates (Implus CEO Seth Richards’ father tion,” Vore says. “We sell select brands into certain channels and don’t was among the original investors when it was founded in 1988 and deviate from that. We also develop certain products at certain price both Richards and Vore have worked at the company since graduating points for those channels.” For example, Vore says the company could from college). never sell a $20 insole at food drug and mass, a channel that demands Backed by those companies, Implus has been on an acquisition tear. a less-expensive product, nor would it attempt to sell a low-end gel In 2006, Implus purchased Yaktrax. In 2007, it bought Sneaker Balls and heel cup at a sports specialty store. About 65 percent of Implus busi- in 2009 the company stepped out of its “below the ankle” focus and ness is in the sports and footwear channel, with the remainder in food purchased two outdoor brands — Little Hotties and High Gear. Earlier, drug and mass. this year, Implus purchased Eurosphere, which it has re-named Implus Vore says Implus remains open to additional acquisitions, but says EU, to handle its distribution in Europe. its current brands and businesses have plenty of upside. After a slow “We’ve been fortunate with our acquisitions,” Vore said. “Typically start in the sock business, Implus hired industry veteran Jeff Wheeler you hope for a 60 percent success ratio with companies you buy, but a few years ago and now has a $30 million hosiery business, which so far we are batting a thousand. Vore says Implus’ strategy with its the company will expand into the outdoor channel for Fall 2011. The acquisitions is to retain key personnel as it has with Steve Couder of company will also introduce two Yaktrax products next year and is set Yaktrax and Mike Hosey the founder of Highgear, who now serves as to debut the Sof Sole Fit Series, a new line of insoles that will allow con- VP-sales. Then it invests in product development, packaging and mar- sumers to select the right product by stepping on a Thermographic keting and then plugs the brand and the product into the sales and fitting unit. distribution machine it has built. High Gear’s sales have doubled to “We’re constantly updating our product,” Vore says. “We introduced $13 million since the acquisition, Vore says, and Little Hotties are on the first gel insole in the market and the Airr series we introduced this pace to double it sales by the end of the year. past year was a significant step ahead of that. We believe our product Implus now manages a portfolio of 14 brands, which it sells across is equal to or better than anyone else’s in the market, but we sell our three main channels — family footwear and sporting goods, outdoor, service and logistics capability as our real competitive advantage.” l

November/December 2010 ~ Footwear Insight • 49 LINES WE LIKE (and why)

So many shoes, so little shelf space, here are four lines that caught our eye.

Tsubo • This brand has a renewed energy and focus that harkens back to the 2003-2005 era when Tsubo first made an impact in the U.S. market. The Fall 2011 collection takes its cues from Cold War spy novels and movies. The collection offers style and design for women of mystery who want glamour with sufficient comfort and performance to run away from the bad guys.

Ecco BIOM Training • Ecco was one of the first companies to introduce a natural running product in 2009 with its BIOM collection and now the Danish company is extending that concept into both training and golf. The BIOM Trainer is based on the BIOM running shoe with flexible construction, particularly in the forefoot and minimal cushioning which allows the foot to move more naturally. Like the BIOM runner, these shoes feature an anatomical last based on more than 2500 scans of actual feet and a direct-inject super light insole. The trainer is available in both men’s and women’s models and with both leather and mesh uppers.

Keen Utility • Keen’s long-awaited move into the work footwear is yet another step forward for that category by a company that brings outdoor technology and style to a segment that has been craving it. The shoe styles take their names from great American cities known for their work ethic. The Portland (featured here) takes its inspiration from Keen’s adopted hometown. The shoe has a waterproof full-grain leather upper and crush-proof composite toes that offer protection without the cold and weight of steel. Other features include: Keen Dry waterproof breathable membrane; removable dual density EVA footbed and 3M reflective piping. The Portland retails for $185.

Blundstone • Any retailer who believes Blundstone is a one- SKU company needs to think again. The company has been strategically adding new versions of its signature product like the new “Warm & Dry.” As the name would have you believe, it is the first fully waterproof Blundstone boot, with waterproof leather and a Thinsulate liner. Inside is a natural sheerling removable insole perfect for those cold nights on the Australian plains, but cool enough when you’re drinking Fosters and trying to romance an Australian cutie. The shoes also have a TPU outsole which is oil and acid resistant and a PU midsole for comfort and flexibility. The Warm & Dry is available in Australian unisex sizing.

50 • Footwear Insight ~ November/December 2010