Custom Insoles: With OTC Pricing / Controlling Transaction Costs / Happy Anniversary! How One Retailer Made it Pay OfF

“Customization has lifted the lowly insole to a new level.” See page 14

The Drop

Zone

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New Thinking PAID US POSTAGE US on Minimalism STD PRSRT FOOTWEARINSIGHT.COM • September/October 2011

Editor in Chief Mark Sullivan [email protected] 646-319-7878 Editor at Large Cara Griffin Art Director Francis Klaess Associate Art Director September/October 2011 Mary McGann Contributors Michael Jacobsen Mike Kennedy Nancy Ruhling Tim Sitek Emma Johnson Publisher Jeff Nott [email protected] 516-305-4711 Advertising Jess Tendrick [email protected] 201-236-6324 Beth Gordon [email protected] 949-293-1378 Jeff Gruenhut [email protected] 404-467-9980 Troy Leonard [email protected] 352-624-1561 Sam Selvaggio [email protected] 212-398-5021 Insight Summer Vacation 2011: The Rocky Mountains of Colorado were never more stylish than after a group of Production intrepid hikers took to the height of 13K in their worn but trusty : Keen, Hi-Tec, Merrell, La Sportiva and Timberland. Michael Jacobsen 201-396-7005 [email protected] Business Manager 06 THE FOOTWEAR EYE 24 Are Made For Walking Marianna Rukhvarger Brand Building at Deckers; A Pur Play; Birkenstock’s Men’s wear looks have taken fashion by storm, with lace-up 516-305-4709 Hollywood Close Up; Pelle Pelle Shoes; Catching Up With oxfords and ankle-high boots embraced by young women. [email protected] Paul Fireman. Subscriptions 26 Casual Comfort store.formula4media.com 14 Custom Insoles: Fitting BOTH the Foot Comfort reigns supreme these days in all classifications of and the Pocketbook footwear for Spring 2012 introduction. Over-the-counter custom footbeds place a priority 28 Benjamin Lovell’s 20-year Itch on personalization. How a Philadelphia retailer is marketing a big anniversary.

18 TO DROP OR NOT TO DROP 30 NSRA Report: Transaction Processing PO Box 23-1318 The battle lines are drawn in the minimalist subculture within Several recent studies suggest that within a few years debit Great Neck, NY 11023 the running world. card sales will surpass credit card sales. Phone: 516-305-4710 Fax: 516-305-4712 22 Trend Insight: Minimalist Footwear 34 LINES WE LIKE (AND WHY) www.formula4media.com The category offers plenty of opportunity as vendors respond Some new thinking that can put some spring in your men’s to demand for more than just running shoes. business with these favorite new shoes from cool brands. Formula4 Media Publications Sports Insight Footwear Insight On the cover: Brooks Pure Connect, Vibram FiveFingers, Saucony Kinvara 2, Adidas adiPure Trainer, Skechers Go Run. Photo by Frank James Outdoor Insight Team Insight Textile Insight Running Insight Soccer Insight

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Facing The Facts

I was at the birthday part of a 90-year-old aunt recently, the highlight of which was the showing of old Super 8 movies. It was great seeing the old cars and the way people dressed, but I was most struck by how people from that era reacted when the camera was pointed at them. They shied away or would put their hands up to block the camera from recording their image. They were modest. That’s quite a difference from today. When you point a camera or a digital recording device at someone, they invariably start mugging, making faces or putting their hands into all these weird gang member symbols. We live in an “in your face” world. Modesty and subtlety long ago left the building. That should apply to retail, too. When I walk into a store, I don’t want a sales person in my face, but it’s nice when the merchandise and the storytelling are in my face. Last week, I took my soon to be 12-year-old son shopping for hiking boots for a school camping trip that he is required to attend. My son has little enthusiasm for this trip. Like his dad, his idea of “roughing it” is staying in a place where they don’t have ESPN2. So his energy for our shopping trip was rather low. Needless to say, we both loved it when we walked into our local Marty’s Shoes in New Jersey and saw a display of “Back to School Hiking Boots” five feet inside the front door. We helped ourselves, tried on two pairs, chose the one that fit and were in and out of the store in a total of 12 minutes. As the manager rang us up, he revealed that he knew all about the middle school camping trip. “A lot of kids have been coming in looking for boots,” he told me, “so we’re trying to make it easy.” He is a smart fellow who knows what’s going on in his market. I’m sure he didn’t have to get the plan-o-gram from corporate to make this decision and I hope he gets a bonus for being the store of the week. A few days later I went to the new REI store that recently opened in the shopping Mecca that I call home. The store was nice, not a knockout, but I was surprised at how “not in your face” it was. I have been coveting a bicycle lately and I walked in and saw an impressive display right in the front of the store. This location also has a bike shop on premise that does repairs, tune-ups and installations. Northern Bergen County, New Jersey where I live has a dozen great bike stores, so the competition will be tough, but I was instantly struck by the large assortment of bikes the store carried and a great assortment of accessories it stocked. I don’t know much about bikes, so how I typically assess them is to lift them up. How light they are will give me a clue as to what the materials used in their construction. Titanium, carbon fiber, steel? At REI, I couldn’t tell. First, many of the bikes were hanging from the ceiling. This was visually striking, but not real conducive to looking or touching. The bikes on the floor were locked down on racks, so I couldn’t really get a sense for how light they were either. And the displays didn’t really engage me. The message they were sending was “We might want to sell you one of these bikes, but we’re really afraid you might steal one.” I wanted to tell them New Jersey is not that kind of place and ever since The Sopranos went off the air we’re all shiny, happy people who don’t steal bikes. I also could have told them that they should practice the Three Esses of Retailing. 1. Showcase high. 2. Sell middle. 3 Store low. That’s why candy stores put the candy where kids can see and grab it. Consumers are time-pressed and very stressed. In self-serve environments like Marty’s, it’s great to have the product in your face. At REI, maybe they believe that because of their high-service environment they can afford to be a little more subtle. But like subtlety and modesty, I left the building too. Without buying a thing.

For those readers who can’t get enough of my wit, wisdom and insightful analysis, you can catch me almost weekly on my new blog. insideinsightblog.com

The Footwear Eye

Watch the Tom Brady commercial for Deckers brand BRANDS UGG Australia on our Blog: InsideInsightBlog.com Brand Building at Deckers

Deckers is best known for its Teva people who own it. Without all that, you don’t have a brand, and UGG brands (see blurb on page 34), you just have a label.” but CEO and chairman Angel Martinez Earlier this year, Deckers hired a few celebrity pitchmen is bullish on his up-and-coming brands, to promote the Mozo line of utility footwear it acquired last including the newly acquired Sanuk, year. This past spring, Mozo introduced the Chef Signature the recently relaunched Ahnu and Collection featuring shoes created in conjunction with well- Tsubo and Mozo. known chefs Aarón Sánchez, Chris Cosentino and Marcus Martinez calls Tsubo the “most Samuelsson. Martinez said the idea was to use the chefs like interesting” of the smaller develop- athletes to sell signature shoes that offer a new spin on the ing brands and describes it as design comfort service category. driven comfort. “The core benefit is For Spring 2012, Deckers re-launched Ahnu with a renewed comfort. We’ll have limited distribu- focus on active women. “We’ve really found our voice with tion and believe it will be a brand that Ahnu,” says Martinez, who describes the brand as “footwear consumers will eventually discover.” for the Lululemon consumer.” Specifically, Deckers has American consumers have already defined the target female consumer as a young female who discovered Sanuk and Martinez is uses the outdoors to escape. determined to make sure shoppers “She grew up during Title IX and played college sports all over the world can fall in love with and probably has some kids, so she gets outdoors to find the quirky brand that was developed some peace,” Martinez says. “She’s more likely to take a two by former surfer Jeff Kelley. “It’s a hour hike than a five day backpacking trip, but she’s serious brand that has a unique voice that and passionate about that time.” reaches a consumer we didn’t have,” he says. “Deckers’ goal With the men’s product, Ahnu will keep a performance will be to take the brand global and help develop the busi- edge with trail running product and performance hikers ness from its spring stronghold to a 12-month a year busi- that appeal to a sophisticated fitness consumer. “Our male ness. “Sanuk has a big upside and we provide the brand with consumer is a guy who’s tired of the gym and everything a runway to a long term vision. that goes on there. He grew up as an athlete and uses the “There’s a lot of heavy lifting taking a brand from $50 mil- outdoors for fitness.” lion to several hundred million (in annual sales) and we’ve As Deckers digests the Sanuk acquisition and develops its cleared the hurdles of infrastructure, sourcing and finance, stable of brands, Martinez says the company will focus on so the founders can concentrate on product, marketing and “execution against all parameters. brand building.” We have great brands, we need to execute on product Deckers worked on the acquisition for nearly two years, design, sourcing (UGG has begun producing product in Martinez says, and he doesn’t foresee another acquisition in Southern California), and delivering margins for retailers. the near future. “It’s hard to find great brands to acquire.” It’s a scary environment out there and retailers want to Martinez defines a brand as “having soul, energy and great make sure their investments with vendors pay off.”

Angel Martinez: “We have great brands, we need to execute on product design, sourcing and delivering margins for retailers.”

OrthoLite Gives the Green Light to Sustainability

OrthoLite, the world’s leading provider Impressions is the company’s first product that of open-cell foam insoles, has come up with a provides a custom fit. When the wearer steps into new way not only to help save the feet but also the shoe, the foam molds to the shape of the foot. the planet. Gelsomini says OrthoLite is focusing on creating OrthoLite Impressions uses nearly 50 percent more sustainable products like Impressions. “We castor oil, a bio-oil, instead of petroleum-based are extremely proud of this new foam techonology,” polyurethane in its formula, an idea the company she says, “and we know our customers will be says will be a game changer in the insole industry. proud to use it.” With OrthoLite foam in use in more “OrthoLite Impressions provides a unique, cus- than 100 million shoes each year, including styles tom-fit feeling that is unlike any foam we’ve ever by Asics, New Balance, Merrell, Nike, Puma, Vans produced,” says president Pamela Gelsomini. and Timberland, the proof will be in the wearing.

6 • Footwear Insight ~ September/October 2011 footwearinsight.com

The Footwear Eye

PRODUCT Vegetable tanned low impact leathers, recycled board, natural crepe rubber soles and latex rubber foam cushioning. A Pur Play The Canadian firm Baffin is known primarily for its cold weather boots, but the brand is attracting attention with its new line of Pur casual shoes. Pur is the latest brand to enter the market with an environmental approach. Pur’s slogan is “footwear with a conscience,” and the brand is following that with a design philosophy that includes vegetable tanned low impact leathers, recycled board, natural crepe rubber soles and latex rubber foam cushioning. The shoes also use thread whenever possible rather than adhesives. Pur execs say their shoe-making expertise developed from years of making performance win- ter boots gives the line an advantage over similar product on the market. footwear with a conscience

The footbeds are lined with an anti- microbial material, which reduces any lingering foot odor in the shoes. Barefooters The Brand

Four years ago before the word “barefoot” thermal and washable, according to Van had worked its way into the vocabulary of Klaveren, who also says the unusual mate- every shoe brand, David Van Klaveren was rial which the company calls CorksiLite plays working on the design of a shoe that would a major role in the product’s comfort story. make the wearer feel as though they were The material has a dampening effect which walking barefoot in the grass. absorbs impact, he says. The insoles on the It took the better part of 40 months to bring shoes are also designed to simulate reflexol- the product to market, but Van Klaveren and ogy principals, and the company has patented his partner Joao Araujo recently unveiled the name Oooaaahs for the footbeds. Barefooters, a line of shoes made from a The Oooaaah footbeds are lined with an and silicone material. The shoes, which antimicrobial material, which Van Klaveren says debuted in America at the Outdoor Retailer reduces any lingering foot odor in the shoes. Summer Market, are breathable, durable, Barefooters shoes will retail for about $90.

Birkenstock’s Hollywood Close Up

Every good brand has its day, and in Summer shown left) with even the ultra-cool, foam shoe 2011 the fashion obsessed decided “it” was brand, Native, planning a version for Spring Birkenstock. From a growing list of celeb- 2012. In a visit to the Birkenstock booth at the rity spottings to a sudden interest from trend- August show in Las Vegas, reps obsessed retailers like Nordstrom and Urban for the brand were well aware of the attention Outfitters, the brand’s season was capped with and thankful for their bursting orders, though a proclamation by ultimate Downtown hipster, having lived through the rollercoaster ride of Chloe Sevigny, in a New York Times article popularity cycles in the past, said the focus that Birks had become her go-to shoe. As remained comfort with no plans in place to well, there clearly has been an uptick in brands make changes to accommodate all their new- inspired by Birkenstocks (especially the Gizeh, found friends. Sounds like a solid plan.

8 • Footwear Insight ~ September/October 2011 footwearinsight.com

The Footwear Eye

Pelle Pelle Shoes MARKETING A rare case of the retailer taking a new product to market

In an unusual case of the tail wagging the night success,” says Alan Bishop, who is dog, a successful retailer is the driving force involved in the project as a consultant. behind a new footwear line. To wit: a showing at the recent Riva del Pelle Pelle, the popular brand of high-end Garda show in Italy was so successful that leather jackets with the signature scrolling Bishop expects to manufacture at least graphics, studs and oversized style, has 80 percent of what was shown. And some partnered with Soles, Inc. The Miami-based customers reordered the same day they retailer of urban footwear has grown to received their first order. three locations in as many years thanks Alan Bishop says the market is ripe to its ability to curate unique, hard-to-find for these unusual designs which com- lines, and growing relationships with the bine “beautiful suedes and skins with hip-hop, sports and entertainment celebri- very casual bottoms. The new high-end ties who frequent the locations. is so much more casual,” he says, adding, The new Pelle Pelle footwear came to “The market is confused with the price of be like this: Alan Bishop, 56, is owner of merchandise going up — you can’t keep the eight-location Mr. Alan’s Shoes chain in Detroit and been in the shoe retail busi- ness since age 19. His sons Jacob, 25, and 3 Lines: Pelle Pelle Adam, 27, took over the Miami sneaker boutique the senior Bishop had invested pellepelle Collection in, and launched it into a mini-empire that Retails for $50 to $80 and includes , slip-ons, loafers, lace-ups, driving shoes, and boots. will soon count five doors thanks in part ICON Collection to “The Brothers” knack for hobnobbing Retails for $90 to $300 dollars, and has a rich with celebrities, their father says proudly. European feel, including signature Pelle Pelle “I think my sons could sell their phones embellishments and exotic skins. This line’s biggest success is the suede driving shoes. for $100,000 each for the celebrity num- Marc Buchanan Collection bers they have in them,” Alan Bishop says. Will retail from $175 to $395 and highlights lizard, So when Alan’s relationship with Detroit- alligator and ostrich skins, combining Italian design based Pelle Pelle founder Marc Buchanan with sneaker components. This line will be limited to 20 retailers. evolved into a new partnership:, son Chad Bishop, 31, partnered with shoe industry veteran Jennifer Oppenheimer, owner of selling the same merchandise at higher wholesaler Island Footwear, which has an prices, or make the same merchandise at extensive client and design base. The two cheaper factories. You need something split profits 50-50, while paying Pelle Pelle new out there.” Bishop says that Pelle a royalty fee. Oppenheimer focuses on dis- Pelle shoes are made at some of the higher tribution, Bishop focuses on sales, and both end factories and work on a 30 percent contribute to design, while Buchanan signs margin, opposed to the industry standard, off on all aspects of the product. Sixty days which is closer to 55 percent of cost. after the launch, the new lines had 200 retail There is a children’s line set to launch for customers including DrJays.com, Magic back to school 2012. Future plans include Feet, and of course Mr. Alan’s Shoes. private label and women’s. “In my 37 years “We worked out an amicable relation- in the business I have never seen product ship so we didn’t have to be an overnight development go from our side over to their success, but we’re starting to be an over- side,” Bishop says. — Emma Johnson

footwearinsight.com Pelle Pelle Shoes The Footwear Eye

INTERVIEW Catching Up With Paul Fireman

In 1979, Paul Fireman, then a marketer of camping and fishing the chairman and CEO of Reebok International, Fireman sold supplies, invested about $65,000 to acquire the North American Reebok to Adidas for $3.8 billion. With that background, it’s no sales rights to a small British footwear brand called Reebok. surprise that Fireman’s recent investment in the nascent running In 2006, nearly three decades and millions of shoes later, as footwear brand Newton has turned a few heads.

“Newton has a point of difference in their product and their technology that is a major move in the athletic footwear and especially the running shoe business.”

After leaving Reebok behind, Fireman, 67, What pitfalls does a brand of this size need and his son Dan launched a private equity to avoid as it grows? firm with several other industry veterans on Well there are always pitfalls to avoid no mat- board. This past June, Fireman Capital Partners ter who you are. As you grow the most impor- invested approximately $20 million in Newton. tant thing is to stay focused on what your Newton Running is Fireman Capital’s sixth strategic intent is. As you grow you become a investment since the firm started in 2009. Other bit of a celebrity, you get more calls and you deals include the likes of Hudson Jeans and have to stay and support your core retailers juice company Evolution Fresh. who brought you to the party. They need to The investment from Fireman Capital Partners grow as a brand and we’ve been able to help is expected to yield further growth for Newton them bring in some experts to work on dif- as it not only offers the brand a cash infusion ferent things that they might not normally be but also offers Fireman’s teams’ expertise able to afford. in marketing, sourcing, design and develop- ment. Newton, whose footwear technology Do you worry that too many other brands is designed to allow runners to run as if they are now jumping on the minimalist and bare- were barefoot, landing on their midfoot/forefoot foot bandwagon? instead of landing on their heels, had $10 mil- No. It’s sensational because what it does is tell lion in sales in 2010 and has seen growth of the world that it is a hot item and a hot category. more than 100 percent per year for each of the Just because everyone wants to bake a cake past three years. doesn’t mean everybody bakes a good one, but We chatted with Paul Fireman about why it makes everyone hungry for a cake today. he’s so excited about Newton and what he sees happening in the marketplace. What makes Newton different? It is an educational story and education is what What’s your take on the cost increases that they do best and that is why I believe they can are currently impacting every aspect of the win this game. And winning doesn’t mean that footwear industry? they’ll be the dominant player in all of athletics, Until about 10 years ago, footwear in general It just means they will be able to continue build- was very suppressed in price. And athletic foot- ing their company. wear in particular has been very tight on pricing and kept prices low over the years. But like Newton is a specialty running brand. What everything the bubble bursts. Now the global other categories and channels can you see economy requires that the places where we Newton moving into as it grows? were making goods, those people there want I think they should stay focused on the people to make a real wage. And so it’s a healthy who are bringing them to the party. There are experience. Prices will go up. Consumers will plenty of shoes that can be sold in their exist- have to pay more and maybe they will be more ing channels, many more than they can make vigilant in buying less pairs or they will just buy right now. It is essential to have authenticity and what they really want. But it also brings parity once you have that as a brand, which Newton to places like the United States where it could certainly does, then you have authority and it’s get to a point where you can compete in labor possible to have authority in other products force here. So there are two ways to look at it. and especially the running shoe business. The as well. But you can’t just sew a label on the idea of “Born To Run” and minimalistic lines, all new product and say “I’m a Newton.” You What is it about Newton that piqued your these things are becoming the mainstream of have to be able to provide new authority in the interest? what running is going to become. People are new product. If you have brand recognition Well, first of all, they are really good people. being converted daily. The elite runners are all you can grow into other products and clothing But also, Newton has a point of difference in interested. Newton has created a product that and all the types of things that other athletic their product and their technology that goes supports that and it is just a question of them footwear companies do, but you have to do it along with what I am now willing to acknowl- evolving their designs to go along with their with authority and you can’t do it for the wrong edge is a major move in the athletic footwear great technology. reasons. — Cara Griffin

12 • Footwear Insight ~ September/October 2011 footwearinsight.com

INSOLES

“The age of customization is upon us,” declares Gary Diehl, Custom Insoles sales manager of eSoles. “More customers are aware that this is a way to minimize pain and maximize performance.” Although “customization” has become a catchword in the industry, Michael Squarek, Superfeet marketing manager, Fitting the prefers to refer to the process as “personalization.” “Because everyone’s feet are so different, when dealing with over-the-counter products, the extent to which insoles can be ‘customized’ is minimal,” he says. “They’re actually being ‘personalized.’ Customization is only true Foot & the customization when a real custom orthotic is made with a plaster cast of the foot.” “Customized” insoles may not be in the same category as prescription orthotics, but they are a step above prefabricated footbeds. “Prefabricated footbeds do not Pocketbook address the fact that each person’s feet are very different, and sometimes even the left and right of the same individual are different,” says Mary Grace Eala, director of training at he terms “over the counter” and “custom” usually do not Footbalance. “I think that is where the ‘customized’ fits in.” go together. But when you’re talking about insoles, they Larry Schwartz, CEO of Aetrex, which makes the Lynco brand, says make the perfect pair. that the demand for customization is growing because “consumers do With these “over-the-counter custom” insoles, the not want a ‘one-size-fits-all’ product any more, rather something that is customer instantly creates a form-fitting footbed the price personalized and beneficial for their particular needs.” of which is a fraction of that of a prescription orthotic. On the other foot, Powerstep promotes the fact that its orthotics James Frank Photo: TThe category is expanding, and the brands are catering to the greater are “designed to prevent the need for customization.” “Our product demand by producing a variety of insoles that work for every foot, line was scientifically designed using the shapes of thousands of feet,” every shoe style and every activity. says podiatrist Les Appel, Powerstep founder and consultant. “We

Lynco Customizable Orthotics / SRP: $69.95 SOLE’s Signature Dean Karnazes Response / SRP: $50 SRP: / Response Karnazes Dean Signature SOLE’s Powerstep’s Pinnacle Maxx / SRP: $45 SRP: / Maxx Pinnacle Powerstep’s

Footbalance / SRP: $79.99

14 • Footwear Insight ~ September/October 2011 Over-the-counter footbeds place a priority on personalization. By Nancy A. Ruhling developed a product that fits the majority of the population comfortably this information is kept by Natick Army Laboratories. We compiled this and reduces their pain.” information and determined the optimal arch heights for customers with While the brand does offer an arch booster and a metatarsal relief low, neutral and high arches.” pad, the orthotics are so well designed, Appel says, that they are rarely There are a number of factors that have increased the demand for needed. these over-the-counter customized insoles: Customization, personalization, whatever you choose to call it, it has People who use them in their athletic shoes now want the same lifted the lowly insole to a new level, bringing in new technology, new comfort and support in all their shoes. ideas and new players. Baby Boomers – and their feet – are getting older, and the insoles allow Over-the-counter custom insoles deliver results instantly. With heat- them to continue their activities virtually pain-free. moldable products like Footbalance and Archmolds, all the wearer has Regardless of a person’s age, there is a new awareness that healthy to do is pop them in the in-store or at-home oven or heating device for feet are part of a healthy lifestyle. a couple minutes and step into the shoe while they mold to the foot. “Podiatrists say three out of four people need some type of corrective Superfeet skips the oven; the insole takes on the foot shape through insoles,” Diehl says. “Specialty running stores are becoming more aware nothing more than daily wear. SOLE insoles are wear moldable and heat and offering insoles, so the market is gradually expanding as people moldable. And Sof Sole’s in-store FIT ID Pad provides a heat-activated know they have to take care of their feet and realize that insoles aren’t imprint of the customer’s arch to help determine the correct footbed. just for older people, they are for all ages.” ESoles offers an easy-to-assemble kit of key components that the Shean says the minimalist movement has been another reason retail wearer puts together to fit each foot while Lynco’s new line by Aetrex sales of insoles have been increasing significantly. “As we have seen in the allows the wearer to peel away gel plugs in the areas of discomfort to footwear industry, end-users are demanding products that promote natural create the perfect footbed. range of motion and the ability to use your body as it was naturally intended This new breed of insoles incorporates a variety of proprietary and to be used. Additionally, more customers are seeing little technology and high-tech features that are designed to increase comfort and performance cushioning that is put into an existing liner of most manufactured shoes. It is by promoting the natural biomechanics of the foot. “Many customers ask the second least expensive component of the shoe, and the customer base us how we determined our arch heights and density levels,” says Peter that sees the value of an insole at retail is growing.” Shean, national sales manager for Sof Sole. “As you know, when cadets But the brands are leaving nothing to chance. Several have started enlist in the army, their bodies are poked, prodded, and several different PR campaigns targeting not only consumers but also retail stores. For measurements are taken. One of those measurements is arch type, and example, Footbalance, a Finnish company established in 2003 that

eSoles’ eFit / SRP: $49.95 Sof Sole’s Fit / SRP: $39 SRP: / Fit Sole’s Sof

footwearinsight.com September/October 2011 ~ Footwear Insight • 15 INSOLES

Archmolds’ Ultimate / SRP: $57.95

Superfeet’s COPPER DMP / SRP: $49.95

launched in the U.S. market this year, hired a public relations firm to offers eight footbeds for a variety of activities and wearers: active, get its name out and an in-house marketing manager to bring the brand cushion blue, cushion pink that is correctly proportioned for the female to America. foot, leisure, max, max+, ski and race. Its most popular, the cushion blue, “We are becoming more involved in industry trade shows as well as is an all-around performer, offering custom-molded arch support, shock localized regional events with our independent sales agencies,” says absorption and comfort for recreational and performance athletes. Eala. “To reach our end users, we attend expos and partner with current Lynco Customizable Orthotics, which Aetrex launched in retail stores dealers at their events. This is an area we hope to grow to gain more in September 2011, feature patented Mozaic Customization technology exposure with the general public.” that allows the wearer to peel away gel plugs in the areas of discomfort. Lynco by Aetrex produces informational videos for its website, Available in a variety of styles and in men’s and women’s sizes, the YouTube and Facebook, and SOLE works with athletes like Dean $69.95 insoles provide a custom solution based on specific foot type. Karnazes to create signature footbeds and supports research by the Options for the rear foot include a cupped heel or a posted heel; choices Running Injury Clinic at the University of Calgary. for the front foot include a neutral front or metatarsal support. “Through the partnership with the clinic, SOLE supports research that Powerstep’s Pinnacle Maxx, which offers added motion control and aims to improve treatment of the most common foot and ankle injuries stability, is billed by the brand as “the next generation of foot orthotics.” for runners,” says SOLE president Mike Baker. “And the clinic’s research Its Heel Secure Comfort System features a micro-thin enlarged heel provides SOLE with some objective platform and a deeper heel cradle and firmer shell. Approved by the data, adding to our understanding of American Podiatric Medical Association, it was scientifically designed The age of biomechanics.” using the shapes of thousands of feet. Its polypropylene plastic shell customization Andrew Slatter, VP-North America prevents the need for customization. It is, according to the brand, sales for Archmolds, says all these recommended by more podiatrists than any other over-the-counter is upon us. efforts are paying off for the brands orthotic. Gary Diehl, eSoles and the stores. “The over-the-counter Sof Sole’s Fit lightweight performance insoles, which hit the market custom heat-moldable insoles are in 2011, work with the wearer’s arch to promote natural range of easy to use, and they do all the work for you. I think they have been motion and the natural biomechanics of the foot. The $39 insoles – for growing nonstop. People are realizing that one size can possibly fit all low, neutral and high arches – are foot types.” made of abrasion- and bacteria- Archmolds’ Ultimate provides up to twice the support of the brand’s The value of an resistant high-rebound ethylene other heat-moldable custom insoles. The $57.95 insole features a rigid insole at retail vinyl acetate foam. cradle under the heat-moldable ethylene vinyl acetate layer to double SOLE’s Signature Dean Karnazes the support, a heel cutout to allow for more cushioning and wings in is growing. Response, a premium heat- the arch area that enhance flexibility. Its topsheet is embedded with Peter Shean, Sof Sole moldable footbed designed for Advanced AG nanosilver anti-bacterial treatment. long runs, has gotten a foot-lift. eSoles’ eFit footbeds take a foot-by-foot approach to customization The $50 insole, which features a deep heel cup and custom arch support, by allowing the wearer to create different insoles for each foot. The is more breathable and lighter because it is made with perforated $49.95 footbeds – Supportive for minimum-impact activities; Dynamic Softec, and it has a moisture-wicking top sheet treated with Polygiene for medium-impact use; and Super Dynamic for high-impact sports -- are to resist odors. It’s also green – 20 percent of the content of its ethylene made of interlocking modular components that the wearer assembles vinyl acetate layer is recycled content as is 30 percent of its top layer. from a kit that has a left and right footbed; four arch supports of Superfeet’s Copper DMP, $49.95, molds to the shape of the foot different heights; and two metatarsal pads. through daily wear. Its three-layer memory foam adapts to the shape of Footbalance insoles, $79.99, are made to mold to the feet and keep the foot via the brand’s Dynamic Molding Process, and a firm stabilizer their customized form because of their resilient patented memory cap underneath it retains its biomechanical shape to provide support core. Feet are fit in-store in fewer than 10 minutes with Footbalance and stability. The trim-to-fit footbed, designed primarily for footwear Recommendation System software that provides a free overview with a removable insole, including most dress, casual, industrial, golf of foot dynamics and stance. The Finnish company, established by and low-impact activity shoes, is ideal for low to medium arches yet physiotherapists in 2003 and introduced to the U.S. market this year, works well with all. Copper DMP follows on the heels of Black DMP. l

16 • Footwear Insight ~ September/October 2011 footwearinsight.com

RUNNING SHOES

By Cregg Weinmann

The battle lines are drawn in the minimalist subculture within the running shoe world. Shoes with less structure, weight, and cushioning are being introduced to capture the fickle, fleeting, and fugitive fascination of fitness enthusiasts. The division between viewpoints is significant. In actuality, to hear the proponents of the two sides, the difference is only a few millimeters, but it is not an easy gap to bridge. The crux is TO DROP whether a should possess a zero-drop from heel to toe. Some shoemakers really believe that they should, while others are not quite convinced. A third group is hedging their bets by coming down on both sides of the question, they are producing shoes with a little drop as well as some that have no drop. Let’s not even get started on minimal shoes that literally fit like a glove. The benefits of minimalist shoes are at least tacitly acknowl- OR NOT edged, though avid proponents are quick to note that because highly structured shoes did not exist before the running boom today’s injury rates must be associated with the modern run- P ning shoe. They further contend that the flip side of that coin James Frank hoto: is the promise of fewer injuries in a shoe that has less weight, less structure, and less cushioning. It is interesting to note that TO DROP cautious coaches from a century ago advised runners to not go Skora Base / $125 KSwiss Blade Foot Ru / $90

Vivo Barefoot Neo Trail / $130

Brooks Pure Connect / $90

18 • Footwear Insight ~ September/October 2011 footwearinsight.com Minimal footwear allows strengthening of the muscles that cross the ankle joint. Not necessarily to prevent injury, which it may, but to improve running efficiency, whether striking on the heel or further forward on the foot. Biomechanics researcher, Benno Nigg overboard with their training as it might lead to career ending injuries How Low Can You Zero? like shin splints. Michael Murphy, track and field coach at University of Several brands have taken the approach that a zero-drop shoe is their Pennsylvania and the US Olympic teams of 1904, 1908, and 1912, noted best approach, but they feature a variety of cushioning, from almost none that “The beginner can avoid such injuries (inflamed shins) if he can run to a near-traditional forefoot thickness. on the turf at the beginning of his training, or, better yet, begins work in Altra: Introduces the Adam, a new shoe that features two insoles, one tennis shoes.” His advice revolved around using a better cushioned shoe, for a few millimeters of cushioning, the other paper thin to strengthen the rather than toughing it out in the minimal track spikes of the day, and this foot. Their initial offerings, the Instinct for men and Intuition for women was almost 100 years ago! – each with a healthy layer of foam under the foot, but with zero-drop – How do you define minimalism? It seems that there are three aims to continue into 2012. the minimalist shoes: minimal drop, minimal weight and minimal support. Kigo: Takes its flat soled design in a new laced model, just a thin layer If two of the three conditions exist then the shoe should be considered of rubber between you and the ground. More about lifestyle, it has a minimalist — after all, “two out of three ain’t bad.” So let’s begin with the more forgiving fit and design to improve the versatility for various active first question: what is minimal drop? In his book Natural Running, Newton pursuits. founder Danny Abshire suggests that shoes with five millimeters of drop Merrell: The follow-up to the initial round of zero-drop models, Merrell or less encourage the most efficient footstrike. Many of the minimal introduces the women’s Dash Glove, and men’s Road Glove, with a thin 4 shoe models offered have hit that aim, so that seems like a reasonable millimeters of foam, plus the Bare Access that has the same zero-drop, but target. What is minimal weight? The Performance category is generally with 8 millimeters of foam under the foot for added comfort, whether for considered to be shoes that are under 11 ounces, so how about single transitioning or as a alternative to traditional shoes. digits? Now to minimal structure, and this may be the simplest measure. Terra Plana Vivo Barefoot: Offers a new trail version with raised lugs Can you fold the heel down, or pinch the sides of the heel completely for traction, but has the same patented sole, and the thin polyurethane together? Does the sole resist twisting under torsion? (it shouldn’t). In a insole for comfort - known for their zero-drop with very little cushioning. nutshell, these answers should at least give some guidelines. Skora: A new brand devoted to zero-drop, offering two shoes to fill the

Saucony Kinvara 2 / $90 Vibram Spyridon LS / $120 Skechers Go Run / $80

Adidas adiPure Trainer / $90

footwearinsight.com September/October 2011 ~ Footwear Insight • 19 RUNNING SHOES

bill. Their synthetic textile version features a nifty criss-cross hook and Transitionally Low loop closure system, while a version with a garment leather upper, has a Several of the more traditional brands have taken the approach that more traditional asymmetrical lacing setup. cushioning is not all bad, and many consumers agree. Vibram: The SeeYa is a new model that is even more spartan than the ASICS: The 33 collection now consists of two shoes, with the new Rush, Bikila and Bikila LS, their running specific models. Virtually non-cushioned and will complete its introductions in Spring of 2012. Moderately lower See iT FiRST in AuSTin and with a no frills hook and loop closure. Also new for Spring 2012 is the than their mainline shoes, the 33 series runs about two millimeters lower Spyridon with a trail traction oriented tread. than their traditional shoes. Ecco: The original Biom A was a shoe designed for serious speedsters, Straddling The Hedge before form and efficient body position took on a more important role. The brands that are hedging their bets have the most to gain for their The low profile has a measured drop of only five millimeters, appropriate efforts because runners who have the interest to try a minimal shoe will for transitioning towards zero. have the best chance to find one that is best suited to their fitness and Brooks: The PureConnect is the first of four minimalist offerings from RegiSTeR nOW! running habits. Brooks, which also include the PureGrit, PureFlow, and PureCadence, Adidas: Adidas features a number of low-profile shoes in their adiZero each targeted for a different level of minimalism or performance. All WWW.TheRunningevenT.COM product range that drop less than the traditional 10-12 millimeters. They feature a 4 millimeter drop, as well as a level of sole pliability to engage introduced the ClimaCool Ride in this past Spring, which had a drop of and activate the foot while running. only five millimeters, and now they offer up a training shoe that is lower Nike: The Free 3.0 remains Nike’s most minimal trainer. Currently stil – just a few millimeters – and features pockets for each toe. For Spring very nicely updated from version 2 to version 3, it is slated for yet 2012 a running shoe joins the trainer, sans the separate toes. another renewal in Summer of 2012. In combination with the Free KSwiss: Will introduce the Blade Foot Run, a variation on their blade Everyday, there are plans to have a Free 5.0 (the Everyday), a Free technology, here in a zero-drop shoe with a bit of protection. Reminiscent 4.0 (a new intermediate version), and the Free 3.0 as the different

Merrell Dash Glove / $110

New Balance Minimus Zero Road / $110 Vibram SeeYa / $100 The Running evenT® December 7-10, 2011/Austin Convention Center & hilton Austin ATTenD The COnFeRenCe: BuSineSS OPeRATiOnS, MARKeTing, MeRChAnDiSing, hR MAnAgeMenT, & MORe The 50 BeST Running STOReS in The Running SPeCiALTY ATTEND FrEE hALL OF FAMe Workshops SponSoredAMeRiCA by Competitor preSented by the irrA And runnerS’ World AT TrE Expo The LARgeST eXPO eveR! SEE THE COMPLETE LIST OF OVER 150 RunnIng SPECIaLTy VEndORS

Ecco Biom A / $220 Altra Adam / $94 Saucony Hattori / $80 WhO iS The FASTeST ReTAiLeR in AMeRiCA? Run The inDie 5K AnD FinD OuT! of a racing flat, it joins the burgeoning line of serious running shoes strengths of Nike’s version of the minimalist running. coming from Southern California. Puma: The Faas series continues to grow. Minimalistic in weight and The Only Conference & Expo Endorsed by New Balance: The Minimus series broadens in Spring to include zero- support, it features a near traditional heel to forefoot drop. More shoes twitter.com/therunningevent.com facebook.com/therunningevent insideinsightblog.com twitter.com/therunningevent.com The APPAReL viSiT The Running drop models in addition to the first Minimus shoes for running on trails, are coming in Spring 2012 to complete the series, for now. roads, or for fitness, which all had a four millimeter heel to forefoot drop. Reebok: The RealFlex receives a running specific update in summer Newton: With a moderately low drop of five millimeters, the forefoot 2012, lowering several millimeters from its traditional drop, to offer TeCh CenTeR STORe OF The FuTuRe friendly brand continues with that portion of their line. New to the more options for the fitness runner, or a traditionalist looking for a less line is the MV2 with the same forefoot technology, but in a zero-drop structured and more natural feel. shoe, and it is a little more than half the weight of some of the heavier Skechers: The Go Run is the first serious running shoe from Skechers, minimal shoes. previous attempts being a cross between their Shape-Ups product and a Saucony: The Hattori and Kinvara show that Saucony is committed to training shoe. The signing of Olympic Marathon silver medalist and New selling minimalist shoes across the range of their performance line (the York City Marathon Champion, Meb Keflezghi, does mean he needs to be award winning Mirage and Cantara both feature the same four millimeter something to run in, and the Go Run gets that nod. Lightweight, flexible, Contact Troy Leonard at 352-624-1561 [email protected] or www.therunningevent.com drop of the Kinvara). minimalist in its features, it is a good starting point. l

20 • Footwear Insight ~ September/October 2011 footwearinsight.com ® 2011 Formula4Media, LLC.

TRE2011 AD 9-11.indd 1 9/19/11 4:20 PM

71% TREND INSIGHT Consumers Aware of the Category

New survey shows consumers see uses far beyond running. Minimalist Footwear Category Offers

Plenty of Opportunity No/25% Yes/75%

s competition in the “barefoot” or “minimalist” more toward water sports than running. Kayaking topped the footwear market heats up, new research from list of considered activities at 13 percent of the responses, fol- Leisure Trends Group shows there is plenty of lowed by canoeing and wearing at the beach. Runs of two miles opportunity left in this quickly growing catego- or less was sixth on the list with nine percent of responses ry. With several non-running activities topping and runs of more than two miles came in tenth at five percent the list of consumers’ considered uses for this of responses. There are lessons in this for both retailers and Afootwear, keeping a broad perspective on the target markets manufacturers according to Kelley. “Much of the attention might be the key to capitalizing on this opportunity. and buzz has been focused on running, but this survey clearly The Leisure Trends Group survey, conducted in late June/ early July 2011 among its proprietary Most Active Americans Preferred Activities Panel (MAAP), showed that three quarters (75 percent) of Active Americans were aware of the “barefoot” or “minimal- Kayaking 11% ist” concept for footwear design. The survey, with 1903 total responses, also revealed that among those aware, nearly half Beach Wear 10% (46 percent) have tried or are considering trying footwear in Boating 9% this category. “These numbers show that the category has hit beyond just the Innovators and Early Adopters,” states Jim Casual Wear 8% Kelley, VP and COO of Leisure Trends Group, “but there is still Fishing 5% plenty of room left with those further down the product adop- tion curve to continue driving growth in the category”. Yoga 4% So far, the major beneficiary of minimalism’s rapid growth Other 3% has been Vibram with its Five Fingers line. When asked which one brand is the leader in this category, those aware of bare- foot/minimalist footwear overwhelmingly named Vibram as the shows consumers are thinking more broadly. The take-away category leader. It is important to note that this question was for multi-sport retailers is the value in cross-merchandising asked in an “open-ended” format which prompted respondents minimalist footwear in different areas of the store, while for to write in the leading brand rather than select from a list. Fifty- marketers it is the need to set their sights on multiple end-use eight percent (58 percent) of those aware of the category pro- targets”. The variety of activities consumers consider for this vided a leading brand and of those, 71 percent named Vibram footwear also provides a degree of protection for the category as the leader. as Kelley points out. “Having multiple end uses for a product But how will consumers use these shoes? While the debate is much like diversifying a stock portfolio. The minimalist foot- over the benefits and drawbacks of running in minimalist foot- wear eggs aren’t all in one basket which gives the trend some wear is capturing much of the media attention, consumers have long-term protection”. The result is a trend that will continue a broader view. When asked for what activities they would con- to pack a much greater punch than its minimalist name would sider using minimalist footwear, Active Americans gravitated seem to suggest. l Footwear Leaders in Barefoot/Minimalist

7% 6% 6%

3% 3% 1% 1% 1% 1% 1%

Vibram FiveFinger’s NB Fila Nike

Teva Women’s Treksport Keen Other Merell Chaco Adidas Vibram Barefoot

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].

22 • Footwear Insight ~ September/October 2011 footwearinsight.com

BOOTS Made For Walking P hotos: Lois Sakany Lois hotos:

Ashley, 19, New York City Briar, 17, New York City Phoebe, 20, New York City Purchased at Journeys for $30 Purchased at Urban Outfitters for $70 Purchased at thrift store for $15 Favorite shoes in wardrobe: “Hi-top Favorite shoes in wardrobe: “Black ankle Favorite shoes in wardrobe: “Pull-on Frye black Converse — all my shoes are black.” boots with a three-inch heel from a vintage boots with custom studs.” Fantasy purchase: “I don’t shop by brand store in Paris.” Fantasy purchase: “Anything designed by so it’s hard to think of anything.” Fantasy purchase: “Opening Ceremony Alexander Wang.” Next planned purchase: “Something a green, suede, lace-up ankle boots.” Next planned purchase: “Black Doc Martens.” little dressier I can wear to a club, like Next planned purchase: “Sam Edelman gladiator sandals.” suede ankle boots.”

24 • Footwear Insight ~ September/October 2011 footwearinsight.com en’s wear looks have taken fashion by storm, with (it was a hot/sunny day in August!), brown is trending slightly higher lace-up oxfords and ankle-high boots embraced with than black, the demographic is young contemporary and while wear- as much enthusiasm by young women as men. In the ers said they were more focused on fashion and price than labels, streets of SoHo, the lace-up the boots shown here Converse, Vans and Doc Martens garnered multiple mentions. And were a common theme. A few things emerged about the trend isn’t over yet — of the seven interviewed, four have Mthe trend — it’s not attached to a brand nor is it weather-driven plans to buy another pair for fall. — Lois Sakany hotos: Lois Sakany Lois P hotos:

Hayley, 18, New York City Xinyi, 18, Shenzhen, China Kayla, 19, New York City Purchased at Steve Madden, price unknown Purchased in a downtown Manhattan Purchased at thrift store for $18 Favorite shoes in wardrobe: “These boots.” shop for $80 Favorite shoes in wardrobe: “Floral Doc Fantasy purchase: “High-heel, knee-high Favorite shoes in wardrobe: “These boots, Martens.” boots.” they’re new and I like new shoes.” Fantasy purchase: “Any old school shoes — Next planned purchase: “Pull-on boots with a Fantasy purchase: “Satin with a Vans, Converse.” more feminine silhouette.” traditional Chinese print.” Next planned purchase: “I already have a few Next planned purchase: “I don’t have anything pairs of boots so maybe nothing for a while. I in mind. If I see something I like, I’ll buy it.” don’t wear heels, I’m 5’10”.

footwearinsight.com September/October 2011 ~ Footwear Insight • 25 SHOES Casual Comfort Comfort reigns supreme these days in all classifications of footwear: from the tony Euro-comfort lines to dress down styles that hook up with denim. For Spring ’12, there are cozy, colorful styles for kids and slouchy -like shoes for grown-ups. No matter how you dress, how old you are or how old you act, your feet will feel fabulous.

1 2

3 4

5 6

7 8

26 • Footwear Insight ~ September/October 2011 footwearinsight.com 1. Blundstone Stout in Brown Leather 2. Cushe Men’s Slipper for men (though it’s not really a slipper) 3. Dr. Scholl’s 10 Jennie for women 4. Keen Women’s Arcata 5. Keen Men’s Arcata in leather 6. El Naturalists Sassi 7. El Naturalista Campos in Chocolate 8. Sanuk Cadet in Green 9. Bearpaw’s Ilvy in Petunia for kids 9 10. Cushe Women’s Slipper (not really a slipper either) 11. The North Face Shifter 12. The North face Single Track Hayasa 13. Hi-Tec Sierra Sneaker 14. Dr. Scholl’s Strolle 15. Ahnu Caledonia in Glacier Gray 16. Quinn Low in Brown 17. Skechers GO Walk in Navy 18. Sanuk Tie One On for Men & Women

11 12

13 14

15 16

17 18

footwearinsight.com September/October 2011 ~ Footwear Insight • 27 RETAIL The 20-year Itch How a Philadelphia retailer is marking and marketing a big anniversary. By Tim Sitek

hen Benjamin Lovell opened his first store in 1991, he was well ahead of the curve. Located on South Street in Philadelphia, he wanted the latest fashions in a hip location, not some fancy suburban mall. As an added bonus, he also scoured lines for shoes that not only set the trend but offered some semblance of comfort, long beforeW fashion-comfort became a buzzword and category. Throw in personal service – fitting stools and attentive, trained staff – and deep selection. Twenty years later, the same philosophy carries on in what has now become a five-store chain. The stores average 1500-square feet, with two in Philly, one each in Manayunk and Chadds Ford, and another in Haddonfield, NJ. And all continue to pioneer lines while catering primarily to women ages 45 to 50 looking for style and comfort at prices from $89 to $450. It also does about a quarter of its business with men and just enough with kids by stock- ing hot brands such as Dansko and Uggs, two lines that it started carrying and selling from Day One. The chain couldn’t pass up the opportunity to celebrate its two decades in business. While the past couple years have been challenging, Benjamin Lovell doubled its marketing budget and rolled out a year-long campaign to celebrate “20 Years of Style and Comfort.” The campaign combines the retailer’s heritage with its hip attitude. “We wanted to acknowledge our past, and at the same time promote our 20th anniversary with new ideas and fresh ways of communicating with our whole audience,” says John Holden, the retailer’s chief operating officer. By the way, Holden knows about Benjamin Lovell’s heritage. He’s been along for the whole ride, starting in the stockroom. Anchored with its 20 Years of Style and Comfort logo, one of the cam- paign’s centerpieces is a video that chronicles its history, ties to key sup- pliers and photos of its staff. The 20 Years of Style video features a hip soundtrack by Small Town Crooks, a homegrown rock band making some noise on the music scene. The chain hopes to offer the group’s soundtrack as a free download. The video is posted on its website (benjaminlovellshoes.com), Facebook fan page and You Tube. There’s also a QR code that can be scanned on any smart phone to access the video. That special bar code is prominently dis- played on all advertising, point-of-purchase materials, e-marketing messages and even on specially designed shirts for employees. “Our long-time customers loved it,” Holden says of the video. Traditional print ads capture the company’s past with a clean fresh look, The “20 Years which has long been a hallmark of the chain. One of the ads spotlights its of Style and ties to four major suppliers that have supported the chain’s success since its Comfort” first days. Dansko, Clarks, Ugg and Naot are billed as Best of Benjamin Lovell marketing and ad cam- Shoes. . . with us from the start, now celebrating 20 years. “We thank our key paign (left) vendors for being with us for the past 20 years,” Holden notes. devised by July brought a big push when Benjamin Lovell rewarded customers with John Holden its first-ever storewide sale. Of course, Benjamin Lovell offered 20 percent off has marked everything in its stores, even on sale items, to mark its 20th birthday sale. the year-long celebration The month was strategically selected during the summer doldrums to of Benjamin create a buzz and build traffic, Holden says. And it worked, with sales up 26 Lovell Shoes’ percent from the previous July. anniversary, More events are part of the celebration: teaming up with Dansko to plant a while its tradi- million trees and with NAOT to donate shoes to needy families in Philadelphia. tional service, complete with And it will hold its third annual food drive in November. Every customer that fitting stools donates a food item to feed the hungry receives a 10 percent discount. and attentive For Benjamin Lovell, blending good old-fashioned service with the latest employees, styles and comfort, not to mention fresh marketing approaches, never goes guarantee out of style. customer loyalty for the To see Benjamin Lovell’s 20th anniversary video (and a bunch of other cool next 20 years. stuff related to active lifestyle retailing), visit www.insideinsightblog.com. l

28 • Footwear Insight ~ September/October 2011 footwearinsight.com footwearinsight.com September/October 2011 ~ Footwear Insight • 29 NSRA REPORT Transaction Processing

It is widely he cost of processing transactions percent in 2005. Use of cash and checks were down has continued to climb, although not this period from all stores data in 2007, both drop- recognized at a great pace, as an expense for ping by about two percentage points. Cash pay- that debit card retailers, despite the backdrop of the ments totaled 12.4 percent of transactions in 2009 use has soared recession and the challenge of making versus 14.1 percent in 2007. Checks accounted for in recent sales to careful consumers. 9.9 percent of the total versus 11.5 percent in 2007. TCredit card processing expenses were 1.6 per- The use of checks and cash has dwindled in each of years. Several cent of net sales, up fractionally from 1.4 percent our last retailer surveys. recent studies for all stores in 2007. Compare that to 1999, when Although our survey did not break out credit suggest within transaction fees represented just 0.9 percent of versus debit card use, it is widely recognized that sales. In 1999, transaction processing comprised debit card use has soared in recent years. In fact, a few more 11.8 percent of total G&A (general and administra- several recent studies suggest within a few more years, debit tive expenses); responses to the 2009 survey show years, debit card sales will surpass credit card card sales will the figure climbed to almost 20 percent of G&A. sales. According to the National Retail Federation (NRF), there is pressure in Washington, D.C. on the surpass credit Shifting Payment Types Federal Reserve to force bankcard banks to consid- card sales. According to the NRF, interchange fees – so called er actual costs for processing debit transactions. “swipe” fees – average between 1 and 2 percent for The NRF is pushing for recognition that debit cards debit cards and 2 percent or more for credit cards. are essentially the same as cash or checks. There Overall, swipe fees charged to retailers and other is also proposed federal legislation that would bar businesses by Visa and MasterCard totaled $48 the card industry from interfering with merchants billion in 2007, according to a U.S. Treasury study. who offer a discount or other benefits to customers In our survey, use of credit/debit/check cards who use debit cards or cash, and other proposed grew by about 2 percent this reporting period, legislation that would allow minimum purchase representing 75.7 percent of all transactions, com- amounts to be set for credit card usage. pared to 73.5 percent in 2007. The other transac- While much of the reported increase in debit tion category showing an increase was “other,” card usage arises from changes and transforma- which primarily includes gift cards and store- tions within the payments processing industry, it issued gift certificates. That figure was 2 percent, should be noted that some increases are attribut- up from 0.9 percent in 2007 but lower than the 2.7 able to ATM use, as has been the case in the past.

30 • Footwear Insight ~ September/October 2011 footwearinsight.com

NSRA REPORT

Another factor that may impact debit usage in inde- chants process less than 20,000 Visa or MasterCard pendent retailing is the relatively large average ticket e-commerce transactions annually. At Level 1, mer- in both apparel and footwear. chants process transactions that number in the mil- lions. In the past, merchants classified as Level 4 PCI Payment Card Data Security were required to be compliant but were not required Although credit card fraud itself has actu- to provide proof of compliance. Recent legislation is ally decreased, according to the Federal Trade requiring even Level 4 merchants to provide proof. n Commission, it still is considered part of identity theft, which still triggers consumer fears. For additional information, go to www.pcisecurity Payment Card Industry Data Security Standard standards.org, www.visa.com/clsp or www.mastercard. (PCI DSS) is a set of data security requirements com/sdp. NSRA members who use NSRA’s Bank of established by the major card brands, including Visa, America Merchant Services processing are invited to MasterCard and Discover, to protect cardholder contact their representative with questions. account information. All merchants who accept any type of payment card transactions must comply with PCI DSS at all times. The steps that merchants take to Space Productivity by Store Type (Avg) achieve and maintain PCI DSS compliance will likely vary. Merchants typically fall into one of four catego- Store A factor that ries, PCI Levels 1 through 4, depending on number of Sales Size Revenue may impact transactions done over the course of a year. Level 4 All Stores $246 2,800 $1,071,643 debit usage in is the lowest number of transactions, in which mer- Type of Store independent Concept 242 2,731 878,344 retailing is the Sales by Payment Type (% of Net Sales) Traditional 235 2,800 978,248 relatively large Company Sales Volume average ticket 70.0 <350K 132 1,500 252,796 in both apparel 350-649K 270 1,750 486,419 and footwear. 60.0 650K-1m 186 3,200 724,342 >1m 289 3,796 1,641,754

50.0 Number of Stores in Firm Single 231 2,827 1,080,828 ● 2009 ● 2007 ● 2005 2-5 Stores 40.0 235 3,390 1,143,360 6+ Stores 327 2,445 902,520

30.0 Store Location Street 278 3,000 1,147,823 Strip 238 2,927 1,004,832 20.0 Freestanding 171 5,000 950,609

Type 10.0 Family Stores 193 4,088 1,220,768 Combination Stores 284 2,300 862,812 High Performers 275 2,800 1,209,060 Credit Cash Check Other Low Performers 231 3,200 1,033,192 Card Like what you’ve read? Would you like to see more? The NSRA 2010-11 Trend in Sales Processing Fees (% of net Sales) Business Performance 1.8 Report, published in coop- 1.6 eration with Footwear Insight, is available to NSRA members for $295 and non-members for 1.4 $695. The report is based 1.4 on in-depth data gathered 1.3 from more than 100 of the top independent shoe 1.2 stores in America and fea- 1.2 tures reports and analy- 1.1 sis on sales, inventory, management, advertising, occupancy expenses and much more. To order your copy, please visit: http:// 0.9 store.formula4media.com 1999 2001 2003 2005 2007 2009

32 • Footwear Insight ~ September/October 2011 footwearinsight.com 2009 LINES WE LIKE (AND WHY)

Some new thinking that can put some spring in your men’s business

1

LLOYD • Lloyd is another European brand striding into the men’s business. The German comfort brand was purchased by Ara about eight years ago and last fall set up a U.S. operation with warehousing and customer service to attack the North American market. Company execs see the line targeting the Allen-Edmonds and Cole Haan customer, but offering more of a fashion edge. The line has developed a rabid following among men’s wear stores that also sell shoes as well as fashion industry insiders. The line features more than 120 styles with both leather and rubber outsoles, including 60 SKUs that are kept in-stock. Suggested retail on most of the line is between $200 and $300.

3 UGG MEN’S • If those Tom Brady commercials don’t have you taking UGG seri- ously as a men’s line, a look at their new fall line will cure you. UGG has had success with Ascot slipper on college campuses and its Butte boot in urban markets and is now filling in the broad space in between those two. Our fall favorites include the motor- cycle inspired Rockville and the catchily named Sullivan.

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WOLKY • This line has been produced in Europe for more than a decade, but Wolky has just shipped its first men’s shoes to U.S. specialty retailers. The brand has fea- tured men’s sandals in the past, but is stepping out with a small collection of men’s shoes made in Portugal that feature calfskin leather and uppers and retail between $150 and $180. The shoes feature a removable anatomical footbed and a specially designed toe box for added comfort.

4 RYZ • Company CEO Rob Langstaff is a for- mer athletic shoe executive who ran a sub-four minute mile in his track and field days. Now he’s trying to put all that experience into a line of footwear that combines style with athletic shoe comfort. The collection features com- pression molded EVA mid-soles that allow for a flex groove in the forefoot (“where the foot is supposed to flex,” Langstaff says). The shoes weigh in at about nine ounces each.

34 • Footwear Insight ~ September/October 2011 footwearinsight.com