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All in the Family

A born storyteller, Tom Romeo, CEO of Bearpaw, spins a career yarn rivaling any American Dream-like tale of success, complete with stories of fierce loyalty and never-say-die passion, with a few wild tales just for laughs.

 

CEO of Bearpaw

CEO of Bearpaw

How did Tom Romeo, CEO of the rapidly growing Bearpaw comfort brand (which is barreling toward the $100 million annual sales mark this year) launch the business back in 2001? You probably wouldn’t guess the story in a million years, because it was completely unexpected, unplanned for and ranks as one of the most financially fortuitous “right place at the right time” moments in footwear industry lore.

It all started with an out-of-the-blue phone call Romeo received from a friend of his Chinese manufacturing partner, who was looking to unload 50,000 pairs of sheepskin boots. Romeo, who had started his own manufacturing company about six years earlier—first making Riddell athletic shoes and then later private label collections and his own Attix brand of entry-level court sneakers (or, as he describes them, “barbecue shoes”) was completely caught off-guard by the sheepskin proposition. “I told him I honestly didn’t know if I could sell them, but he then added that his friend vouched for me as the man who could make it happen,'” Romeo says.

So Romeo took some samples back to America and said he’d have an answer for him in a week. He then called his buddy, a buyer at Big 5 Sporting Goods, to see if he was interested, quickly realizing he didn’t even know the wholesale price of the boots. But before Romeo could get a price quote, his buddy told him that he knew he would be fair and Big 5 would buy them all. It was a done deal: $750,000. “I didn’t expect anything, so it was a real good deal for me,” Romeo says. But then his Big 5 contact said the product needed a name and asked Romeo to come up with one ASAP. As fate would have it, Romeo’s ex-wife was a good friend with an American Indian artist. “I paid him $500 to come up with a name and logo,” Romeo says, adding that his first suggestion was Bearclaw, but it couldn’t be registered. “He then came up with Bearpaw and drew our claw logo. I liked it.” Adds Romeo, “To this day, it’s the best $500 I have ever spent.”

Romeo thought that the newly minted Bearpaw brand was going to be a one-and-done deal. But Big 5 called after the debut collection sold out, noting customers liked the name and the product, and they wanted to buy more—125,000 pairs, to be exact. Soon after, Romeo decided to set up shop at the WSA show to expand distribution. “All of a sudden, I started selling to more and more retailers,” he says. Soon after that, Frank Imperial, then sales manager for Emu Footwear, called Romeo—again, out of the blue—and asked to work with him. It proved an ideal match: Imperial and Romeo exclusively distributed Bearpaw from 2003 to 2007, eventually hitting 1 million pairs in annual sales. Then the duo hired a sales force, shortly afterward bringing in industry veteran John Larkin to handle international sales. (Bearpaw has 24 distributors to date.) Next came the addition of Randy McKinley to lead the brand’s global marketing efforts and, as Romeo describes it, Bearpaw’s tight-knit nuclear family came into full existence. “Randy’s the bomb,” Romeo offers. “He’s got us communicating to our customer across so many mediums, it’s incredible.”

The family-like workplace is a reflection of Romeo’s upbringing. Romeo’s father, an Italian immigrant, came to America unable to speak English but eventually became a doctor. He instilled in his son a tremendous work ethic as well as the importance of family. In fact, his father wrote a book about his life, “The Son of a Molder,” which provided Romeo with inspiration at a recent company sales meeting. “I told our team, ‘You probably won’t read the whole thing, but this book is about family. If you stay together, you can conquer a lot.'” Romeo adds, “That’s what’s so remarkable about our team: We eat, play and work together, and that closeness has been key to our success.”

In addition to strong ties and quality products, Romeo attributes Bearpaw’s rapid growth to its willingness to gamble. Along these lines, Romeo recalls one of the best compliments he has ever received. It was from a DSW buyer, who told him that the reason the chain buys from Bearpaw is not only because the merchandise sells (because everything DSW buys better sell, he noted). It’s also because Bearpaw carries inventory that the chain can then re-order. The buyer noted most brands don’t take that inventory risk. “I’ve always been an entrepreneur and a gambler, and I’ll put my money where my mouth is,” Romeo maintains. “At any given time, we have 500,000 to 1 million pairs in our warehouse.” Romeo says it’s worth the risk if a particular style or collection gets hot. “When you are strictly manufacturing by order amount, you can be caught short,” he explains. “That has been our recurring problem—[no one’s] been buying enough. So I keep going back to our factories asking for more to meet this growing demand. This inventory risk is what makes us unique in the marketplace.” And Romeo, fiercely loyal, remembers the factory owner who started it all with that initial 50,000-pairs: “That man’s factory will make more than 1 million pairs for us this year, and totaled we will make more than 4 million pairs in 2010,” he says.

Over the past couple of seasons, Bearpaw has expanded beyond its sheepskin boot roots, with the introduction of a sandal collection last year and new wellies and canvas styles for Spring ’11. Romeo describes the brand now as “comfort fashion” answering consumers’ desire for three essential qualities: shoes that are natural, comfortable and sensible. “That’s our mission statement,” he says, defining “sensibility” as affordably priced styles that are highly wearable. “I look at us as a comfort brand first and a fashion brand second,” Romeo adds, noting that Bearpaw’s appeal to young consumers is a bonus. “We reach a much younger audience than a lot of the traditional comfort brands.”

Romeo credits an impromptu tour of his son’s high school campus a few years back for enlightening him on what today’s youth really want—in addition to affordability—when it comes to fashion and footwear. “I noticed the kids were all basically wearing pajamas and slippers,” he says. “So I told our design team, ‘the youth of today want comfort.’ It’s a far cry from when I grew up, when it was all about big hair and uncomfortable shoes.”

Romeo believes the sky is the limit for Bearpaw’s growth. Asked where he sees the brand in three years, his reply is honest: “If you asked me that same question three years ago, I would have been way off… As Bearpaw grows it will give us the opportunity to launch or acquire additional brands and enable us to reach further into the marketplace.” Romeo projects Bearpaw’s full potential to be $500 million in annual sales globally, citing the brand’s success in Korea as a benchmark. “We are that country’s No. 1 sheepskin brand, having already opened 42 concept stores there, and we’ll sell anywhere from 750,000 to 1 million pairs this year,” he says. “We are now opening concept stores in China, and I believe our international sales could be as big as our domestic sales within five years.”

Right now, it’s all good at Bearpaw, and Romeo is the first to credit his corporate family for the brand’s success. “That’s why I can see our business continuing to grow, because we have such a great group,” he says, adding that he considers himself the furthest thing from a dictator. “It’s all about family.”

Bearpaw appears to be one of those rare recession-proof brands. What do you attribute that resiliency to most?

Our value-added attributes. We offer so much value within our quality products. There’s no middle man—we work directly with our factories. So we don’t pass costs on to our retailers and then on to consumers. It’s the same in our corporate offices: We do a lot of business with few personnel. [The company employs 12 at its Citrus Heights, CA, headquarters; its rep forces and design department bring the total to 40]. We get the best people who want to work hard.

Describe your business philosophy.

The No. 1 thing about me is my passion. I will never give up. It’s just not in my makeup. And I’m really passionate about our products—I love the smell of the leathers and how they feel. No. 2 would have to be my loyalty. I try to be fair with everybody, and I believe that as long as I do my job right, everything else will fall into place. I never really worry about money. Money is not why I got into this business.

You don’t come across too corporate—which is a compliment.

It goes back to my baseball playing days. I approach my business as a game that I really want to win. I don’t run it as a business; I run it as a family—and it’s all about winning.

When a finance guy runs a company, there are good and bad aspects. Personally, I think there’s more bad, because that individual is going to watch out for the numbers more than anything else. But when a salesperson like myself runs a company, we are not afraid to take chances. Now, I do have my financial guy sitting over my shoulder whispering for me to be careful at times—and I do listen—but when you’re hot, you have to ask yourself, how many chances do you get to be hot? We have to take advantage of it while we can. Sometimes people make the business much more complicated than it needs to be.

Any guesses on how long Bearpaw’s hot streak might last?

In 2003, I thought, “Wow, this is fun, and I’m making some money now. But it’s gotta slow down.” Then in 2005, we landed Famous Footwear and it has since become a destination for our brand. But again, I expected growth to slow. Yet we kept on growing, and this year we landed Macy’s and our international growth will be up 10 times. So how do you accurately project future growth? In addition to the fact that we offer a hot look, people want the brand now as well. And sheepskin boots, specifically, have become a style staple. People know that in the winter it gets cold, and if they’re attending, say, a football game, then they are going to be wearing Bearpaw.

What is the main difference between Bearpaw and other sheepskin brands?

I think one the best analogies of the difference between Ugg and Bearpaw consumers was revealed at a high school football game I attended with my son about three years ago. One of the schools was from an affluent town, and its fans were primarily Ugg wearers; the other, more middle-class town’s fans mostly wore Bearpaw. That summed it up best: Ugg sells the elite and we sell the masses. That snapshot told me what direction to head with our brand. And it also taught me to keep my eyes open and let the consumers guide me.

And there’s room for a handful of sheepskin-based brands?

Absolutely. We still have challenges meeting our growing demand. And let me just say, I consider Ugg a great brand and a category creator. While there’s an old saying, “Don’t tug at Superman’s cape,” we did and got away with it. We recognized the potential of this category at the mass level right away. Emu Australia was there at the time, but they had internal problems. No one has truly committed to this market segment like we have at the mass level, and we’ve since surpassed the competition. There are always opportunities for brands to succeed.

In the case of sheepskin footwear, the premise appears to be pretty simple: comfortable shoes sell—and sell well.

Once you get into shoes that are comfortable, you’ll never want to take your feet out. That’s the most important aspect to me. Kids today feel the same way, and that’s one of the main reasons why Bearpaw appeals to a younger demographic.

Bearpaw’s broad distribution also reflects how sheepskin’s appeal stretches far beyond boutique or comfort specialty dealers.

Sheepskin crosses far and wide—from sporting goods stores to family shoe stores to department stores and comfort and outdoor specialty dealers. The web is huge, and that’s why our growth has been so enormous. But there is still a lot more growth to be had, because as a true “natural, comfortable and sensible” footwear brand, we can go far beyond our traditional third- and fourth-quarter selling periods.

What are some highlights of the Spring ’11 collection?

Our design team has worked their tails off. We are coming out with a canvas upper and cork wedge package that’s very “natural, comfortable and sensible.” And our new wellies collection has been well received. We really want to focus wellies on the next back-to-school sell-in period, but the spring launch gets us into the category. In addition, our comfort sandals did well this year, but there’s a lot of competition in that segment—brands that have done sandals for a long time and are very good at it. So we face a few challenges in that category, but we have introduced a crochet group that plays off of our crochet boots, and that has been doing well. Overall, our designers have their pulse on comfort fashion.

Just how easy has it been to expand beyond your sheepskin roots?

It’s always a struggle to introduce new categories because retailers tend to pigeonhole us as a fall/winter brand. But I always tell them that our customer doesn’t go into hibernation during the summer. It’s our job to give our customers what they want. We have been working hard on developing and designing warm-weather products and—this year more than ever—we have been driving home that hibernation warning to our retailers. We are determined to get that message out because that is the key to major growth for us.

Have you instituted any big changes due to the so-called ‘new normal’ when it comes to doing business?

Not really. For example, we informed our retailers that, while we understand that they may be reluctant to write more orders, they should give us an idea of what they would write if they had no restrictions, and we will back it up in our warehouse. It’s like an unwritten rule: They bought it, but they didn’t. We have a lot of customers that take advantage of that. And it has made us so much more relevant in the marketplace. Now, if things were doom and gloom, I might cut back. But I don’t see that happening as of yet. I always look for that plateau, and I haven’t seen the line on the chart go straight yet. Nor has it made any hints at a U-turn (laughs).

As an industry veteran, not to mention an optimist and a risk-taker—many retailer-like qualities—do you have any advice for storeowners about surviving these tough times?

Get to know your customers better than ever. You have got to know their buying habits, their fashion and brand preferences, store preferences, social media habits, etc. Because you have to buy the brands that they expect you to carry, at the price they expect to pay. That’s what it’s all about, and that’s what we’ve been able to achieve. We know the kill zone when it comes to pricing. When you get over $100, that’s nosebleed. It gets tough for most consumers to justify that expense. But when the cost is between $59 and $79, they don’t debate it nearly as much. The fact is consumers are increasingly looking at price and added-value aspects when it comes to making a purchase decision. So I would advise retailers to buy brands that have added value—not the ones that are basically a foot covering with a huge markup. Beyond that, you’ve just got to be smarter as well as know what your store stands for. If you do that, consumers are going to keep buying. It’s not like no one is buying. Consumers still shop—they are just shopping more selectively.

Does a company’s ‘green’ factor matter to consumers when it comes to their footwear purchases?

I think it’s starting to matter more. We did a promo recently with Lady Foot Locker where every pair came in a biodegradable box that featured embedded plant seeds. It was a tremendous success. And then John Larkin asked if we could transform the roof at our headquarters into an eco-friendly living space. He really lives the green life, and now he’s browbeating me into converting some of our land for growing vegetables… But back to your question—yes, consumers are more cognizant of a brand’s eco-friendliness, but that doesn’t mean they’re willing to pay more.

Where does sustainability rank within Bearpaw’s brand identity?

When Randy McKinley asked to introduce a number of sustainability initiatives, I was skeptical at first about what the efforts would entail and wondered what the reward might be. I told him to quantify it. He came back with figures on the tonnage of paper we were wasting through our packaging as well as how much glue and ink was going to waste. I was blown away by the amounts. We decided we could make a difference, but it’s not about overtly marketing our efforts to consumers like some other brands are doing. It’s more about being stewards of the environment. It’s our responsibility—it’s not to try to make more money. In fact, some of our efforts cause us to lose money. But we do it because it’s the right thing to do.

Bearpaw hit $10 million in sales a few years into the game, then $25 million shortly after and now is approaching $100 million. Any more concerns that it might slow?

No. We just keep on going.

What never ceases to amaze me about this business is the potential for tremendous success—often out of nowhere, it seems.

It’s really unlimited. In the case of Bearpaw, the brand has taken on its own life and now we’re just steering it in the right direction. My wife often marvels how I get up in the morning, get on the phone—sometimes the conversation is intense and sometimes it’s calm—and then after a day at work, I’ll come home and play with my kids and deal with a few more work calls. Then I forget about everything. She asks, “How do you do it?” I tell her every time, it’s by having great people around me. You’ve got to have that or this business will totally consume you. Bigger doesn’t always mean better. In fact, it often means more stress. But how you sleep at night depends a lot on your ability to delegate to those who do their jobs well.

What do you love most about your job?

I have an unbelievable amount of fun. I love coming to work. Some days are more stressful than others, but you have the power to make it fun. That’s how I live my life, which is what my mom taught me: You get more with honey than with vinegar. Accentuate the positive, eliminate the negative and don’t mess with Mr. In-Between. Both my parents were great role models in this regard, and I thank them dearly for that. —Greg Dutter

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