The Right Fit
James Rowley, CEO of Mephisto USA, on making the classic French comfort brand matter again in America.
Timing is everything, and sometimes there are serendipitous instances when a brand and an executive cross paths at just the right moment. The brand’s needs align perfectly with the exec’s skillset. They need each other, and they have the potential to bring out each other’s best attributes. Mephisto USA and James Rowley look to be one such perfect fit.
Arguably one of the original Euro comfort brands, Mephisto first came ashore in the late ’80s at a premium level positioning that, to this day, remains nearly exclusive. However, the Mercedes of comfort shoes has been idling in neutral for the last decade. For too long, the brand had been relying on carryover product. Fresh styles and innovations were noticeably lacking. Sure, Mephisto has retained its reputation for quality, and a legion of loyal customers has continued to replenish their closets with their favorites. But as the years have ticked by, those customers have grown older and there has been a dearth of new, younger Mephisto consumers. As any brand builder worth his or her salt knows, that’s the road to irrelevance. One need only look at the metaphoric roadside to see the discarded hulks of rusted-out brands for proof.
Enter, James Rowley, who took the driver’s seat at Mephisto USA this past January. The ad man-turned-boutique-shoe-retailer-turned-footwear-wholesale-executive has the experience and know-how to get Mephisto’s engine revving again in the U.S. Rowley knows marketing, merchandising, product development and brand management. Not too many executives boast such a diversified resumé—or one so well suited to Mephisto’s needs.
“I’m a good fit for them, and it’s a great fit for me,” says Rowley, who most recently served as president of Geox USA and, before that, managed Kork-Ease under the H.H. Brown umbrella for seven years. “The brand needs to be freshened up. It needs somebody who can tweak the retail, product development and marketing aspects. I have experience in all those areas, as well as sales, and the brand is small enough so one person can have an impact.”
That impact will start with the launch of Mephisto Originals this fall, a standalone brand aimed at younger consumers (think 30s and 40s) who crave authenticity in their purchases. The Originals’ archives, Rowley says, are chock-full of such styles. “This consumer is in search of the real deal type of products,” he says. “If they want an authentic Euro walking shoe, Mephisto is that brand.” Rowley likens the launch to another brand with authenticity—Kork-Ease, which has served as the touchstone for this effort. “Authenticity is what helped make Kork-Ease such a success, and that concept plays heavily into what we are doing with Mephisto Originals,” he says.
Rowley is also focused on modernizing Mephisto USA across the spectrum. Leaner inventories, upgraded ecommerce capabilities, better terms for key partners—all the blocking and tackling that comes with brand management today. It’s a task, Rowley says, that’s made easier because of Mephisto’s solid foundation. And it’s why he believes the sky’s the limit. “Just by not carrying over everything and trying to turn our inventory more quickly we’ll increase our business drastically,” he says. “That on top of bringing in new product innovation on a seasonal basis should double our business in the next three to five years.”
Rowley, an entrepreneur at heart, relishes the opportunity to be hands-on in all aspects of Mephisto’s repositioning and rebuilding. In fact, his entrepreneurial exploits stretch back to his teenage years when he opened a boat repair business back in Sydney. After selling the business to attend Pace University in New York, Rowley embarked on an advertising career with Ogilvy & Mather. That’s when a friend, a Texas rep for Stuart Weitzman, suggested he open a shoe store. The entrepreneur in Rowley thought, why not? He chose Austin for the opening of Ven Shoe Salon. “It was an up-and-coming city, and my friend said he would help with credit lines and product,” Rowley says. The store featured a mix of upscale labels, including Giuseppe Zanotti, Tory Burch, Valentino, Cole Haan and Stuart Weitzman. Rowley went on to have a “great run,” he notes, opening two more locations over the following few years.
Then the entrepreneurial bug struck again. Rowley and his business partner decided to relaunch Kork-Ease. “It was considered to be the original American wedge and a rock star of the ’50s, ’60s and ’70s,” he says. “The platform sandals used to blow out of my partner’s Houston store.” After acquiring the rights to the brand, Rowley got to work on expanding his burgeoning product development talents. The year was 2005. “I had already been doing a lot of private label development for my stores, so it seemed like an easy add-on,” he says. “We just gave it a shot. Right off the bat we got a lot of press and the brand took off. It went from zero to 100 miles an hour in six months.”
Business got so good, in fact, that H.H. Brown made Rowley an offer he couldn’t refuse in 2009. The Greenwich, CT-based conglomerate made a pitch to buy Kork-Ease and install him as its manager. The timing was right for Rowley. “We needed to put a bunch of money into Kork-Ease or get out of it,” he says, noting that credit for retailers was also tight at the time. “(H.H. Brown CEO) Jim Issler made a very fair offer,” Rowley adds, noting that he closed two doors and sold one. “It’s one of the best decisions I’ve ever made because I ended up working for Jim for seven years and learning a lot.”
It’s where Rowley earned his master’s degree in footwear wholesale. “H.H. Brown is one of the most efficient businesses from a product development standpoint,” he says. “Their logistics and online systems are fantastic. I’m applying a lot of what I learned to Mephisto.” Issler, especially, has had a lasting influence on Rowley. “Jim goes at 120 miles an hour all the time,” he says. “He’s always focused on change and innovation, and those are the two aspects I learned the most, plus if you don’t change, you’ll die.”
It’s the approach Rowley has taken from Day One at Mephisto—and it’s exactly what the brand doctor ordered. “Mephisto USA hasn’t been approached as a change organization for the last 10 years,” Rowley says. A string of previous execs failed to move the needle, and that was a lost opportunity for a 53-year-old brand that arguably helped invent the comfort category. To remedy the situation, Mephisto Chairman Martin Michaeli sought a fresh approach. “They wanted somebody that brings a different skillset to the table than a traditional CEO-type, somebody who is more entrepreneurial to rethink and rebuild what they are doing,” Rowley says, adding, “It’s an awesome opportunity, and I’m excited about the future for Mephisto.”
What specifically attracted you to the Mephisto USA opportunity?
First off, I like that we’re a family-owned business. Martin Michaeli is extremely involved and decisions are made very quickly. Also, the decisions are made with only the best interest of the brand in mind. There’s no stock market issues or politics. In addition, the brand has an incredibly loyal following. A lot of our customers only wear Mephisto. I see a huge opportunity in brand loyalty, but we need to bring in a younger customer. We have to reposition ourselves online to a younger market, and we have to update our brand in the marketplace at all levels of communication.
Like with the launch of Mephisto Originals?
Yes. A key aspect of this overall effort involves relaunching Originals as a separate brand. We’re targeting that younger consumer who’s looking for authenticity in their purchases. They want to buy brands that represent something that’s not contrived or built up from hype, rather it’s built on reputation and reality. For example, if they want a lace-to-toe sneaker, they’re going to buy Stan Smith. A sheepskin boot, they’re going to buy Ugg. That’s where the opportunity stands for Mephisto. Our archives span 50-plus years and are filled with iconic products for a casual lifestyle. And unlike most comfort brands, we have our own factories. We control production—every single element of the process from soup to nuts. That quality sets us apart. It gives us a very consistent product, and Mephisto customers understand that as I believe consumers who seek authenticity will too. All these factors combined position us very well for growth in the U.S.
What will retailers see that’s new with respect to Mephisto Originals?
They’ll see a standalone website, a new logo and a new marketing campaign that captures the heritage, craftsmanship and attitude of Mephisto Originals. It’s an irreverent campaign that doesn’t take itself too seriously. There’s an emphasis on fun. We’re conveying how great these shoes are to walk in without calling it “comfort” shoes. But let’s face it, that’s what they are: super-comfortable shoes. We’re launching the campaign in September with a pop-up beside Sportie L.A. We’ve partnered with (Sportie L.A. owner) Isack Fadlon’s ad agency, Propeller 5. Creative director Hersh Rephun, an ad veteran who has created content across all industries, is leading the campaign.
Lots of brands want to get younger, but it’s not easy. Why will Mephisto Originals be able to do so?
Because we have product that suits that market. And when I say younger, we’re not trying to hit 20s, we’re aiming at 40s and 50s. Our iconic Rainbow shoe, for example, is a classic, lace-to-toe type sneaker that is more on the traditional shoe side than sport. I think that’s where people are going, especially in the category and age group I’m talking about. They’re moving away from wearing sneakers to work. They’re looking for that crossover product that is as comfortable as a sneaker but fits slightly more on the shoe side of that category. Plus, we have great brand recognition in the U.S. If we put the right digital marketing around that product along with upgraded ecommerce capabilities, we can target that younger audience directly. Becoming younger as a brand overall is the biggest opportunity for us, and that’s been my first order of business since I’ve gotten here. But rather than potentially alienate our current Mephisto customers with trying to change the way we represent ourselves, we’re going after that younger customer with Mephisto Originals.
Who is the current Mephisto customer?
Our current customer is on the older side right now. But we’re updating our product development capabilities very quickly and bringing new products into the marketplace to slowly bring our average age down. We’re also doing a lot more online marketing to bring that average age down. Prior to my arrival, our digital capabilities had not been important to the brand. We were very late to the party on ecommerce, Instagram, SEO—all aspects that we are now pushing hard. In fact, our ecommerce business is already up 80 percent over last year, and that’s just from pulling a couple of little levers to help grow our own site as well as with partners like Nordstrom.
What was Mephisto USA doing wrong before?
A big problem was that it was being run like a stock-and-fill company. They weren’t innovating. They weren’t bringing new products into the market each season. They were carrying over too many styles. If you don’t change, you die.
What’s the reaction been from retailers so far?
Our partners are very excited, and we’re already seeing results. We’re going to have a plus year—the first time in six years. Our shipments are up for Q1 and Q2, and we’re looking at a very strong finish to the year.
As a former retailer, how would you assess the current landscape?
It’s tricky. I understand how difficult it is. People are trying to work out the online channel and how it affects pricing. Business is still being done, but it’s just being done in different channels, and we have to figure out how to make sure that we are representing our brand in those channels.
Is it really as apocalyptic as many say?
Brick-and-mortar is having a very tough time, mainly because they are fighting a steep drop in traffic. As a retailer ourselves, we’re spending a lot of our time and energy trying to figure out how to increase traffic in our stores. It’s not just about product and pricing to achieve that. It’s about developing innovative strategies and experiences to get more people to walk into our doors, which is expensive because it’s a marketing cost. But it’s necessary. We are mining data that we’ve collected in our stores. We’re doing a lot of email marketing and other forms of digital communication.
Are Americans, by and large, just over shopping in stores?
In the case of Mephisto where they’re looking to buy a $300 to $400 shoe, they’re still more likely to want to try it on first. You can’t get that without the brick-and-mortar experience. But to answer your question, many of them could be. Times have changed. People are spending their time doing different things and the web is just so convenient. I don’t think brick-and-mortar will go away entirely. People still shop and many still have their first experience with products at the brick-and-mortar level. But once they know the brand, the product, their size…many are going buying replenishment items online. That’s why we have to be able to service those customers at every point of contact.
If that really is the overriding trend, how will stores survive?
One way we help is by sharing our ecommerce business with our Mephisto-only stores. Our corporate- and partnership-owned stores all get a piece of our ecommerce business. We have a system that routes orders, and they can choose to fill them if they have the items in stock. It’s a systematic process that’s done fairly. Nowadays, it’s very difficult for our retailers to survive without that help because most of our stores are doing between 10 and 20 percent of their business through our website.
How unique is this in the industry?
It’s very unique in the comfort footwear business. But it’s not a unique system in other industries. We started it about six or seven years ago, but since we’ve ramped up our own ecommerce site now it’s an order volume that is making a real impact for our stores.
Lots of multi-branded retailers gripe that every DTC sale is one they’ve lost. What are you doing to support their needs?
We do a lot to help them compete because we believe that channel is an extremely important part of our business. We offer drop shipping, we’ve introduced better terms for key independents, we’re shipping quicker, we’ve strengthened our MAP policy and, of course, we’ll be introducing fresh and innovative products. We don’t look at brick-and-mortar and online as two separate channels. We look at them as a combined effort to build our brand.
What was the best lesson you learned by being a retailer?
That’s a good question. Probably to find brands that had a partnership mentality was most important. You have to find brands that are willing to partner closely, because it’s so tough with the influx of second tier competition online. So in addition to better terms, we’re segmenting our line to offer the wholesale channel exclusive products to protect them from online competitors.
Is the Match collab you did last year with Concepts an example?
Yes. We are doing more with Concepts on a quarterly basis. The next drops in October. We are also doing one with Sportie L.A.
Both are sneaker boutiques. Why do you think the collabs work for a “brown shoe” brand like Mephisto?
Because the customer that shops those boutiques is in search of authentic items, and that’s what Concepts and Sportie L.A. get behind. Both stores are big fans of Mephisto because it’s the real deal. Both also sell a lot of Birkenstock, because that brand is authentic. When (Concepts owner) Tarek Hassan finds something that’s authentic, he doesn’t try to change it much. He retains the DNA and puts a little fashion spin on it. That’s what makes it fresh, and why it’s so successful. The Match had only been produced in black, white and a bunch of brown leathers. Doing it in bright purple and mint green had his customers say, ‘Wow, that’s authentic and cool. I’m in.’ It’s a stamp of approval for Mephisto to have both these stores on board.
Both happen to be brick-and-mortar retailers at heart.
There are always going to be good stores, and the ones that are competing well are like Concepts and Sportie L.A. Tarek’s in the process right now of changing his store experience where it will be fewer brands but larger stories about each. Zappos and Nordstrom also provide strong platforms to tell brand stories. They invest in brands, and brands invest in them. It’s a two-way partnership.
While it’s been a dark stretch for retail, might there be a silver lining?
I don’t think it’s all bad. The better retailers will survive. They’re becoming more innovative and creative, and there’s absolutely a customer for that. People still like to shop. You’ve got to offer new and different experiences. Say, for example, you’re looking to buy a stereo. If you can’t go into a store to listen to a range of models while sitting comfortably in a sound room where you can sample a variety of speakers… Why would you go? You could just buy it online, instead. Retailers have the physical space— there’s a lot you can do in that world that you can’t do online. The good retailers are doing it, and the bad retailers are closing.
Gazing into your crystal ball, what might the typical shoe store look like in five years?
I think there will be less stock overall but more to learn. It’ll be more experience-driven. For example, I heard Nordstrom is talking with Tesla about putting their product into their stores to drive traffic.
Canada Goose is opening a cold room in one of its flagships. That’s an experience you can’t get online.
Exactly. Anything that gets consumers’ attention and drives them into the stores to experience the brand is a good thing. That includes a steady stream of new merchandise. Nobody wants to go into a store and see what they saw last season. Carryovers can be bought online.
What’s your main goal for the remainder of this year?
In addition to launching Mephisto Originals brand and partnering more closely with retailers, it’s to open two of our own stores in New York. We hope to open another in California early next year. We have 16 stores now, seven of which we own. We want to expand both our corporate- and partner-owned stores, We’ll also continue to focus and segment our product line. We’ve cut our SKUs down by nearly half since I’ve been here. We now have separate collections for wholesale and our stores. While they both have the same feel, we want them to be slightly different to give both channels some exclusivity and a reason for consumers to shop. Nor will consumers see 100 percent of our line on our website. Fewer SKUs also helps us with replenishment, because reorders are what makes retail successful. Initials are nothing, really.
What do you love most about your job?
I love the fact that Mephisto is a great family-owned brand that controls its production. I also love that there’s a huge amount of opportunity for Mephisto in the U.S. We don’t have a lot of competitors at our price point. We’re still the premium comfort brand in most stores. I also love our sales team—it’s one of the best I’ve experienced. Lastly, I love that we’re growing already. We’re moving our business in the right direction.