Doing the Right Thing
Rockport SVP David Kahan declares his mission to make the comfort brand once again ‘best in class’ among leading independent retailers.
David Kahan believes Rockport had been doing the wrong thing for far too long. It started when previous management decided to largely abandon the brand’s core independent retail base in favor of higher-volume dealers—a strategy that Kahan, Rockport’s senior vice president of U.S. sales, says underestimated the collective weight these key independents carry, particularly in the service-oriented comfort arena. These stores can make or break comfort brands; in addition to Rockport, Clarks, Birkenstock and Ecco have all made their bones within this tier. As time would prove, choosing to neglect such an influential base can even have a negative trickle-up effect with the majors, since they take cues from these independents’ merchandise mix.
The sales numbers clearly bore this out. Upon Kahan’s start in April of last year, Rockport was the largest brand at Macy’s in men’s and had a developed business with Dillard’s, but a little research revealed that the overall dropoff in U.S. sales coincided with its growing absence from the independent channel. Making matters worse, the recession had been taking a whack out of Rockport’s department store sales.
Kahan decided it was high time to do the right thing: build the brand from the independent base outward. “In the brown shoe world, your authenticity comes from the true service environment, and you just can’t replicate that service level in a department store,” Kahan says, citing a recent in-store event at Harry’s Shoes in New York as proof. “They sold 50 pairs of Rockports in one day, mainly because they had two guys on the floor who have been there for 20 or more years and can really sell shoes. We might have sold 15 pairs on an average day otherwise.”
Unlike the athletic side of the business, where Kahan says brands are built by retail behemoths like Foot Locker and Finish Line as well as key regional players like Dr. Jays and Downtown Locker Room, a brown shoe brand’s acceptance by this “shoe mafia” of independents is critical. Rockport had fallen outside the family and Kahan knew the brand had to make amends, whether it required sit-downs with select dons, appearances before retail associations or working the phones. “It was like the gatekeepers had deemed other brands way more focused and engaged, and therefore worthy of their shelf space,” he says. Their biggest gripes were lack of product differentiation and no communication.
Sparking communicating again on Rockport’s behalf, Kahan first apologized for the past and then set forth with a comprehensive, proactive plan to regain the tier’s lost shelf space—starting with new product lines that addressed the needs of the better independents. The product began appearing in men’s styles this fall and will flow into women’s next spring with the Fall ’10 collection marking a complete makeover. But it’s not just about reissuing classic styles, rather Kahan says the new collections combine the Rockport DNA with new innovations. “It’s truly modernizing the collections and including the right architecture,” he says. “Our product team believes that Rockport has the right to be an innovator.”
Kahan thinks retailers are more than willing to forgive—so long as Rockport’s product delivers results. “I’m making considerable inroads, as I believe they sense the sincerity and the direction the brand is now going,” he says. “We have to earn our space, and I see some opportunities where brands may have had a good run but have lost some momentum.” The Adidas factor is also working in the brand’s favor, he adds, since investing in shop-in-shops, extra marketing efforts and sales associate engagement programs in 40 key U.S. doors is pocket change for Rockport’s $12 billion parent.
Doing the right thing is the new mantra, and Kahan and CEO Michael Rupp have set ambitious goals backed by this philosophy: “By next year at this time, we want Rockport to be recognized as best in class with the better independent channel,” Kahan says. “Alongside that, we will continue to build our department store business with differentiated product as well as go after the moderate business with segmented product.” He is confident that Rockport has the reach. “The beauty of the brand is it’s not marginalized by a certain tier,” he says, likening it to Nike’s acceptance in the most elite running stores, coolest sneaker boutiques and moderate retailers. “Rockport has so much brand strength that allows it to play in a lot of different segments,” he says. “If we do the right thing for the brand, then Rockport can grow by substantial volume over the next couple of years.”
[Adidas CEO] Herbert Heiner said just after the acquisition that Rockport had the potential to be a $1 billion worldwide brand.
Oh, there’s no doubt about it. It’s why he has one of his handpicked guys [Michael Rupp] running it and is also giving it the necessary resources. This brand hasn’t even been globalized yet.
Nor has it become fully established in the women’s market yet.
True. The good aspect is that most women have no aversion to the Rockport brand. But there had been an aversion to some of the product in years past because we flip-flopped too many times on our product positioning. The DNA of the brand is comfort, and now the mindset is “don’t compromise style for comfort.” It’s a pretty simple thought process, but executing the product is a little more difficult. Thankfully, our new women’s design team is doing just that, and we are very excited about Fall ’10, which will mark the first breakthrough season. The team really “gets” the female consumer—her lifestyle, needs, mindset and emotional connection to footwear. Our offering will have styles that meet the more “American heritage” comfort silhouettes, and we’ll also surprise people with great executions of contemporary on-trend styles.
Just how important is developing the women’s side of the brand?
Women’s is the most significant key to our success in the years ahead. We realize that our share is currently out of whack versus men’s in the overall marketplace. For Rockport to be successful in the leading footwear independents, then we must be an important women’s resource. It will happen, but it will take some time.
Sounds like an extensive brand repositioning. Are you on schedule with that effort?
Michael [Rupp] has set four objectives in order to become the leading footwear brand in the industry: Globalize the brand, develop a stronger retail presence, expand our women’s business and develop operational excellence. Now, 18 months into my tenure and despite the serious economic headwinds, I am supremely confident that we are on track in the U.S. market.
Our division is fully integrated with our global organization so that brand marketing and messaging are consistent on a worldwide basis. Our branded stores in the U.S. are seeing significant promise and truly set the image necessary for brand perception in the marketplace. Also, our in-store presence will be consistent with our own concept stores. Lastly, our operational capabilities have improved dramatically. We have created a true “center of excellence” that includes the functions of finance, business management, inventory management and customer service to better serve our sales organization and retail partners.
Just how strong were the economic headwinds this year?
The past year has been challenging and we don’t have expectations for a huge retail uptick in the near future. Still, even in a market that is flat at best in the year ahead—and that may be optimistic—we are holding ourselves to very high expectations and expect significant year-on-year growth in 2010. Our order portfolio for 2010 looks strong as we continue the rollout of DresSports, deliver some compelling women’s collections to our most visible retailers, create excellent online partnerships to drive consumer demand, launch our “Rock Shop” products that are value engineered and meet the needs of the moderate/family footwear consumer, and manage our inventory so as to maximize our replenishment capabilities. We will just continue to execute our master plan.
And key independent retailers are the plan’s lynchpin?
Yes. When I met with them I asked, “What are some of the things you would do if you were me?” I told them I may not be the smartest person in the world, but I am smart enough to know that my answers won’t come from sitting in an office in Canton, MA. I needed to hear it straight from the people that helped build this brand, and most importantly, find out whose support I would need to help build it back. Trust me, I got more than I bargained for. The leading independents are not only passionate about the industry but are passionate about sharing their opinions. A consistent message soon emerged—the belief that Rockport is one of the strongest consumer brands and that we had allowed brands that may not have had our pedigree to gain market share based on their focused efforts to service this channel. All that these retailers really asked for was innovative product unique to their channel, excellent service—including store-level marketing support—and greater attention so that the needs and mindset of their consumers is a part of our brand’s positioning.
Is that mission being accomplished?
In the past year, I am incredibly proud of our efforts to break through in some of these leading doors. We are back to being engaged with the leading trade organizations for independents; we have reorganized our U.S. operations so that the “priority”-tier retailers have dedicated support to service their stores from sales, marketing, customer service and in-store training aspects; and most importantly, we have begun to deliver products that are focused directly on their clientele, starting with the launch of DresSports this fall and the introduction of Rockport Signature series in 2010. Our order portfolio shows significant gains in this channel. But we are just beginning to gain back retailer confidence. We have lots more to do. For 2010, we will kick into high gear with an intensification of our brand presence at retail, key account marketing efforts and sales associate training tools.
Where do department stores stand in this new brand platform?
A broadly distributed brand in and of itself is not a bad thing; in fact, it’s just the opposite, as it means that Rockport has tremendous brand awareness across a wide range of consumer profiles and the environments in which they shop. The challenge then becomes—as it does for any consumer brand with such large mind space—how to differentiate between the points of distribution. Basically, how do we generate excitement and offer a unique and compelling product proposition in each channel while maintaining the brand DNA across each of them? Our global product organization is doing a fantastic job to ensure this is happening. For example, while we may launch a technology story, such as the use of Adidas’ adiprene cushioning technology, our high-end footwear will feature full-foot adiprene for the leading independents and adiprene will be incorporated in the heels that target our moderate channel. Yet the qualities that make a shoe “Rockport”—their comfort, light weight and flexibility, or what we call “walkability”—is what a consumer expects in our shoes, no matter which channel they’re purchasing from. As long as we execute this in our product across each channel, create clear segmentation and maintain strong brand imaging, we will succeed.
What is Rockport’s current status with Macy’s?
Let me first say, for years a lot of pundits have been forecasting the demise of the department store and, frankly, I think they are wrong. Just walk into Macy’s Herald Square store on a Saturday afternoon—there is no more exciting retail environment on the face of the earth, in my opinion. The challenge for vendors has become how to connect with these very important consumers who are walking through Macy’s 600-plus doors seven days a week, coast to coast, now that they are a centralized buying organization. As the vendor, we must dedicate a far deeper level of analysis so as to understand door-by-door inventory levels, geographic assortment needs and mix of product (promotional versus statement), and manage the sell-through data weekly. If you believe that Macy’s represents valuable real estate by which your brand can connect with consumers, then it’s imperative you do all you can to partner and make your business a success. It’s about how you are represented in the true flagship locations—we seek to balance commercial products with more directional styles—and, even more importantly from a turn and profitability standpoint for both your brand and Macy’s, how you are represented from an assortment and depth standpoint in the broader door mix.
We appreciate our close working relationship with Macy’s and believe—especially on the men’s side—that they are creating innovative ideas like “Men’s Nights Out” to engage shoppers, and that will have long-term benefits.
What are some new product highlights?
First off, the launch of DresSports. In 1990, these were the shoes that ran the New York marathon, and to reintroduce the collection, a few Rockport employees ran the marathon in them this year. Coinciding with that event was a New York promotional blitz, complete with street teams of people in business suits and runners’ bibs who led consumers into retail locations for try-on events. In addition, every top New York independent held a trunk show designed to create energy as well as sell lots of shoes. Across the country, leading independents also featured window displays and in-store events to correspond with the promotion.
People who try on on the shoes won’t take them off. They love the lightweight, flexible construction—what we on the athletic side describe as the “ride” when they walk in them. This collection epitomizes what Rockport is all about: true engineered comfort. These shoes combine athletic shoe technology—they are lighter than most running flats—with contemporary style.
On a side note, [Brown Shoe CEO] Ron Fromm gave a fantastic speech recently regarding the next generation of consumers and how meeting their needs will change the industry and be a key to success for both brands and retailers. Along those lines, we believe that the younger consumer entering the workforce, who grew up wearing sneakers, just won’t accept the discomfort historically associated with such footwear. I remember when I first joined the workforce, my new dress shoes pinched my toes and grinded my heels—my feet were killing me. After a few weeks, they finally broke in and were OK, but today’s generation will not put up with that. DresSports combine a sneaker-like ride with the style of a dress shoe, so it becomes the perfect interview and first job shoe. It also helps bring the Rockport brand to a new consumer.
Has Rockport considered making a play for the wellness category?
While Rockport may not speak specifically to wellness or fitness, the fact that the average New Yorker, for example, walks two to three miles a day means that having shoes that are “walkable” will certainly yield health benefits. In general, our brand message is that Rockport enables people to do more, be more and live more, which I believe is a pretty empowering statement.
Will walking reemerge as a strong segment for the brand?
Yes, walking is a major element of what Rockport is. It’s not necessarily health or fitness walking, although there’s an element of that, but the fact that Rockport shoes are walkable means every Rockport product incorporates engineered comfort so consumers can go about their daily lives—what we call the “7 to 7 life”—in comfort. It’s the daily commute, running to meetings, through the airport, to lunch and finally to the soccer field to watch the kids. Our targeted consumer leads a hectic and full life. He and she are what we call “metropolitan professionals,” and walking is an integral part of their lives.
Having once been a retailer, any advice on weathering these tough times?
Just like we are embracing who we are as a brand, I would advise retailers to embrace who they are. Ask, what is your competitive advantage versus the competition? Is it the breadth of your offering? Is it service? Is it a combination? And do what you do best. While the recession has created a heightened expectation for value, it is all relative. It’s not just about price.
What in your retail experience best prepared you for your wholesale career?
Spending time on the selling floor. When I was a buyer at Macy’s, I went down to the floor every day from 12 to 1 p.m. and from 5 to 6 p.m. That’s where I learned what was going on in the market, what the reality was. Unfortunately, the training just isn’t the same today.
Why not? It seems to be one of the most successful exercises a retailer could provide.
Department stores have so much going on internally right now. The fact that a buyer is probably doing a job that literally 10-plus people used to do… I don’t think they have the time. Subsequently, so much of the gut instinct has come out of the business. It’s now so pure data-driven. While we were always data-driven, the old-time career buyers went on feel and instinct. They didn’t need a spreadsheet to tell them what was going on.
Has it become a lost art form?
Absolutely. When I was an assistant buyer, one of our veteran buyers gave me the best advice: Walk the selling floor every day, and not just in your department. Walk through domestics—towels, sheets and pillowcases—and you will start to understand what is going on with colors and patterns. Learn what influences people’s buying decisions and see what customers are wearing and what they are buying. I never forgot that.
What do you love most about your job?
I feel very fortunate to be in the footwear industry. Not to get too esoteric, but I believe everything has an energy to it—a desk, a chair, a tree, a flower—and we are fortunate that we work in an industry that brings products into the market that truly have an inherent positive energy, that truly give people satisfaction and happiness. Our products help people to perform better in their daily lives and, in the simplest terms, bring them joy. —Greg Dutter