Edward Kanner, CEO of Kanner Corporation—the distributors of Finn, Think, Gabor and Snipe—on why his current brand portfolio is in step with an increasing amount of Americans.
Quality, handcrafted, comfortable, ecological, healthy, stylish, exclusive—these are all words that describe the stable of premium European comfort brands (Think, Finn Comfort, Gabor and Snipe) that are distributed in the United States by Kanner Corporation of Thousand Oaks, CA. They also happen to be buzzwords associated with the tastes and demands of a growing amount of American consumers who are tiring of me-too looks and the marketing mirages often associated with wellness and sustainability. These affluent consumers seek authenticity, demand quality and want exclusivity in their purchases—the very desires that Edward Kanner, CEO of Kanner Corporation, says his brands answer.
“We are purveyors of luxury European comfort footwear with a strong emphasis on health and wellness,” the exec says. “Brands like Birkenstock [for which Kanner’s parents’ company has owned the license for Canadian distribution since 1968], Finn Comfort and Think were decades ahead of these trends. They didn’t just jump on the bandwagon when green and wellness recently became cool. They have been producing healthy, ecological footwear for generations, and they will be around for generations to come.” Kanner adds that Gabor and Snipe—the Spanish-made brand with a sustainability platform recently acquired by Gabor—are two more labels that are the real deal when it comes to delivering on wellness and sustainability, respectively. Gabor is set to launch its Rolling Soft collection for Fall ’10, and Snipe backs its edgy casual styling with verifiable eco-friendly product design and manufacturing processes. And while Kanner admits that the decision to launch a new brand in the States in 2008 may have seemed like an ill-advised move, he also considers Snipe’s introduction spot-on. “We are witnessing a global behavior shift—the rise of ethical consumerism,” he says. “The short-term, throwaway mentality is over; superficiality is out and individuality is in.”
Such ahead-of-the-curve positioning is exactly why Kanner believes his brand portfolio is poised for strong growth, albeit a trajectory he maintains will be controlled, sustainable and—with luck and hard work—profitable for all parties. Having been an importer of European comfort brands since 1991 (beginning with the German-made Finn Comfort), Kanner is a follower of that continent’s often adhered to business model, in which volume for volume’s sake is not the primary goal. When asked what his sales outlook is for his brands in 2010, Kanner candidly responds: “Infinite growth is unrealistic, but our brands are under-distributed, thus we expect to continue our path of steady, controlled growth even in a depressed economy. We are selective and cautious about whom we open, and our relatively limited distribution gives authorized retail partners a form of exclusivity.”
To say that is a breath of fresh air in America’s clearly over-distributed landscape is an understatement. Excess regarding pretty much everything is what got many Americans into financial straits to begin with. And if, in fact, we are entering an age where less is more, quality rules over quantity and authenticity—not smoke and mirrors—makes up the new rules, then Kanner believes his brands are in an enviable position. When asked if more brands might enter the Kanner Corporation fold, he is quick to respond: “That’s out of the question right now. The exclusive labels we distribute represent a perfect blend of comfort, fashion and wellness.”
Equally fresh is Kanner’s tell-it-like-it-is approach on a range of topics. For example, when asked whether he thinks the economy will be on the mend in 2010, he replies, “Media and government keep hinting at a recovery and inciting consumers to spend more to drive the economy. But what’s good for the economy is not necessarily good for the individual. What the consumer really needs to do is to stop overly spending and start saving.” As for any pause in the era of insatiable greed, Kanner offers this summation: “The economy will bounce back, but we may be facing a ‘new normal’—perhaps the dawn of a new austerity. While it could prove challenging for business, the adjustment in consumer behavior was well overdue. Household savings rates in the U.S. are ridiculously low as compared with the European Union overall.” Nevertheless, Kanner believes his products serve more as investments in areas like health and wellness, and therefore are not as impacted by consumers who may be cutting back on frivolous spending.
Kanner’s success coupled with his family’s longevity in Canada (under the name Serum International) is validation of their controlled growth philosophies, a fact that becomes even more noteworthy considering the family entered the footwear business by accident. Before landing the Birkenstock license, Kanner’s parents sold fine German-made laboratory glassware. “We saw Birkenstock’s medical virtues and sold it primarily to health stores and medical facilities,” he says. Little did they know then how the market for well-made German comfort footwear brands would take North America by storm. “At the beginning, many retailers laughed at the concept, [but] today it is one of the most sought after categories worldwide,” Kanner says. “We still have a small medical division. It’s just that now we are 98 percent footwear and maybe 2 percent glassware.”
Having grown up in the family business, Kanner says footwear is in his blood. And when he is not intensively training for various Ironman competitions (he’s currently prepping for the France edition) and marathons (he was the youngest finisher in the Montreal marathon at age 14; his next race will take place in Los Angeles this March), he’s all about shoes. Kanner and his wife and business partner, Teri, are busy raising two young children while also rearing four shoe brands. When asked whether he considers himself a triathlete or a shoe executive first, Kanner says, “My wife thinks I’m crazy. She says I love my bike more than I love her. But I’m a shoe executive first. The triathlon training is my therapy as I juggle a busy career and family life.” It may not be the quintessential CEO’s life, but it works for Kanner. “Controlled chaos and the eternal quest for balance is more like it,” he says of his busy schedule. “It’s really more about maintaining a lifestyle of health and wellness.”
How has Snipe been received in the U.S. market to date?
Very well, despite the challenging environment. Understandably, retailers are reluctant to commit until they see proven results, but we went with a soft launch for Spring ’10 with a number of select retailers and we expect Snipe’s fall business to triple in size. And while our decision to launch a new brand came in the face of severely adverse conditions, we immediately recognized its long-term growth potential and couldn’t pass up the opportunity. Snipe stands for a sustainable lifestyle, and it’s different yet functional without neglecting the fun fashion aspect. The shoes are comfortable and made of high-quality, all-natural materials. They are also very well made and therefore last a long time. Timeless design holds up for more than one season, and this is sustainable, too.
I also believe that one should never get too comfortable or complacent in business. While challenging times call for prudent decisions, this was a calculated move and a long-term investment in our future. We believe this will be a brand to be reckoned with. And the fact that Snipe was recently acquired and rebranded by Gabor makes it that much more compelling. Gabor’s organization, marketing and logistics are unparalleled. Having a powerhouse parent like them looking over you with a watchful eye is sure to spell success for Snipe. They have the capital to make it work.
Where do you think the green movement stands from a footwear perspective, now that the initial hype appears to have waned?
I strongly believe there is room for this concept. The conscientious consumer strives to act and shop more ethically while continuing to enjoy a healthy, high-end lifestyle. It is the Whole Foods shopper in her Mercedes SUV. One doesn’t necessarily have to sacrifice luxury for ecology. While at first glance these traits appear contradictory, such peculiarities often naturally coexist.
But it has to look good first, right?
To the general population, overall design and quality may still come first and sustainability second. But if it happens to be environmentally friendly, it has an added feel-good/do-good incentive. We believe this is rapidly changing and that we have just scratched the surface of this emerging consumer category. What appears to be exclusive within eco-oriented brands today will hopefully become standard in the footwear industry down the road. Aspects like chrome-free leathers, sustainable materials like cotton and linen, and fair-trade sourced materials should become common practice. In the meantime, eco-friendly brands will have to constantly improve their methods and materials and act as trailblazers for this category.
At the same time, this concept becomes terribly watered down when everybody suddenly proclaims their green virtues. We trust that the sophisticated consumer can filter out the nonsense and see it as greenwashing. Hyped-up, manipulative sales tactics appeal only to the unsophisticated buyer. American consumers have to ask themselves some hard questions: Is this a frivolous luxury, a throwaway purchase or a long-term investment in quality? We need to inject a dose of consumer conscience and greater financial self-discipline.
Speaking of financial discipline, what’s your take on the luxury market’s viability going forward?
Although there are clearly challenges within our niche and some of our brands may never appeal to the great masses, our target customer will open her wallet when she perceives value and authenticity. While Volkswagen will always outsell Mercedes in terms of sheer volume, and while there is greater price-comparison shopping going on today, value is not only measured in terms of price. Original design, health and wellness benefits, orthopedic support and sustainable production are other factors. The unique products we offer are healthier for you and for the planet we share.
Having said that, we are certainly not immune to the financial crisis. But we are fortunate to be somewhat sheltered due to the medical/orthopedic nature of our brands. We have rarely concentrated purely on fashion or trends. The fact is many of our products are nothing less than significantly beneficial and truly enhance people’s quality of life. There’s tremendous therapeutic value. We offer products that are sustainable and able to be refurbished, thus one can prolong an investment for many years.
Exactly what separates Think from other comfort brands?
Think is Austrian-made, high-end, luxury comfort footwear for the sophisticated and health-conscious consumer. We do not sit with the typical slew of moderately priced comfort brands. We are several levels above, both in quality and price. Few tanneries can produce organically tanned leather and, as a result, our availability is very limited. Think’s production philosophy rules out 95 percent of tanneries—a fact that has an impact on its pricing. Organic tanning is simply better but costlier, slower and more complex to process. In this day and age, certified vegetable-tanned European leather is an extravagance mastered by few European tanneries.
Do Think and Finn customers overlap?
Quite often, in fact. Both are natural comfort brands with fervent followings, although with Finn we have a stronger orthopedic customer base. While they are both sophisticated, health-conscious consumers, I describe Finn as a Mercedes for your feet. It’s a sturdy, German-built and finely engineered piece of footwear, whereas Think is more of an avant-garde brand—the sportier Mercedes, if you will. It’s also a few steps ahead in the organic arena. Finn shoes aren’t 100-percent natural, but Think goes to great lengths and expense to use only vegetable-dyed leathers. In fact, the brand was one of the first in the green movement when we began importing the collection about 12 years ago. And while other brands now copy Think styles left and right, the differences are its European-made, hand-crafted qualities.
How were Finn Comfort’s sales this year?
Sales continue to grow steadily. Finn Comfort is the crème de la crème of European walking shoes. It is amongst the very few German brands still produced exclusively in Germany. In a world of mass production, Finn Comfort is a handcrafted masterpiece. Serious function and support set the brand apart from the competition. Connoisseurs around the world praise our superior quality.
Arguably, you were selling “comfort couture” before it was even considered a category in the States.
First of all, the term “comfort” is overused—all footwear needs to be comfortable. But Think is a comfort couture pioneer. Its groundbreaking, original design was heretofore unseen in Euro comfort. Think set a new, higher design standard and spawned countless imitations—albeit mostly of lesser quality.
I noticed Gabor is launching a line called Rocker Soft. What’s unique about that collection?
Rolling Soft by Gabor is outpacing all expectations. The shoes have a built-in stabilizer for enhanced motion control and feature great medial/lateral stability. Unlike several competitors who preach the benefits of instability, Rolling Soft is all about exceptional stability. Similarly, Finnamic is our new rocker sole by Finn Comfort. The gentle rocker soles work in conjunction with Finn Comfort’s renowned orthopedic footbeds to provide serious support for your feet. The key difference is that these shoes provide what I call anti-instability.
But you are not anti-rocker sole?
We offer a much less aggressive rocker sole. But we offer all the health and wellness benefits of a rocker sole with a stable base. MBT, Finnamic and Rolling Soft could all be merchandised on the same table as a retailer expands its presentation of health and wellness products.
What’s your take on the whole rocker-sole craze going forward?
Rocker soles promote a more natural way to walk and offer numerous health benefits, but anyone who really believes they are going to get fit solely from wearing rocker soles is delusional. Often, brands resort to hype, exaggeration or misleading facts. If you want to get healthy, go to the gym or go outside to be more active. Rocker soles have existed for decades in orthopedic/pedorthic milieus. Nonetheless, hats off to MBT and their fine marketing campaign that pioneered an entire new footwear category—one vendors and retailers can no longer afford to neglect—and rendering it intelligible to the average consumer.
Was 2009 as bad as everyone says it was? How did Kanner Corporation fare?
It was a challenging year. We were steady on most brands. Flat is the new growth, right? But I also think there is a problem with this desire for infinite growth. Where does it end? Must you grow 20 percent every single year? At some point, if you have a good business that’s profitable, what’s wrong with that? What’s wrong with flat, so long as it’s profitable?
Dare I say that you are content?
We are building brands and pioneering them in this market, which takes time. Our portfolio consists of four of the world’s finest brands and all are still in their relative infancy in this market and boast considerable growth potential. There is tremendous work to be done, and we look forward to it with great anticipation. As has been shown time and again, it takes years to break in and establish a new brand in the States. And being a powerhouse in Europe or elsewhere overseas does not guarantee instant success in North America. There are so many brands out of the GDS show that have tried to get into this market and failed miserably. They have come in, spent a few million dollars over a few seasons and then they close shop. It requires a lot of work and patience. More importantly, it takes experience. Over the years we have developed the systems, hired the personnel and established relationships with the key accounts to make it happen. In today’s business, there are just so many brands out there clawing for two feet of shelf space. So while the power of the brand is key, the power of the distributor is equally important. Who has the best customer service team, the best shipping, the best warehouse? It’s more than just the brand. And we must be doing something right as we decline—on a near monthly basis—distribution offers from major European brands that know our reputation.
Any advice for retailers trying to weather these tough times?
Prudence, common sense and aggressive cost control. Take advantage of your vendors with strong in-stock/rapid replenishment programs. Kanner is a recognized stockist and we are working on expanding our in-stock offerings and rapid delivery system with respect to all of our brands. In addition, many stores lack character, personality or atmosphere. I would advise creating a warm, inviting ambiance. Hire educated and self-motivated sales personnel. And where possible, establish relationships with your clients. Because our shoes are more expensive, technical and boast many one-of-a-kind attributes, we depend heavily on sales professionals to convey our products’ unique features and benefits. The message needs to be genuine and heartfelt. No B.S.
Just what impact has the downturn had on the industry overall?
It is survival of the fittest. The unprecedented downturn forces both vendors and retailers to be leaner and to maximize efficiency. Those who survive will come out of it stronger and smarter.
What do you love most about your job?
Working with people of character, honor and integrity. There are still a few of these people left. We strive to conduct our business with dignity and propriety. —Greg Dutter