Old Skool Meets New School
Kevin Bailey, president of Vans, refuses to let the classic brand rest on its recent laurels—starting with 18 straight quarters of double-digit sales growth—by embracing change and continually adapting and evolving.
The numbers speak for themselves: 18 straight quarters of double-digit gains, annual sales at $1.7 billion and a three-year plan that projects sales to rocket to $3 billion. Vans has become a really big brand. It’s no longer the retro, low-tech, vulcanized, So-Cal lifestyle indie brand that started making shoes stateside in 1966. Vans has become even bigger than it was when it rode the action sports craze of the ’90s, positioning itself as the Nike of the alternative sports movement. Back then, the company introduced hero skate shoes, opened massive skate parks around the country and created the Triple Crown Series for skateboarding, surfing and snowboarding, which showcased athletes from all three sports on national TV. It also launched the Vans Warped Tour—all of which produced hundreds of millions in sales annually for the company. But even that pales in comparison to Vans’ current size and level of success. And President Kevin Bailey believes future potential sales growth could reach beyond the company’s projected $3 billion goal.
It wasn’t until VF Corp. acquired Vans in 2004 that the powers that be started to seize upon Vans’ full potential as a lifestyle brand. With the support of the new parent company, the brand quickly expanded to a worldwide scale. Back then, Bailey was in his first stint with the brand (he joined in ’02), as vice president of retail. Vans itself wasn’t faring as well as some of the aforementioned brand extensions (which included the launch of a record company) were expensive and overreaching and had caused the brand to take its eye off what should have been the primary focus: making cool shoes and apparel. “We weren’t focused on what made us great, which was our product,” Bailey says. It got so bad, he confesses, that just before the acquisition, Vans didn’t even rank as a top three resource in core skate shops for footwear. Worse, the focus on action sports pigeonholed Vans into a male-dominated arena. “We were doing a lot of things, even from a product perspective, that weren’t focused on what we do well,” Bailey concedes. “We were chasing me-too products and not focused on what we are known for—our classic canvas vulcanized product.” The decision was made then to get back to the brand’s strengths and “own what we are good at,” he says.
Bailey says the acquisition enabled Vans to no longer have to act like a public company. “It took a lot of heat off of us,” he notes. It also marked a sort of epiphany: “We decided to rethink who we really wanted to be when we grew up,” he says. It involved looking beyond Vans’ insular action sports world. “In order to make this brand really successful, we asked ourselves, how do we stay cool but also hold Vans up against the best brands in the world? Not just the best action sports brands, just the best brands?” Bailey explains. “We had to break free from our action sports world if we were ever going to recognize that there was a greater calling for Vans, and that’s when that change all started.”
That repositioning, however, created a conundrum. Bailey and his team believed Vans possessed the brand width to appeal more to a greater number of people. But diversification had gotten them into trouble before. “Our beauty is our diversity, yet our biggest weakness is our diversity,” Bailey says. “We play across so many different spaces, and, to be a part of youth lifestyle, you have to be really diverse.” It comes down to making the right choices—a lot of them. “How to choose where to invest and how much to put in each bucket? And which ones are for aspiration and which drive commercial value?” he says. For example, Vans has always been in mid-tier distribution and had every intention to remain so, but it also needed to make a statement in the upper tier to become a great brand. Bailey adds that the Vans turnaround meant becoming a top resource in core skate shops again. (It has regained its foothold there.) Not only that, Vans needed to be a wholesaler and a retailer, because that’s how the brand grew up. “And we had to be in the footwear and apparel businesses,” he adds.
Easy, right? Not exactly. Yet the turnaround that started shortly before the acquisition and picked up steam right after has been nothing short of dramatic. After a two-year break starting in ’07 to take on a leadership role at Lucky Brand Jeans, Bailey returned to Vans when the opportunity to helm the company was offered. “I couldn’t turn that down because one of the hardest days I ever had was telling them that I was leaving the first time,” he says. Bailey, a self-admitted eternal teenager, looks to be the perfect man for the job. He is a lifelong retailer who started working the floor of a local Gap in his home state of New Jersey in high school to “meet girls” and went on to add stints at American Eagle, Eastern Mountain Sports, Banana Republic and an eight-year turn as director of retail operations for Nike. Bailey possesses an encyclopedic knowledge of his target audience. What’s more, he has a voracious appetite for keeping up with rapidly morphing teen trends. Others might find it exhausting or overwhelming, but Bailey thrives on staying current. “One of the things I love about retail is that you are problem-solving every day,” he explains. “And all these changes of late—be they new forms of competition, methods to shop or ways to communicate—are new problems to solve. That’s the beauty of it. If you don’t love that, you shouldn’t be a retailer.” Bailey says that checking sales reports gets him up in the morning and gets his heart pumping.
With adrenaline pumping through his veins, Bailey is fixated on helping Vans fulfill its full potential to become an iconic global brand representing creative expression and youth culture across the art, street, music and, yes, action sports genres. As the following interview reveals, it’s a dream job for Bailey, one he embraces with enthusiasm and willingness to adapt and change with his brand’s ever-evolving core audience. Ever eager for new challenges, he recently added a new title to his other responsibilities—Coalition President of Action Sports Americas to oversee VF Corp.’s Reef and Eagle Creek brands. “I’ll definitely spend a little more time outside of our building, but the good news is that Reef and Eagle Creek are both based in Southern California and in the same office—just a short drive down the coast,” Bailey says. One of his primary goals will involve figuring out how Reef fits into the footwear space, how it interacts with Vans and how, as a big sister, it can help. It’s all a labor of love for Bailey. “Being part of this youthful brand and working with amazing people makes me feel young every day,” he says. “I also love being part of youth culture. It’s such an exciting and inspiring space to be in. I’m one of the oldest teenagers you’ll ever meet.”
Did you envision this level of growth when you returned to Vans in 2009?
When I returned I thought Vans was this great brand that hadn’t realized its full potential. We had a lot of the right filters in place, but I don’t think they were all turned the right way. I also thought we were still apologizing too much for past mistakes. In 2004 we decided to be an art-, street-, music- and culture-brand based on an action sports foundation. Personally, I thought that we were still limiting ourselves. The action sports foundation was the first filter that everything had to pass through. But that doesn’t work for girls as well as it works for guys. A boy at age 9 may want to be a professional skateboarder when he grows up. A girl never says that. I don’t care whether it’s skate, surf, snow, moto or BMX, it’s just not going to happen nearly as much for girls. While their fashions might be influenced by action sports, I just felt like our guiding documents had to be turned a little bit so as not to limit ourselves.
What were some of those turns?
It was about recognizing our true potential as a youth culture icon brand. Vans is about youth culture. Action sports consumers are only a piece of that. There are also all the kids that attend the Warped Tour, for example, and the artist types who like to draw on our shoes but who aren’t necessarily skateboarders. It required us to unhitch all those different aspects and look at the brand from 30,000 feet to recognize that it was being contained in a box that it didn’t fit in anymore. We needed to let the brand breathe and recognize its creative calling, which was about how people express themselves creatively in many different ways. For example, the skateboarders featured in the movie Dogtown were emulating their surfer heroes on dry land. They changed the way skateboarding was viewed forever. That was a form of creative expression. Similarly, the bands playing on the Warped Tour are exhibiting another form of creative expression through music. So if you really start unhitching who we are as a brand, it’s really about that moment in youth culture when you start defining yourself. In your teenage years you are starting to understand who you are—the struggles of adolescence. Then, as you go through college, you are defining yourself further. Then you embark on a career. Those years, between 16 and 24—where you decide what you wear, drive, do, listen to, hang on your walls, etc.—define who you are. That’s part of self-expression and that’s what we are as a brand. More importantly, that involves a far, far greater calling than being just an action sports company.
It sounds like Vans experienced a reawakening.
Yes. By unhitching all of those aspects, our North Star started shining a lot brighter. That was the big change in the brand. We started taking on a broader leadership team, and not just executives but going deeper into the organization and soliciting feedback from all of our employees about their thoughts on the brand and what it stood for. I didn’t have to push too hard. I just gave them little peeks and watched them come to the same conclusions, which was that we were limiting ourselves. While skateboarding is where we started—and we will stay true to that, no matter what—we discovered Vans could be so much more.
You say Vans is a youth culture brand, but there are a lot of people north of 30 who love it, too. Can these two demographics coexist peacefully?
I believe so. A company did a study on us a few years ago and said they were a bit perplexed because they’d never seen a brand where the 15-year-old skateboarder was OK with his little sister and dad wearing the brand as well. They compared us to candy bars and fast food in terms of crossover appeal. Some of that has to do with nostalgia. I’ll use Levi’s as an example. Some of our consumer studies show that Vans and Levi’s will always be pieces in their closets, so long as we don’t do anything stupid. They sort of put us outside the arc of normal brands that come in and go out of style. We have a timeless aspect to us. It’s one reason we call our vulcanized canvas footwear “classics.” That’s Vans, in a word. We are viewed as a classic item. I also believe that as you get older wearing our brand allows you to express who you are. So when the neighbors in a cul-de-sac are wearing boat shoes without socks, Dockers pants and Lacoste polo shirts, our guy, who may work on Wall Street during the week, sports a Ramones T-shirt, Levi’s jeans and Vans checkerboard slip-ons. That’s his moment, outside of work, to be true to himself. It’s also a way for him to connect back to youthful memories.
Every adult was once a teenager.
Yes. The trick is offering styles that are current and relevant—a canvas, literally, where we can put both modern and nostalgic references. Right now, our Star Wars collaboration addresses both aspects. Star Wars connects to sons as well as to dads. It triggers a nostalgic passion in many people, yet it’s also a cool and modern collaboration. It’s been broadly received in the marketplace. We also introduced a top-tier, limited-edition Star Wars collection in our Vault series. That adds another layer of coolness and interest.
The slip-on silhouette, in general, is hot of late. How is that impacting Vans?
We happen to be in the right place for this trend, which is being fueled by the runways in Europe. Designers have embraced the sneaker of late, and that’s particularly beneficial as it brings women back into the sneaker world. What’s more, that’s a silo that, no matter who is making it, is recognized as a Vans shoe. So we benefit from that as well. But, having walked a mall recently, I had to laugh at the number of slip-ons in the store windows. Fashion cycles will come and go, but we’ll never abandon the slip-on.
Are you looking beyond this trend already?
First, it never left us, so it’s not that scary to us if it goes. We certainly know that some of our bigger retailers showed more interest in carrying more of those silos from us this year. But we don’t overly play into it. We don’t want to create a spike. We are not going to suddenly move the line dramatically toward slip-ons and try to overcapitalize on it. That just creates a fad, and that’s not what Vans is about. We are a genuine and authentic brand. We’ve been who we are for almost 50 years now.
A growth spurt such as the one Vans is currently experiencing as it nears a half-century in age is unusual, no?
It’s not common and I didn’t envision this level of growth when I returned, but I certainly have lived through big growth phases at Nike. So I knew it was possible. We hit $4 billion while I was there (1993-2001) and I remember (then Nike President) Tom Clarke saying we were going to hit $10 billion. We all thought he was crazy. But we did. And then they said $19 billion, then $26 billion and now they are saying $35 billion. Why not? What we recognized at Vans is that we were being contained in too tight a box. The brand DNA was being too narrowly viewed. Embracing our full potential has been a big part of our recent success. The other part is enabling the platforms that we now have globally, which VF Corp. has helped us achieve in a big way. It has allowed us to grow faster in places like Europe and Asia, and with a new Central and South America region launching, we will be able to grow faster there than we would have if we were doing it ourselves. We’ve also been very disciplined about building a more geographically resonant brand throughout the U.S., which has helped us grow overall. We put a lot of effort in New York with the opening of the House of Vans events space, with our General by DQM store and Vans retail stores in the surrounding suburbs. We’ve put a big effort into becoming meaningful to the New York-area consumer.
How does your extensive retail experience—starting as a stock boy—guide you in this position?
I think it gives me an appreciation for what it’s like dealing with consumers on a floor. And having worked as a stock boy, in particular, I know just how hard that job can be. It’s where the rubber hits the road—where the consumer experiences your brand. If you can put yourself in those shoes for a minute and think about what it’s like for that employee or what it’s like for that consumer experiencing that employee and your product, that gives you a unique perspective—one that is far more accurate than trying to orchestrate strategies on a white board and avoiding any reality.
What exactly is the reality at retail today?
The reality is it’s all changing so fast. There’s not a retailer today who isn’t talking about declines in traffic. E-commerce is where a lot of business has moved as well as off-mall. You certainly see the changes in what electronic devices are doing in regard to how consumers shop and experience brands and how they showroom brands, for example. There are terms being tossed around like “omnichannel” and “CRM” (customer relationship management), but I think most people can’t even define what those really mean. They are just using them because they are supposed to. I think really defining them requires getting on the floor and finding out what consumers want from your brand, wherever they find it. We all know the stories of singularity and how fast consumers and technology are changing. If you’re not paying close attention to those changes and moving quickly with them, then you will fall behind. Two years ago we spent about $4 million on a consumer study (the biggest one VF Corp. has ever done) to understand who our consumers are and what they thought of our brand and our competitors. We asked what values they assigned to us and whether or not we met their expectations. And we asked what they wished we did or didn’t do. That level of consumer study has become part of our regular lives here—we are constantly asking those types of questions.
What were some of the answers the survey found?
It affirmed a lot of things, like that we were a brand often associated with skateboarding and males. But we were also a brand they associated with youth culture and meaningful moments in their lives, whether it was attending a summer Warped Tour or learning to surf on a family vacation or the guy they met at the beach one summer. Overall, we found there was a lot more to who we were, and consumers were giving us permission to do a lot more than what we did. It allowed us to sharpen our focus, turn up our energy and, most of all, got us used to asking lots of questions.
Is the traditional brick-and-mortar format even sustainable in a smartphone shopping world?
The old formula is not going to work. It never does. The old rule of thumb was if retailers didn’t evolve their concept every five years, they would fail. I’ve seen plenty of retailers go through that cycle and disappear. So if we don’t change the way consumers perceive shopping or access to our brand—if we are not listening—it’s not possible to succeed under the old model. As to what exactly will be the new model, I wish I had all the answers. We are spending a lot of time thinking about it and evolving the way we partner with retailers. Looking around the world really helps you understand that. For example, in this country we look at being outdoors primarily from the perspective of exploration and challenging ourselves physically, whereas the Chinese look at it in terms of socializing. So, can shopping in stores be social? I think for high school kids it is. You see so many of them at a Starbucks, for instance, and half of them are doing their homework while the other half are hanging out. What are the consumers doing and why are they doing it? What need does it solve? And if you get to what the need is, how do you meet it? I think retailers have to understand consumers’ inner motivations to really decide how to evolve what they do. If we just do the same thing or think we know without doing the consumer research, then we will fail.
I agree, but might the traditional retail format be approaching extinction?
I still believe there’s a certain part of shopping that involves instant gratification. While there are web sites that do a lot for a female consumer with respect to footwear—some introducing same-day delivery even—does that eclipse standing in the middle of Nordstrom’s shoe department? I don’t think so. That access to everything and the sensory experience of trying shoes on is a very special experience for a woman. Maybe someday the web and 3-D printing will evolve and address those aspects, but even so, with respect to a woman or a teenage consumer, I believe part of the shopping experience is social. Two women who go into a Nordstrom, have an espresso, peruse the beautiful shoes and maybe go home with a pair or two—that’s the piece that I think will never go away. That said, how you meet their needs, how you update your services, how you communicate with them, how you listen to them—all of those aspects will change.
Teenagers move fastest of all with respect to those changes.
Exactly. So, how do you continually give them what they are looking for? Think for a moment about the connectivity teenagers have globally today: How can we offer them platforms to be a part of that conversation? That’s what it’s really all about. We’ve shifted a lot of our energies to consumer insights and trying to really understand them. It’s helped us make some of the changes we’ve made to allow us to better understand the consumer. We’ve added a lot of science to what is a very emotional brand, and that has helped us considerably.
What are some of the changes?
One example is the creation of offthewall.tv, which stemmed from the rise of social media and has become the center of youth media. I read a statistic that stated 70 percent of all 14-year-olds who watch “The Simpsons” do so online, not on TV. If you ask kids what network that show is on, they’ll likely give you a blank stare. They don’t know networks like we did as kids. It’s much like shopping: They want it when they want it and where they want it, and they want it for free. So rather than buy traditional TV ads, we decided to create content for them that they can watch online. We also recognized that we had to articulate our brand through some activation events that were different from the Triple Crown Series, X Games and Dew Tour events. So we opened a House of Vans in Brooklyn (four years ago), which is an indoor skate and music events space. It’s closed to the public, essentially, but we run lots of skating events and free music shows. Kids can get on the guest list and attend. It’s a great way for our customers to experience our brand. We also just completed another season of our Custom Culture high school art contest. That’s partly a way to bring attention to art education and the underfunding of it, but it’s also a way to give students a platform to express their creativity. They are all examples—the Warped Tour is one as well—of creating platforms for our consumers to engage with our brand. They continue to evolve and, regionally, they take on different nuances. In China and Europe, for example, those events are different in order to cater to the respective consumer bases. We’ve recognized that it’s not about selling globally so much as it’s about communicating globally. If you think about how kids today communicate online, it’s global and a free back-and-forth exchange. That globalization allows more input into our brand. With the variety of blogs, web sites and social media platforms, consumers are much more aware of what’s trending or what’s cool on a worldwide scale. So we want to act on what’s happening in Japan and bring it to the U.S. quickly. We want to give our customers access to that trend because they already know about it. They saw it on Hypebeast yesterday.
Brands today can’t dictate as much to consumers. It requires more of a back-and-forth exchange.
Yes, collaboration is a big part of the changes in culture today. Community is a big word, too. We knew it was coming with the advent of social media, right? We understood communities, but did we really understand where it was all going? In my opinion, it’s becoming a world without borders. About eight years ago I was watching my son (he was 12 at the time) play a game online. He was chatting with someone in Spanish. I asked who he was talking to? He said, “I don’t know. Some kid in Chile. He’s at the same level I’m at.” The fact that he was interacting with a kid in another country like it was no big deal just amazed me—and he’s 21 now. So think about how much has changed since then and continues to do so at an even quicker pace. Regardless of whether people say business is harder today or, one could argue, easier with such communication, you just can’t fit it through the funnels that we’ve all grown up using.
Any advice for retailers?
One: Be sure you define clearly who you are. By that I mean, what really is the DNA of your brand? If you look at the name above the door, what comes to mind and what does that bring up in terms of emotional thoughts about who you are as a brand? Is that message clear to your employees, customers, wholesale partners, shareholders, etc.? And have you done everything to align your choices and decisions to ensure that’s the message? Two: The consumer is the decider today. We have to recognize that all the power rests in their hands. We can try to get them to do things that they used to do and complain about some of the things they are doing now, but that’s not going to work. We have to change to keep up with those shifts. Everyone has to get back to understanding the consumers’ wants, needs and desires. And figure out how their brand—the name on the door—can meet those needs and desires to be able to attract and engage consumers and make them loyalists to the brand.
The opportunity is always there.
That’s the reason we do what we do, right? When Nike entered the action sports space a few years back, a mass panic ensued—they don’t belong here, they are not authentic, shame on anyone that lets them in, etc. My reaction was you can only hold the flood back so long and, rather than protest it, I saw them as bringing in a new consumer who might be more athletic. We haven’t had that type in this space, which has been so insular and contracted. So let’s tell those consumers why they may want to wear Vans instead of Nike. Why bother trying to hold back the 800-pound gorilla? We do that and we’ll turn our attention away from retailers and consumers, and that’s not how to compete. It’s a similar scenario for retailers facing new forms of competition. While we can all complain about mall developers not doing a better job at creating traffic, it doesn’t preclude retailers who have access to the Internet, social media, etc. to focus on the consumer. Rather than complain about online dealers, for example, ask yourself how you use the Internet? What does the consumer think of you online? How is your site operating? How are you communicating with consumers? Are you giving them a forum to speak with each other? There’s a lot you can do.
Where do you see Vans in five years?
Our goal is to be a global icon of creative expression and youth culture. That’s the bottom line. If we can achieve that, then the actual product we make almost becomes less relevant in a crazy sort of way. If I said Apple, for example, you might say iPhone. But if they had just stuck to making desktop computers, what would they be today? Instead, Apple has become an icon of creative technology. And if Nike stuck only with making running shoes, they would be known for one thing and might be the size of Saucony or Brooks today. If Vans can become important for what we believe consumers want from us, which is a way to express themselves creatively as they go through that period of personal growth in their youth, then I believe we have a much bigger calling. We just have to stay focused on what we do and make the right choices. We need to be smart about investments in technology, retail and understanding our consumers and their changing needs.
I say Vans, you say?