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Midwestern Values

Diane Butrus, COO of Diba Imports, makers of Diba True and Testosterone, on how the medium-sized fashion house is always looking to fill the market voids.

Diane Butrus, COO of Diba Imports

Diane Butrus, COO of Diba Imports

WHEN SPEAKING WITH Diane Butrus the first thing that comes across is her managerial frankness. She tells it like it is. The fact is she has a master’s degree in management, but there’s also a Midwestern straightforwardness about her that is quite refreshing in an industry that has more than its share of dreamers and hucksters. While such hyperbole will always be a part of the fashion business, Butrus doesn’t partake in any of that. “Our goal has always been to have a medium-sized company, and we never really wanted to be super famous,” she says. “We just want to do a good job, make a decent living, provide a nice life for the people who work for us and not have too much stress.”

But don’t take this modest description too literally. Diba Imports, makers of Diba True and Testosterone as well as licensee of Bronx, and its sister company Demand Shoes (makers of Luichiny and Caliente) is anything but a sleepy, staid or unambitious footwear operation. For starters, you don’t stick around in this business for 25 years by doing the same thing season after season. Founded by Butrus’ father, Joe, in 1989, the business has zigged and zagged and continuously found ways to adapt and survive. “My dad’s philosophy, for as long as I have known him, is to always fill the void,” Butrus says.

Take the impetus behind how Diba came into being. Butrus’ father, who rose through the ranks of Edison Brothers to vice president of merchandising for Chandlers, had crossed into wholesale as the first U.S. sales rep for Bronx. A couple of seasons into selling the edgier European styles to retailers across America, he was on a plane when an industry colleague slapped him on the back and thanked him for a Bronx shoe that he sold the previous season. “My dad had sold about 2,500 pairs of that style and this guy sold about one million pairs of a copy to Payless,” she says. “Well, my dad didn’t sleep that night and started a new business the next day called Diba.” Butrus’ father believed he could fill the market void by duplicating select Bronx styles better than the competition. “He had the last and he knew where the shoes sold and in what colors and styles,” she explains, adding, “in the beginning, Diba was just the best Bronx shoes from the previous season.”

A more recent example of filling a market void involves Diba’s entrance into the men’s market with the launch of Testosterone this year. The premise being that younger men (think millions of Millennials entering the workforce) are ready to graduate from wearing sneakers 24-7. But they are unlikely to jump into their fathers’ brands and seek something fresh and edgier. “Men are wearing jeans as dress code, but they need something to go with them that is acceptable to wear to work,” Butrus says. “I also like to use the analogy that when they are done dating girls and want to date women, they shouldn’t be wearing just sneakers.”

The launch of Diba True last year is another case study of how to fill a market void—this time led by leather boots priced in the $150 to $175 retail range. The reaction has been strong, which Butrus attributes to consumers responding to product that pops at an attractive price. “We also upgraded our branding and the boxes,” she says. “We’re priced under $200 yet offer similar quality to price points well over that figure.” Butrus says the proof is in the re-orders. “Last fall, our first full season of Diba True, we had more re-orders in our line than we had in the last five years,” she reports. “This year we are trending in the same direction. We are getting re-orders every day.” Butrus notes that one customer recently re-ordered five styles. “Five styles re-ordered on a Monday morning from one customer with one store…That’s super exciting,” she says.

Indeed, there’s plenty to be excited about at Diba. In addition to these aforementioned initiatives, there are others that have been launched and more in the pipeline. Not to mention a thriving private label business. Butrus believes being a mid-size company enables Diba to be nimble but also big enough to execute on its numerous endeavors. “We own our own 45,000-square-foot warehouse. We have a ton of flexibility to grow as well as partner with other companies,” she says. With regards to possible partnerships, Butrus says the plan is to help select start-ups get their businesses to the next level by tapping Diba’s extensive backroom capabilities. “Start-ups often sell out or give up their dreams because they can’t get the back office squared away,” she says. “All they need is what we already have.”

Butrus and her father balance each other well in positioning Diba today and going forward. It’s been a left and a right brain partnership between manager (daughter) and dreamer (dad) that’s approaching two decades now. “My dad comes up with a great new idea about every five minutes, and I tell him we are only going to do one a year so keep thinking,” Butrus laughs. “We counterbalance each other well.” It’s a lesson Butrus learned when she first joined the family business in 1996. She had been working previously in an airplane factory (McDonnell Douglas) and then for Leica, where she sold optical and laser measuring equipment to the automotive and aircraft industries. A self-described “technology person,” the first thing she sought to implement at Diba were five- and 10-year business plans to replace its one-year budgets. “My dad laughed and said it doesn’t work that way in the fashion business,” she recalls. “I learned very quickly that every year is a new year and it’s like making a sculpture out of sand where the tide comes in and you start all over again.”

Nonetheless, Butrus has brought Diba up to speed logistics- and technology-wise. Today, for example, orders are shipped within four hours if the inventory is in the warehouse. “We are really focused on customer service, and that requires good sales materials, systems and people,” she says. “We are able to either do a whole lot of business or less, depending on the ups and downs of fashion cycles.”

Amid those peaks and valleys, Butrus’ goal is to maintain Diba’s medium-sized equilibrium. Not to be the biggest or the flashiest, rather a company that is respected and reliable. “Let me put it this way,” she says in describing Diba’s corporate philosophy, “my dad lives in the same house that he did when he started this business. We’ve never gone off the wall with anything. We just try to do the right thing and stay on top of everything and go to bed without any regrets.” Midwestern values personified.

So how’s business been overall this year?

Frankly, it’s been very challenging. It’s like walking through a minefield sometimes. While our business with the dotcoms is growing, a good deal of our independents are struggling. The first six months of this year winter seemed to last forever and consumers are buying more online. I always root for the little guy, but it’s tough for them right now. There are more dotcoms popping up all the time, so we have been spending more time looking for them than we are for brick-and-mortar stores.

And the good news is?

The best thing that has happened this year is that our recently launched Diba True and Testosterone brands have exceeded expectations.

What are some of the factors behind Diba True’s strong response?

If people aren’t necessarily shopping for something in particular but see something that pops, they respond to it. The antiquing of the leathers, for example, makes it pop. These boots retail in the mid- to upper-hundreds, but we believe we are offering a similar quality to price points well over $200. Our biggest re-orders are coming from a combination of online dealers and independents, especially those located in the south. Flat boots, in particular, play well in that part of the country. They like that distressed materials look. Diba is also known for boots—it’s our most prominent category—so retailers come to us for that.

And the reaction to Testosterone?

Every single customer that we’ve shipped to except for one has re-ordered. That, by far, exceeds your expectations when you launch a new brand. We are working with very good factories and the quality is spectacular. The shoes feature a bunch of details like brushed leathers that make them stand out, and it’s at a very good price point ($130 to $160 retail). We are also inventorying them by the pair so there are no minimums. In fact, with a few select independents we offered the added incentive of shipping shoes that they could send back within 30 days if they didn’t sell. No one sent shoes back. The dotcoms were a little slower to come around, but we are now getting more established in that tier. We are now looking at some department stores. They are a little more conservative when it comes to the name. We are waiting patiently for them to become more familiar with it and realize that they are shoes and it will be OK (laughs).

Why, exactly, the name Testosterone?

Some people really like the name—us included—and some people are not so sure, but nobody forgets it. We like that Testosterone is bold, memorable and refers to guys. Our tagline is: “Testosterone shoes: made for men.” It’s as simple as that. And we don’t mind being a little controversial, which I think helps with the younger generation.

Who is the Testosterone customer?

Initially, we thought it would be a young urban guy under 30, which we are getting. But we are also getting customers over that age. In general, we are selling to guys that are interested in shopping for shoes, as opposed to those that basically buy a new version of their same shoe.

Is this a growing segment within the men’s market?

I think we are trending in that direction, and that doesn’t strictly apply to guys who are the metrosexual type. We believe we are just at the beginning of a fashion curve where men in general are moving out of sneakers-only and into shoes. That’s why getting guys to try Testosterone on has been key because if they do, the shoes pretty much sell themselves. And if a guy gets a few compliments from women, his buddies will ask where he bought those shoes. It becomes a whole different ballgame because they become aware of the difference their shoes can make.

Where does the Bronx license fit into the Diba Imports portfolio?

Bronx has had some interesting turns. When U.S. fashion has followed European trends, it has sold well in the U.S. Today, however, fashion is going in reverse and Bronx has gotten heavily into sneakers as a result. Frankly, sneakers made in Portugal are super expensive. They look great, but not for double or triple the price. So Bronx hasn’t been our major focus of late. In addition, Diba True has been out-performing Bronx over the last several years because it’s specifically developed for the U.S. marketplace.

What might you attribute this fashion reversal to?

I think it’s due to social media. Everybody is connected with each other all over the world. You spread all the information around and everything gets closer together. Trends used to start in Europe and then the next season move to New York followed by Chicago, St. Louis, etc. But it’s not that linear anymore. But, as my dad always says, fashion is cyclical. We are never going to get stuck with any one thing. There will always be the next thing.

When just might that be, because I think our industry could use some newness right about now.

I agree that fashion trends have been somewhat limited over the last few years. I kid my product development team to please come out with the next craze because it would really make a difference for us as well as the whole industry. The economic conditions over the last several years have really had a negative effect on the retailers’ willingness to accept new and fresh brands. We believe, however, a pent-up demand for that is eventually going to bust out because consumers can only take so much sameness. That’s why we think there’s a void in women’s shoes—below the ankle and closed-up styles. I think we are at the beginning of that movement. Women are ready for shoes after seasons of buying boots, booties and sandals. Now it’s up to us to come up with styles that work with the athletic apparel trend and not against it, but we feel we are doing that.

Might the sameness at retail be a bigger industry ailment than the weak economy at this point?

It could be. The bigger companies get, the less innovation there is in the marketplace. And it works both ways because the bigger the retailer, the bigger they want their resources to be. That’s why their floors all look the same and that’s what leads to boring fashion. That’s the inning I believe we are in now. We are also trying to address this issue with exclusive partnership with some of our retailers. For example, we partnered with J.C. Penney to launch Diba London last fall, which are styles influenced by the streets of London. It’s been doing well.

Did J.C. Penney come to you?

It was a combination. We hadn’t been selling to them for years, but they had a change in their buying department. The new team was more familiar with what we could accomplish and understood what Diba represents to the American consumer. Still, it took something special, which included exclusive product, point-of-sale materials and new boxes. They didn’t want just another me-too brand. Our intention is to partner with another retailer next year on an exclusive collection. Again, we are looking to fill voids for our customers.

What qualities enable Diba to have such brand elasticity?

One of the main reasons is having production based in several countries. We make shoes in China, India and Portugal, as well as a few other countries in a small way. It gives us the ability to match any price point. We are also customer service-oriented and more than willing to work on special collections. In addition, Diba is very much a centered brand. So to take one step toward London, the south or New York is easy for us.

Collaborations, in general, have been very successful of late.

Absolutely. Think about it: If it’s easy to obtain something, you get some joy out of that. But if it’s difficult—where you have to stretch just a little bit whether it’s being in the right place at the right time, paying a little more or seeking it out to buy it—the amount of joy you get out of obtaining that purchase is tenfold. It’s also what retailers are looking to do in the absence of a meaningful fashion trend. Collaborations stand out amid all the sameness at retail.

Just how many collaborations is Diba Shoes capable of producing?

Unlimited in the sense that we actually already do that in our private label business. We make shoes for a lot of other brands and it’s actually the biggest segment of our business. Specifically, we are not trying to make shoes the cheapest way possible. Most of our competition looks at price point, whereas we may not have the highest initial mark-up but we very well may have the highest maintained margins because our shoes look better on the table. Retailers don’t have to discount our products as much in order to sell through because they look like you should spend more money for them.

Where do you see Diba in five years?

I see us taking on another brand and expanding our offering. I also see us combining logistics with companies our size and smaller. In particular, younger brands that are trying to jump into the marketplace but lack the capabilities to set up the infrastructure that we already have in place. I see us helping some of the start-ups get started. That way they could spend their efforts on sales and product development and not on logistics and customer service. For example, our warehouse is located in the middle of the country and we can pretty much ship anywhere in the U.S. in two days. That’s a big deal. And, believe me, my rates with FedEx are going to be so much better than any start-up’s. My relationship with the freight forwarders, the factories and the box manufacturers are also going to be a lot better. We also have our own IT and CPO on staff. A start-up isn’t going to have that. The synergies would make us both more efficient as we battle these bigger companies that are efficient by their sheer size. We have to get smart, too.

As increasingly difficult as it is for start-ups, they keep coming. 

Absolutely. Anybody who is willing to get some samples made, be able to sell those and build a bankroll so they can make some more shoes and possibly start selling to bigger retailers can build a business. My parents did just that. My dad sold shoes out of the trunk of his car, our garage was the warehouse and my mom typed out invoices in our basement. That’s literally how my family business started. But to go from selling a few shoes out of your car to being able to sell to Nordstrom today is not easy.

Sourcing, for one aspect, has to be one of the most difficult challenges. 

Yes. The bulk of our production is in China, India and Portugal. There’s a shift happening out of China and we plan to let some of the bigger companies do that heavy lifting and then we’ll jump on their coattails. We took a leadership position in India about seven years ago and lived through some very challenging times figuring out what cities, which manufacturers, the right freight forwarders, etc. to be partners with. In fact, we are doing production for some companies because they don’t want to go back into India on their own.

What drove you to stick it out in India?

Primarily the fact that the types of leather shoes we want are about 35 percent more expensive to produce in China. We feel like we have gotten the factory to the point where they are making shoes that look like we once did with our factories in Brazil.

Where might the next great sourcing country be?

I hope it’s in Africa. I think it would great for a country like Ethiopia, for example, and it would be great for the shoe business. Unfortunately, production will probably spread out to several countries, which won’t make it any easier for our industry. Still, I hope it’s in Africa and our industry helps develop another under-developed region of the world. Our industry has the ability to provide a lot of jobs and help a country commercialize itself, and that’s definitely a positive.

Despite the numerous challenges facing Diba and the industry in general, would you still label yourself an optimist?

By nature, I’m an optimist. I’ve always believed in people. Human beings always find a way to survive, and we’ll find a way to make the shoes business work. I don’t know what it’s going to look like exactly five or 10 years from now, but I suspect it won’t look like what it does today because what we have been doing is not sustainable as an industry. That’s why, for one thing, I think we are going to see more start-ups. And if you are flexible enough and willing to evolve, then I think you can be successful.

What do you love most about your job?

The people I work with and building good relationships with our customers. I love dealing with people and bringing out the best in them, which I’m happy to be doing in my family business. Because no matter what business you are in, if the people are lousy then you are going to be miserable.

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