The distributor business model is tough. After doing all the grunt work of introducing a brand into a market, breaking into retailers one at a time, managing the business season after season, retaining existing customers and (diplomatically) adding new ones, and doing one’s best to ensure client, customers and consumers are all happy…It can be snatched away in an instant—or at least whenever the deal is up for renewal. All that blood, sweat and tears exerted to build a brand, treating it like it’s your very own . . . then it all goes poof!
No one needs to tell Edward Kanner how tough it can be. He’s lived the distributor model since childhood, growing up in Montreal, Canada, and helping out in the family’s distribution business during summers and school breaks before eventually taking the helm in the early ’90s. Kanner Corporation built its reputation by introducing Birkenstock to the Canadian market back in 1968, and managing it successfully for 50 years. (As far as distributor agreements go, that just might be a world record.) It also successfully introduced Finn Comfort to the North American market in 1991. But portfolios change and oftentimes what makes a brand successful is what makes a distributor’s deal end: all the heavy lifting is done and the brand can take it from here.
Thus, it’s up to the distributor to introduce the next up-and-comer, one that couldn’t fulfill its promise without the coveted relationships, market expertise, persistence and passion of an established distributor. In other instances, a distributor picks up where another either dropped the ball or it’s time for a fresh approach. Kanner Corporation has a solid track record of performing in all these scenarios, specializing in the upscale European comfort fashion and wellness markets. The company’s current portfolio includes a mix of longtime partners, Gabor and Think!, and new additions Haflinger (last winter) and (this year) Ganter.
“We’ve always concentrated on healthy lifestyle and wellness products,” Kanner says, noting that each brand has its own identity, heritage and loyal fan base. One similarity, however, is that they play in dependable markets. “We’ve been fortunate not to have had to follow the ups and downs and fickle whims of fashion. The brands we work with are stable and enduring—brands that our retail partners have been and will continue to be able to depend on in difficult times.”
Kanner Corporation’s latest additions fit that bill to a T. Haflinger, founded more than 50 years ago, is the largest manufacturer of boiled wool in Germany—long before Allbirds made wool shoes de rigueur. The brand has built its reputation on the craftsmanship and quality of its slippers and clogs. In this instance, Kanner Corporation is hitting the ground running since the brand already has an established presence in the U.S. market. “Haflinger enjoys a fiercely loyal following and a 25-year history in the United States,” Kanner says. “Compliments to Madame Gerda Hoehm for introducing the brand to U.S. consumers two and a half decades ago. We’re fortunate to have acquired North American distribution rights to a brand with such a positive track record.” Kanner adds that this is just the tip of the iceberg for Haflinger. “You’ll see us extending Haflinger into a year-round, indoor/outdoor lifestyle brand for all seasons,” he says. “You’ll increasingly see Haflinger in other categories, such as sandals and shoes. Nor will we be limited to wool. Haflinger’s anatomical cork footbed sandals will be in stock in the U.S. for the first time this spring, and there’s much more to come in 2020.”
Ganter has similar brand strengths. It’s also a family-owned business (founded in Austria in 1922) and the product is strictly made in Europe. “Ganter fits perfectly within our program,” Kanner says. “A luxury European comfort brand that stands for health and well-being whilst being perfectly on-trend with a keen sense for fashion and modern aesthetics.” Kanner says Ganter is not for the masses, starting with a premium retail price range (generally $175 to $265). “Ganter is for the sophisticated, walking shoe connoisseur, and for superior retailers who know how to sell the exceptional. It requires some effort.” So far so good, Kanner reports. The initial response from retailers has been strong. “Even stronger than expected,” he says. “Our loyal partners trust us. The immediate retailer support was gratifying and validated our decision to take on Ganter.”
Not to be overlooked, Kanner reports Think! and Gabor continue to make steady, stable strides in their respective markets. The former is an upscale, healthy lifestyle fashion brand out of Austria with an eco-friendly and sustainable platform. “Think! features highly original styling and sumptuous comfort for the independent-minded and quality-conscious consumer,” Kanner says. Gabor is the portfolio’s most popular brand in terms of commercial fashion. “It’s an absolute powerhouse in Europe with sales of more than 10 million pairs annually,” he says. “We’re still comparatively minuscule in the U.S., but our following increases nicely each year.”
The way Kanner sees it, controlled, steady growth is the healthiest strategy for the long run, an approach this self-described “long-distance triathlon junkie” may have learned through sport. The only way to complete an Ironman—something Kanner has done numerous times—is one swim stroke, pedal revolution and stride at a time. There are no shortcuts. “One tends to forget how much patience and perseverance it requires to achieve greatness,” he says, citing Birkenstock as an example. “It took a half a century of trials and tribulations for that brand to reach its current zenith. With very few exceptions, there are no sudden overnight success stories.”
As for additional brands joining Kanner Corporation’s portfolio, it’s always a possibility—provided the fit feels right. “We continually explore offers and opportunities,” Kanner says. “We’re a highly sought-after distributor with a dynamic team that serves over 2,000 accounts. Truth be told, we turn aside 90 percent of proposals. Sometimes less is more.”
In an age when business can be blinded by the numbers, Kanner’s sustainable growth philosophy is refreshing. It’s also the mark of a distributor that treats every brand as if it’s one of their own. Kanner believes this is even more necessary amid the disruptive landscape. “We’re living in transformational times,” he says. “Traditional business models are being disrupted. Retailers and distributors alike are under pressure. Everyone has to adapt in order to remain competitive and to stay relevant.”
With fewer specialty independents to sell overall, Kanner believes building strong, strategic relationships with retail partners matters more than ever. “Simultaneously, we’re intensifying relationships with our European manufacturer partners to ensure they do not underestimate or misunderstand the unique complexities and nuances of the North American ways of doing business,” he says. Think adapting to North American timelines and product cycles, namely meeting earlier buying and trade show schedules. (Being late to the game has long been the bane of European comfort brands.) “In order to succeed in this difficult market, you have to readjust and evolve your thinking,” Kanner says, noting that his company is there to assist retailers in any way possible. “We routinely develop special styles, materials and colors specifically for the North American market as well as run a year-round stock program.”
Like any dedicated triathlete, Kanner’s desire to improve never wanes. He calculates success in numbers—time splits, cadence, watts, heart rates, distances, etc.—and perhaps most of all in pure persistence. Asked what the company’s leading goals are for this year, he answers: “They revolve around self-improvement, elevating our brands and our business. Everything is in play, from superior brand positioning to raising our own levels of service and professionalism. We can constantly improve ourselves and our systems.”
Why might it be a case of good timing for Haflinger and Ganter, be it the macro comfort trends, increasing preference for authenticity and wellness attributes?
Wellness is the new luxury, and it’s a particular niche in which we specialize. Driven by Millennials, today’s consumer wants to feel good and live a healthy lifestyle. She is willing to pay more for higher quality and authenticity. Just look at the skyrocketing organic food industry, health supplements and various fitness crazes. That’s our target audience for all four of our brands. It’s a burgeoning consumer market segment. These are the people who seek out our brands. In terms of sheer sales volume, Haflinger and Gabor are the most established and popularly priced. Ganter and Think! are in a higher price category that we describe as affordable luxury.
How does Haflinger complement the portfolio?
Wool is obviously on-trend, and its natural properties are well known. Haflinger quietly sold millions of pairs in America before Allbirds even existed. That said Allbirds is doing a fine job, and they’re helping draw attention to the benefits and comfort of wool footwear and proving it to be mainstream and for all walks of life. So you couldn’t ask for a better fit. After all, we’re cork footbed and serious arch support specialists, and we exclusively distribute European brands. It is our modus vivendi.
How has year one gone for Haflinger?
Admittedly, year one was challenging. In the midst of the distributor transition, wool prices went through the roof. We experienced some material supply issues, and a factory closure/relocation led to manufacturing delays. We disappointed some retailers, and we could have sold a lot more. It was a sluggish start, but we learned a lot and we are intensely focused on getting things right this year.
What exactly did you learn?
We had to learn everything about the brand from scratch. There are retailers who have successfully sold Haflinger for 20 years and helped guide us. We listened. More than ever, we need to be forward thinking and we need strong, open and constant communication between manufacturer and distributor.
Who is the Haflinger target customer, and what is your expectation for growth going forward?
The brand was already well established through a previous distributor. However, the consensus is that Haflinger is under developed, a sleeping giant. We know that we have tremendous untapped growth potential. There’s no question that we will take it to the next level by intensifying retail partnerships and by raising our game on all fronts.
How did the Ganter opportunity come about?
We had been in contact with Ganter for many years and have had close relations with CEO Gerhard Aigner. We had previously passed over the opportunity so as not to conflict with another one of our previous brands (Finn Comfort). The landscape shifted, and the timing was spot on.
Speaking of the shifting landscape, has it been, as many have said, some of the most tumultuous years ever in retail?
We live in interesting times. There are so many determining factors. Our role is to be a dependable supplier, to support retailers and to help them thrive. Thus, disciplined brand management is of vital importance. We also look for inspiration from outside our industry. We look at other business models and brands and think what can we learn from them and apply.
Are there any silver linings to come out of this disruption? Like the changes Nordstrom, Macy’s and DSW have introduced to re-invent and reimagine their shopping experiences. What’s your take on the collective efforts of retailers trying to adapt to consumers’ changing ways?
In these critical times, constant transformation and continuous improvement are the keys to moving forward. Experiential retail is on the rise and key.
If you were a retailer, what’s the first thing you would be doing?
Actually, we are retailers—we own online and brick-and-mortar stores in Canada—and we understand firsthand the difficulties and challenges. We can sympathize and appreciate their needs and concerns. That said, the first thing I’d be doing is to create an experience. Offer shoppers something original in a vast sea of sameness. Differentiate. Modernize. Make it fun. Serve an espresso. Shake it up.
What’s your position on direct-to-consumer platforms?
While we have not yet launched DTC with Haflinger or Gabor, it has indeed become inevitable for brands to survive and to showcase their entire breadth. It’s a question of self-preservation. Contrary to popular belief, we believe it drives traffic to our retail partners. DTC drives increased customer attention and brand awareness. Flagship accounts will continue to thrive and prosper from it. I believe our most dedicated retailers, those who are seriously committed to the brand, will most certainly benefit. We will see to it that they do. Only those who are not seriously supporting our brands in a meaningful way, may see a sales erosion. It’s a double-edged sword.
What might the typical shoe store look like in 10 years?
You mean, how long before the robots take over? (Laughs) Retail is not going away but we’re experiencing dramatic change and rapid shifts in consumer behavior. The digital transformation will carry on, modernization and reshaping of existing concepts will continue. We will inevitably be surprised. Many ideas that once seemed like science fiction are mainstream today. I don’t see that changing any time soon.
The elephant in the room pretty much with any industry conversation is Amazon. What’s your take on its impact going forward as it pertains to selling shoes?
While the vast volumes they want to buy from us may be tempting, we believe it is shortsighted and untenable. We have studied all the arguments pro and con. We’re opting out for the sake of brand longevity and to maintain greater control. By not giving in to Amazon’s demands, we safeguard our brand equity, we strengthen our authorized retailers and, in the end, we protect ourselves.
Just how unique is your position here within the industry? Might it shift more toward your stance going forward?
I don’t find it unique. There seem to be two distinct camps: cooperate with Amazon or steer clear. A handful of our standout retailers do a first-rate job on Amazon Marketplace, however we do not need 500 resellers selling the same product in ways that are inconsistent with our brand policy. We must strive for coherence.
Despite numerous challenges and market volatility, you’re optimistic about business in general because?
While general market conditions remain difficult, we have the ability to evolve as business dictates. At a time when 95 percent of all footwear is produced in Asia, our premium brands are produced exclusively in Europe. The quality level of the brands we represent is second to none. Asia produces some fantastic product but exquisite European craftsmanship still shines above. Retailers also can rely on our extensive year-round stock program for rapid replenishment. Lastly, we manage a rigorous business. It doesn’t need to be the biggest, but it runs like a well-oiled machine and with German efficiency.
What is the biggest challenge facing Kanner Group in the near-term, and what do you plan to do to overcome it?
It’s the little everyday challenges, like policing and enforcing MAP, recruiting and educating the right people, doing business the right way and not cutting corners. Our retailer contract, for example, prohibits sales on third party marketplaces. Henceforth, this will be vigorously enforced.
Why exactly is that policy important to Kanner and its retail partners?
Our retailers are our lifeblood. If they tell us that Amazon is disruptive and affects them negatively, or that discounting is a problem, we pay attention.
Where do you envision Kanner Corporation in five years?
Stronger and faster.
That’s the triathlete in you speaking. What are you most proud of with regards to your company?
The dynamic people I work with, our high integrity, our consistent results, our endurance and our versatility in the way we adapt to constant change.
Is it fair to say you approach running this business as a triathlete trains?
If you mean keep going when the going gets tough, then sure. Endurance and perseverance are good traits in business. Others include intelligence, vision, tenacity, resilience and adaptability to change.
What do you love most about your job?
For me, it’s no longer purely about ROI, but about enjoying the relations and people we choose to do business with. It’s about having fun and making sure that everything we do is done with dignity and propriety. If we only care about profit maximization, I believe we’ll rapidly go downhill. We would also fall short as people. I don‘t want to sound overly virtuous, but we believe in treating people honorably and doing business with a conscience.
