The Right Stuff

Consolidated Shoe Company has a 116-year track record of success. Marc Fanning, COO, discusses how the full-service operation builds partnerships that are made to last.

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Nearly all wholesalers claim they can do it all, and usually better than anyone else. They believe they possess enough human talent, technical systems, factory operations, established brands and spot-on styles to provide a resource that retailers simply can’t afford to pass up. But nearly all retailers know these claims are not always true. Too often, capabilities are lacking, misses exceed hits and promises end up broken.

That’s why proven results speak volumes. And the longer the legacy of proven results, the louder it speaks. Enter Consolidated Shoe Company of Lynchburg, VA, and its century-plus legacy as a full-service wholesale partner. It currently features a portfolio of seven women’s brands (Nicole, Madeline, Madeline Girl, Poetic Licence, OTBT, Axxiom and Dimmi) and a substantial first-cost division (Trade Winds). Marc Fanning, COO, credits the longevity primarily to three generations of Carrington family ownership (Billy Carrington is CEO) and a unique blend of strong family values, state-of-the-art customer service and production capabilities. All customers receive equal and individualized attention, whether they’re one-store independents or national chains. Fanning stresses that each account is a partner of Consolidated Shoes in the truest sense of the word. “We are not just selling them shoes,” he says. “We work with each account closely in order to ship them the right products, at the right time.” Helping to make those decisions is an executive management team that, in total, possesses 180 years of industry experience. “Down to a single thread or a last shape, we know what we are doing because we have been doing it for so long,” says Fanning, who has more than 30 years of industry experience in retail and wholesale. “We are confident that we can do a good job for anybody.” Consolidated’s executive team members are all former retailers who made their industry bones managing Kobacker stores. “We have worked together for 25 years and we talk all the time about what we would do as retailers,” Fanning offers. “We are more conscientious about trying to do what’s right for the retailer because we know what it’s like to be on the other end of that phone call.” For example, Fanning’s team understands the impact a wholesaler can have on a retailer if he requests an extension on a delivery or seeks to pass on a price increase. “That’s why we do everything possible to prevent having to make those sort of calls,” Fanning adds.

What are you reading?

Blockbusters by Anita Elberse and King of Maxwell by David Baldacci.

What is inspiring you right now?

As always, my son, Spencer.

What famous person in history do you most admire?

Walt Disney. He had a vision, turned it into a reality and it became a huge business. And it’s the fun business, which I think we would all like to be in.

What is your motto?

Say what you are going to do and do what you say.

Who would be your most coveted dinner guest?

Blair Moseley, who was a good friend, a great colleague and a confidante. She passed away from cancer this past year and I would love to be able to sit down and speak with her again. She worked for our company for 25 years. She ran our operations. She did everything. We called her the Queen of Consolidated.

What is your least favorite word?

Unacceptable.

What is your favorite part of the day?
Late evening, when the dust has settled and I can plan for the next day. However, in the shoe business, your plan doesn’t always turn out the way you expect. But having one at least gives me a good feeling inside.

What is your favorite hometown memory?

I grew up in Toledo, OH, and it’s of being with my family at my grandparents’ lake house.

What sound do you love?

A boat coming across a lake in the early morning to break the silence.

“We want to get the right shoe at the right quality and at the right price for each store, because if they’re not successful then we’re not going to be successful,” he says. “Our staying power boils down to our ability to work with each customer. More importantly, our wanting to work with them.” The first non-Carrington to run the company’s day-to-day operations, Fanning honors the customer-always-comes-first approach to business. “It’s what the Carringtons have always done and what they have instilled in all of us who work here.” He recalls a red chair that sat in second-generation CEO Dick Carrington’s office and was actually called the hot seat. “I can’t tell you how many times I heard him ask someone sitting in that chair, ‘Did you take the order?’ They’d say, ‘Yes.’ Then he’d say, ‘Then whatever the deal was is the deal you’ve got to live up to.’ There was no swaying from that.”

People who work at Consolidated Shoes tend to stick around. (The average employee tenure ranges from 15 to 20 years.) “Plenty of my customer service reps started around the time I did or before,” notes Fanning, now in his 21st year at the company. It’s a distinct advantage, particularly when dealing with larger accounts where buyer turnover is high. “We know their shoe business more than the buyer does, and that consistency helps our customers,” Fanning says.

While not the largest of corporations, Consolidated Shoes’ relatively nimble size enables it to react and adapt quickly, which is an increasingly attractive quality for buyers who are looking to order closer to season. “We’re different from a lot of competitors, especially the bigger ones. And the smaller ones don’t have the diversity of product that we offer.” Take this past fall, for example. During the sell-in period, the prediction was that short boots would be all the rage, but that turned out to be wrong. Consolidated had the flexibility to adapt in time and still deliver what women really wanted: tall boots. “We basically told our factories to not cut the material,” Fanning explains. “The heel, last, buckles, straps—they were pretty much okay.

Instead of making, say, 6,000 pairs of short boots, we made 2,400 pairs of tall boots.” While it might sound simple, the ability to discover the mistake, make the necessary production shifts and still ship on time is no easy feat. That level of flexibility and speed to market is rare.

The need to react and adapt faster is increasing, according to Fanning. It’s a fact of life in a risk-averse retail climate. “Customers just don’t give you that 50,000-pair order upfront anymore,” he says. “They might give an order of 20,000 pairs up front, followed by several 3,600-pair orders and then maybe some 1,800-pair orders. But they are also looking to ramp it down if a style is not performing.”

Today’s market is much more fluid. Each account has its own ebbs and flows. The companies that are able to navigate them successfully stand to gain the most. “Today it’s all about how fast you can react to the latest trend,” Fanning confirms. It makes the business more difficult, he says, but also more fun. “Being able to figure out what a customer needs in time and being able to solve the problem is much more rewarding.”

How would you describe Consolidated Shoes’ niche in the market? 
We are a women’s fashion house that concentrates on the upper mid-tier market. Our team shops markets around the world to find the latest information on styles, silhouettes, materials, ornamentation, etc. to make sure we have the right product at the right time. It’s backed by one of the most sophisticated ordering systems in the industry. Customers can order as small as a 9-pair or 6-pair case that ships out the next day. They can even order a single pair. Our warehouse is completely open stock. People can log on and buy anytime, anywhere. Our warehouse can ship 5,000 pairs at a time up to 25,000 pairs in a week—by style, color and size. Everything is automated, which is a credit to (CEO) Billy Carrington. He saw that coming years ago and reacted. He’s the visionary for our company and is always five steps ahead. The next step is having our salespeople enter orders at a show on their tablets for delivery the next day or in a month. It all relates to our never-ending drive to service our customers as best we can.

Everybody says they do that. But it’s not always the case. 
To be fair, everybody services their customers to some extent. Otherwise they would never stay in business. I just don’t know how much importance other companies put on customer service. We try to always take it to the next level, and I believe that differentiates us in the marketplace. It’s not easy and it takes time. But everyone is going to have to get there if they want to survive. Take e-commerce, for example. That’s the future. We need to embrace it, which is why we have been developing those systems and capabilities for years. It’s no longer a competition between tiers; retailers have to be able to sell on all levels. They have to be able to accommodate however consumers want to buy goods from them. That’s the way I shop. I buy lots of things from Nordstrom, but I haven’t gone into an actual store in ages to do so.

Can independents compete in a meaningful way online?
I don’t think most independents will invest the money to have a significant e-commerce business of their own, but we can help service them in this arena by having inventory available to them at all times. They can log on and buy anything they want, at any time. We are working on taking that to the next level, where we have tablets in stores so a consumer can order something right on the spot and, if it’s in our warehouse, it’ll be shipped for next-day delivery. In some cases, a retailer may carry five styles from one of our brands and the consumer will see on the tablet that the styles are offered in additional colors. After trying a style on in-store and seeing how it fits, she may decide to go with a color that can be ordered online.

How close are you toward reaching that level of capability?
It’s six months to a year away, perhaps. It’s very important because independents are where we do most of our business. That’s why it’s our job to make sure they have capabilities available to them that allow them to compete with the major chains. Another way for them to compete is through product differentiation. Between the breadth of our brands and first-cost business, we offer that capability. We make sure our seven brands don’t overlap and we work closely with our retail partners to choose the most suitable mix for that particular store.

I often hear people say it’s becoming less worth the aggravation of working with independents because there are fewer and fewer of them and those that remain represent small volumes. 
It does require a lot of work. But we are willing and able to make sure what they buy from us is right for them. We do it with all of our customers, regardless of their size. But we don’t need a $1 million order. Buy three shoes that we recommend and the next season we’re confident you will want to buy at least five styles because those first three are going to do well. We’re not a small company, but there aren’t a whole bunch of layers that you have to go through to get a decision. Basically, you call me [laughs].

How important are independents to the industry right now?
We need those stores. For starters, they don’t come after you for markdown money at the end of a season. They are also usually great people to work with, really know the shoe business and are an important part of the overall retail landscape. It’s the American way, right? Consumers like participating in “shop local” campaigns. They want to support their local communities. So we want them to be successful for a whole bunch of reasons. Fortunately, for the most part, we do business with ones who have stayed relatively healthy. It is difficult for them to survive, but I don’t think independents will ever go away entirely. There’s still a healthy array that spans multi-store operations, one-store powerhouses and plenty of boutiques.

I agree. It was Mark Twain who once said, “The report of my death was an exaggeration.”
There are plenty of examples where people wrote things off, but they didn’t go away. Take the iPhone. People said no other company is ever going to ever be able sell another type of phone. And then Samsung comes along and proves that theory wrong. I was talking recently with our design team about the online tier and one of them said, “Women are women.” They might not have planned on buying a pair of shoes when they went shopping, but often they’ll be in a strip center or a mall, they’ll see an attractive shoe display and they will buy. They still like to see the shoes, touch them, try them on and compare them to other styles. Or maybe they just bought a new outfit and they’ll realize they need a pair of shoes to go with it. My point is that part of the business is still going to be around. Online may take a share of it, especially with regard to men, but for women, shoe shopping in stores, I suspect, will remain an enjoyable experience.

Speaking of shoes women like, what are some of your brand highlights?
In general, our branded portfolio is lifestyle driven with distinctive interpretations of current fashion trends. The styles are also developed to connect with consumers beyond the immediate fashionable attraction. They engage consumers on an emotional level and tap into habits, experiences and philosophies that are unique to each individual lifestyle.

So for OTBT, what does that mean?
OTBT (Off the Beaten Track) is a fashion-casual brand inspired by travel, music and culture. It features high-quality materials and finishes along with comfort technologies. It launched four years ago as a replacement to our Palladium brand, which we sold to K•Swiss. That’s been a good decision for us, as OTBT features a much broader assortment of styles. Last year, in particular, was a good year for OTBT ($89 to $199 retail). Sales increased by about 20 percent.

What’s Poetic Licence’s niche in the market?
Poetic Licence is a United Kingdom-designed dress shoe brand for women who want to show an individual sense of style. The brand’s personality is offbeat, distinctive and exclusive. It perpetuates creativity in a world of conformity. The shoes ($79 to $159 retail) often feature lot of different materials in one style—say, polka dots mixed with stripes. It’s like a material factory blew up sometimes. The sales have been strong. Macy’s Herald Square, for example, has been reordering frequently.

Nicole and Madeline are Consolidated’s portfolio veterans. What do they bring to the mix? 
Nicole started it all for us. It’s a tailored brand ($49 to $149 retail) that offers effortless versatility for women on the go. The designs are chic yet extremely wearable. It features plenty of rich leathers and classic designs with a twist for shoes that are relaxed yet sophisticated. Madeline, on the other hand, is a fearless collection of couture footwear that bridges the gap between high style and affordability ($32 to $79 retail). The brand, which has been around for 20 years, delivers up-to-the-minute, trendy designs at an attainable price. It’s carried in a lot of fashion boutiques. Madeline Girl is junior takedowns of that.

Which leaves Axxiom and Dimmi.
Axxiom is our price point ($32 to $79 retail) comfort casual brand. And Dimmi, our newest brand ($39 to $59 retail), is based on a unique charitable premise. Billy Carrington’s brother passed away a few years back from ALS (amyotrophic lateral sclerosis) disease. Initially, we started a website called Dimmi (it means “tell me” in Italian) that was designed to be a social networking community for people suffering from a variety of diseases. The site would allow those afflicted and their family and friends to communicate with one another about treatments and coping. Unfortunately, it didn’t take off, but the ALS cause is still important to the Carringtons, so we decided to launch a shoe brand under the Dimmi name, where all of the profits would go to support medical research. The first donation will go to ALS most likely, but going forward donations will be made to help fight a variety of diseases.

How’s it going so far?
This fall will be our third season, but it’s really more of a re-launch. Our initial collection was okay, but we upgraded the quality and have a nice line now. It includes a mix of canvas casuals where it’s all about the fun and bright prints with plenty of material treatments like satins and sequins.

The challenge lies in convincing retailers and consumers that it’s legit. There are plenty of false charitable tie-ins as a ruse to get sales.
Oh, for sure. I even went as far as setting up a separate company with separate accounting for Dimmi so that anyone who wants to take a look can see it’s legit. The brand slogan is “100 percent good.” It’s not really about the shoes, although the stores must make their margins. It’s really about trying to do some good for people in need. Fortunately, we happen to be pretty good at making shoes and consumers will have the added benefit of feeling good that their purchase is contributing to a good cause. That’s why it’s important to get the message of Dimmi’s charitable platform across first, which is one of our main initiatives this year. We have a website that tells the story. We made some videos about ALS. But we really need to get Dimmi into chains like Shoe Carnival, Kohl’s and Rack Room in order to get the necessary volume on the patterns and units so we can then offer it to better-grade independents as well. We have been doing business with these chains, in some cases, for as long as 50 years. If we tell them we are going to make these donations they believe us, which gives them confidence in telling their customers that we will. Beyond that, if we put this message in a Dimmi ad, we’d better damn well do it because our whole business could go under if we are dishonest.

You’ve been in the business for 32 years. Is it easier or harder today?
Oh, it’s definitely harder. Of course, we laugh about how 20 years ago we thought life was miserable. But we would take those days in a heartbeat right now.

What was so miserable back then?
Pretty much the same things as today [laughs]. Prices are too high, deliveries are late… It’s just that today the problems and the business overall happen so much faster. Everything needs to happen faster. And the faster the business, the faster the problems come. But my take is that problems are opportunities. If you didn’t have them, you didn’t have the order to begin with. For example, I see that we shipped 8 million pairs of shoes last year and we might have had an issue with 200,000 pairs. All those individual orders that accounted for the 200,000 pairs made it seem like the world was crashing down. But don’t forget, we shipped 7.8 million pairs on time, in good quality and with no problems. I guess nobody wants to give you credit for the good things you did. They only want to tell you what went wrong [laughs].

Why has the business gotten so much faster? 
Fashion is happening faster. Retailers see a shoe pop up online somewhere and they want it right away. Consumers want product shipped the next day as well. In the past, the August trade shows were when orders were placed. Now we’re getting orders in December to arrive by the same deadline. We’re trying to turn it around as fast as we can. It’s a big reason why Steve Madden has been so successful—he makes a certain style in New York, puts it into his stores and finds out right away if something is working. Then he’ll fire off an order to his factory for 70,000 pairs and sell a boatload of them because he knows they will be good. The business is moving really fast, but it’s not a bad thing.

Because? 
It meets what retailers and, ultimately, their customers demand. In that regard, I don’t think the Internet shortens the lifespan of a trend. It just makes everyone aware of it faster. Before, there were trends nobody knew about because they never got beyond where they originated. Social media might keep a trend going longer. It has with tall boots.

Where do you see Consolidated Shoes in five years?
We expect to be a bigger business. We work on that every day and I’m confident we will achieve our goals. We will have more partnerships. One of our main goals is to establish our brands further in order to be a player with the Nordstrom and Dillard’s of the world. We also want to become more of a globally known resource. We are opening accounts around the world and will continue to do so.

Is there another Carrington in the wings? 
No. Twelve years ago we became an ESOP (Employee Stock Ownership Plan) company. Eventually, Consolidated Shoes will become 100-percent owned by the employees.

What do you love most about your job?
The diversity and the people. I’m just not a standstill guy. I can’t sit in an office 52 weeks a year staring at the four walls. I love traveling to our Asia factories, the shows and seeing our customers. I just love it all. I used to be on the road eight months a year, but now it’s about six months. Being the boss makes me have to be in the office a lot more than I really want to be, but that’s okay if it means helping us reach our goals.

Are they within reach?
Absolutely. We would become a hugely profitable company if just our branded business grew to a certain volume—and that is a more than reasonable goal. We believe OTBT has the potential to reach that goal on its own. And if our branded business could one day equal the size of our first-cost business, then I’d turn the job over to somebody else and take my ESOP dividend check and check out [laughs].

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