Dividing the company into three distinct brands (Kalso Earth Shoes, Earth and Earthies) wasn’t the initial game plan when Gary Champion first joined forces with legendary footwear designer Michel Meynard, CEO of Earth Inc., about a year and a half ago. On the heels of a successful 18-year sales management run at Clarks Companies North America that saw the company become a powerhouse in the comfort footwear arena, followed by a brief stint managing Geox USA, Champion was exactly the type of seasoned industry professional Meynard was seeking to be company president. Meynard wanted to focus more on his first love—designing shoes—and leave the day-to-day running and building of a footwear company to a professional such as Champion. At the time, Earth was grounded, you might say, in its design DNA of a negative heel construction. And while Meynard tried almost every style possible to keep the brand’s wellness construction updated and fashionable, let’s face it—preventing a footwear designer from incorporating heels into any of his creations is nothing short of torture. Meynard desperately wanted to branch out and had some ideas, but he had no idea how successful one of them (the launch of Earthies) would become less than two years later.
Earthies’ birth began on Champion’s second day with the company. He was in the conference room with Meynard, who mentioned he had a name (Earthies) for a new brand but not much else. “He asked what might be the right way to approach it,” Champion recalls. “I suggested what I always believed could work: creating a brand for sophisticated women who grew up wearing sneakers and comfort shoes but gave up style in the process or, when wearing fashion shoes, gave up comfort.” Champion believed a middle ground existed where a well-made and fashionable design—not fashion-forward—could be combined with a legitimate comfort construction. The suggestion inspired Meynard and his trusted design team to get right to work, and the eventual result was a collection of short heels and wedges with a three-pronged approach to comfort: a cupped heel design that sets the foot into the proper supported position, an anatomic arch that increases touch points along the transition from heel to forefoot and a cradle toe area that evenly distributes weight from the toes. Or, as the marketing team at Earth coined it: “Wellness. Elevated.” Champion says it was exactly the comfort-fashion balance he envisioned. “Our design team did a wonderful job studying the market and creating some terrific uppers, and our engineering team did a great job fitting the product and contouring the footbed,” he says. “It’s an amazing collaboration.”
As soon as the first prototypes came in, Champion could sense this new brand had the makings of something special. It was further confirmed by the enthusiastic response the collection received from retailers during its inaugural trade show run. But neither he nor Meynard could have predicted the enormous success it’s currently experiencing at retail. “The launch has been phenomenal,” Champion says, noting it has topped all of his launches at Clarks. “We hit a niche that resonated with our consumer immediately.” Strong sales back up Champion’s claims: Earthies scored a 20-percent sell-through in the first four days in select Nordstrom doors. What’s more, consumers are raving about the brand, as evidenced by numerous e-mails the company received from customers effusing about the look and feel of the shoes. The enthusiasm is contagious, Champion adds. “The retailers are excited because they are seeing the reaction from their custom-ers, and they haven’t seen that level of excitement in a while,” he says. “Women are just raving about the style and comfort. [We often receive] letters that begin, ‘I haven’t worn heels in years…,’ or ‘I never thought I’d be able to wear heels again…,’ or, ‘I’ve tried your shoes and I’m wearing them all day long…'”
Whether Meynard and Champion uncovered the Holy Grail of women’s footwear remains to be seen, but the initial signs are quite encouraging. And while it may seem like a simplistic recipe—offering comfort and fashion together—it is not easily achieved. (If it were, everybody else would already be doing it.) “The piece that sells it is the fashionable design,” Champion offers. “The women aren’t expecting that shoe to look that way and be that comfortable.” It’s a scenario he has witnessed on the sales floor time and again: “The customer loves the style and the minute she steps inside she says, ‘Wow, these are comfortable.'” Champion adds that Earthies’ Fall ’11 bookings are up 35 percent over this spring. “I wouldn’t be surprised if we double our business by next spring,” he says.
Next up for Champion was the relaunch of Kalso Earth Shoes for this spring. The strategy was to go back to Earth’s roots as an original wellness footwear brand, one that embraces its famous negative heel construction as a healthy lifestyle choice. Champion is quick to note that this is not about toning and fitness. “We got sucked up into that craze and left behind the heritage and authenticity of the Earth brand,” he says. That heritage is based on shoes, originally designed by yoga instructor Ann Kalso 40 years ago, that feature a 3.7-degree negative heel construction that is said to relieve joint stress, distribute weight more efficiently and improve posture. Champion is focusing on the brand’s proven benefits with the addition of premium components and leathers. Kalso Earth will open at $149 suggested retail with some boots in the $200 range. “We are taking the whole concept back to the way the brand was marketed 40 years ago,” Champion says, which includes original packaging, sockliners featuring the Kalso Earth Shoes logo and POP focused on the benefits of the negative heel. “Kalso Earth becomes the heritage of our company—the authenticity of why we exist in this country in a branded way. It puts a stamp on our corporation.”
Which brings us back to Earth, so to speak. At some point next year, Champion says Earth will be re-launched as a traditional comfort brand (no negative heel construction) positioned for men and women. “I believe the Earth brand has more power than just the negative heel technology allows us to be,” he says, noting prices will open at $100 with select boots in the $150 range. And while it may be last on the list of launches, Champion believes Earth has the biggest sales potential based on its mass audience appeal. “Earthies has the potential to be big, but pricepoint wise ($159 to $200) it doesn’t have the size potential that Earth has,” he says.
All in all, Champion is bullish about the company’s overall growth prospects going forward—projecting branded sales to be at least five times its current size in three years. And while it’s obviously a market share battle, Champion’s track record of success proves he is pretty savvy in that regard—just like Meynard is when it comes to creating innovative designs. It’s a one-two punch that bodes well for the future. “Michel loves product. And while the day-to-day running of the business is something he can do, he doesn’t enjoy it,” Champion says. “That’s where I come in. It’s a great team, and I really enjoy working with him.”
You’re about a year and half into the job. Is this where you expected the company to be?
I believe we are further ahead than expected. In fact, I think we have accomplished a lot in that time period. It takes a good six months to figure out the business and get your feet on the ground as to where the company has been and where it’s going. And then it takes the next six months to figure out what product you want to deliver, which puts you six more months ahead. So this spring is really the launch of what influence I could have on our brands.
Did you think Earthies would be a hit right out of the gate?
I’ve been in the business long enough to look at it and say, ‘This should be good.’ But you never really know until you get the product in front of the consumer. I’m not a women’s size 6; I can’t try it on to see if it is really comfortable (laughs). I’m not exactly sure how well-fitting the last will be even though our engineers spent a lot of time making sure it would fit just right. We pushed our factories to get it right because we had a tight window. We wanted to make sure that when we delivered the product it fit to our exact specifications.
Which came first, the fashion or the comfort?
We worked on the Earthies technology first— lasts, bottoms and footbeds. We first asked, ‘How is that going to work?’ Then we shopped Europe twice in the spring of 2010 for trends and then went off to China to build the line.
Which matters more, fashion or comfort?
I believe it’s a combination—that’s the niche we hit. And we are over delivering on both comfort and design. Consumers are not expecting Earthies to feel the way they look.
With respect to Kalso Earth Shoes, it’s the wellness attributes that matter most and not the toning or weight loss ones, right?
Yes. Personally, I don’t believe we ever should have gotten into the fitness and toning craze. Maybe we should have done a walking shoe and some kind of [exercise] flip-flop and stopped there. But toning is not who we are. Our tagline is: “The original wellness shoe. Designed by nature, created by Kalso.” The consumer who knows us as Kalso Earth expects the wellness attributes associated with the negative heel construction as well as quality. Kalso Earth is [comprised of] high-quality comfort systems, leathers and laytex insoles. We are putting quality and creativity back into Kalso Earth.
How is wellness different than fitness and toning?
I think wellness came out of that grouping, but I don’t believe it is connected. I see fitness and toning moving more into the athletic world involving shoes related to physical exercise. Wellness, on the other hand, is not just about footwear—it relates to a whole lifestyle. When you talk about wellness, you talk about to what degree you want to live that lifestyle—in mind, body and soul. As that relates to footwear, wellness can be comfortable shoes with legitimate comfort systems and technologies. Kalso Earth is one example. Some people will buy a hybrid car, eat organic foods and buy Kalso Earth shoes. These people are serious about living a wellness lifestyle. Then there are those that just want to be comfortable and will buy Earth. And there are those that want style and comfort and Earthies is for them. To me, all three of our brands have a wellness aspect to them, depending on how serious you are about living this particular lifestyle.
The fitness and toning market is having some difficulties. What do you think has gone wrong?
I think a lot of those brands just over promised. The hype behind [the shoes] didn’t deliver the goods. Burn more calories, skip the gym, tone your muscles. For the woman that is working out every day it makes sense. For the woman who thinks she can put on a pair of rocker soles and walk around the mall and get fit…I just don’t see that. But I believe the category will be successful in the long run—shifting to brands like Reebok, New Balance, Nike and Adidas—that approach fitness and toning in a much more athletic way. They are the brands that are going to get that message and product right.
Fill in the blank: Our industry is in…
A time of chaos, because the largest country (China) we source from is going through tremendous changes. Everybody is having to scramble to meet production needs. It’s very difficult and, unfortunately, there are more questions than there are answers at the moment.
We are trying to get the best read on where China’s economy and sourcing structures are going. Leather pricing is erratic and so is their currency, and there’s no clear clue what that government is doing to control it. One thing is certain: Prices are going up for next spring.
Despite the challenges, what is your outlook for the rest of this year?
The rest of the year, while not spectacular, will be good. I believe there is a pent-up demand for footwear. I’m counting on boots being as strong as they have been this fall. I don’t see that trend going away. In general, the U.S. market is absolutely in a better state, compared to about a year and a half ago. It doesn’t feel like a recession right now. There have been worse markets. But I’m just not exactly sure where it’s heading. It could turn ugly quickly. Or it could just be a continued slow recovery.
Has the consumer calmed down, or is she still a bit freaked out?
It depends on the price points you are dealing in. The low-priced market is stressed right now because the high price of gasoline is having a major affect on that category. Those consumers that are doing OK financially will be a solid market. They can afford the extra $20 to fill the tank each week.
Has the overall mood among retailers improved as the consumer has backed away from the ledge?
Well, nobody is screaming. March was OK, but April was difficult because the weather didn’t cooperate and most expected May to be better. Overall, they feel that the consumer was coming in but was not buying until she was ready to wear it. Nobody panicked early on, which was unlike recent seasons. That was a good sign. In 2008 and ’09, markdowns would have happened early. Even the department stores held their prices for the most part. There were not the 30 to 40 percent off sales signs throughout the stores. They waited for the weather to break. Before, a lot of retailers overbought in their inventories. They have gotten smarter. They are watching their inventories and turns much more closely so they don’t have to panic as early. I just think they have gotten better at those aspects of the business.
Might this more conservative approach to inventory management narrow the playing field of brands offered?
The way Earthies has been received has changed. In the past, we would have had 120 accounts knocking down our door to get their hands on the product. What you are seeing now are inquiries—despite the fact that we don’t have any product left to sell them. But it’s a more thoughtful approach: ‘I heard great things about the brand. Can you show me the line for fall?’ It’s not a case of chasing trends and throwing money at them just to get product into the store. There are intelligent conversations about getting involved and to what degree. Retailers are adopting a more strategic approach to growing their businesses.
Is this a long-term shift, or do you think they will revert back if the overall economic climate improves?
I think if the economy comes back and the consumer starts driving it again, then money will become more available and retailers will chase again (laughs).
Along those lines, has the consumer really changed?
The consumer’s emotions are driven by the economy. Right now, there isn’t a lot of good news and as a result there isn’t a lot of money floating around. But when the stock market was flying, people were investing and the banks were giving out loans, people were spending. I don’t think that will come back as quickly. But if the situation improves again, the consumer might react a little slower, but, in the long run, they will be willing to spend again.
So consumers didn’t learn a thing about saving for a rainy day?
They learned for the short-term. But I think it disappears within the masses fairly quickly. The only difference between the luxury and volume market is money. But the consumer psyche is basically the same: When you have money in your pocket, you want to spend it to make yourself feel good.
What do you love most about this job as opposed to other ones you have held in the industry?
I now have my hands in everything. There is a difference between running a wholesale business and answering to a president of a wholesale business. I now have a responsibility to our outside partners and to the people that work for me—the ones who put food on their families’ tables. I need to make the right decisions to grow the business in a profitable way. It’s a responsibility that becomes apparent very quickly and it is fun, exciting and reinvigorating. But it’s a responsibility that you don’t take lightly. It challenges you on so many different avenues. And there are different challenges that come at you each day. Clarks was getting to the size where I had six or seven people reporting to me. It ran itself because I had good people around me and they had good people around them. People we had hired and trained. At some point you are sitting on top of a team and end up getting further away from the retailer and the consumer. So it’s kind of fun to get back in the trenches and build something again.
Do you recommend all successful career veterans to try this?
Well, what makes the opportunity at Earth possible is that I have tremendous product people in-house. Michel and his team of designers are very talented and understand the market. The product team is a big piece of what makes you successful in this business. Marketing and distribution strategies, operations and IT, human resources—you need those aspects but you have to have the right product people. That’s where many brands fail. They don’t understand the consumer and can’t answer their needs. I’ve been blessed to work with two very talented design firms with respect to Clarks and Earth. And both Bob (Infantino, former CEO of Clarks Companies N.A.) and Michel are very talented product people.
What keeps you coming into work each day?
It’s the passion of this business. The footwear industry is quiet and well hidden. It’s a small group of people that are successful. I really enjoy the people not just in our offices but out in the field as well. Many of the retailers—from department stores to independents—are good people to work with. And it’s fun to win.
But winning is not easy.
It’s not easy. The economy has to be strong enough to allow retailers to invest in your products; that’s outside of our control. We have to stay in touch with our consumer and keep making great products that are delivered on time, look and fit right, and resonate with them. We need the talent pool in order to achieve that. And we have to buy and sell the right shoes. There are lots of things that can go wrong in that formula but, at the same time, there are lots of things that can go right. With the right product, I know how to go out and get the sales. I’ve always treated people fairly and been honest, and I’ve built a reputation of trust. When I say we are going to make money together, they are usually willing to give me an opportunity. The right product with that opportunity is a winning combination. That’s where I believe this Earth family of brands can go. —Greg Dutter