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Footwear Trading | Recipe for success | Stanley Kotkin and Laurence Slotsky
November 2014

Footwear Trading’s

recipe for success

Why do some companies trade well through economic downturns? Stanley Kotkin and Laurence Slotsky of Footwear Trading told TRUDI DU TOIT how they managed to grow brands during the current slowdown. Photo: NICOL DU TOIT

Trading is tough. And you won’t hear many arguments about that. For some companies, though, trading is not as tough as for others.

”We do feel the economic impact, but maybe not as badly as others,”says Footwear Trading director Stanley Kotkin. The reason is that their brands are not aimed at the bottom end of the price-sensitive market, where over-distribution and dumping of product takes place. Their customers are not so much affected by the pertrol price, or food price inflation, or rising school fees etc. that gnaws away at so many consumers’ disposable incomes.

This is because all their brands — Diesel, Skechers, Tommy Hilfiger, Levis, Jeep and Fila — appeal to the middle- to upper-income level consumer. Although these consumers are affected by the economy, they they want to wear brands that have equity and are more immune to price hikes than the lower LSM consumers, he says. ”The higher up you are in the LSM, the less you are affected — but, there is also a knock-on effect.”

The bottom end of the market is completely over traded and price driven, adds his fellow-director, Laurence Slotsky. These consumers just want the look at a price and most of the products are pure copies of successful international brands and styles. There is little quality or design features in the products, and certainly no brand equity,which leads to a shorter life span. In addition, your competitors often have low rentals and low overheads, and can lower their prices accordingly, he adds.

”We have noticed over the past year that many consumers are once again returning returning to purchase true global aspirational brands that offer quality and value,” says Slotsky.

Especially now that more and more international brands are returning, South African private label brands that were bought because they resembled well-known brands, will be declining, he predicts, because they will be facing tough competition from the well run international brands. ”That’s the reason our company is really focused strategically in our brand selection,” says Slotsky.

Despite the tough economy, Levis footwear sales are at the highest in the last three years. Even though price points have increased due to the declining rand, the brand has had double didgit growth.

Jeep footwear is another success story for Footwear Trading. The brand is being worn by all culture groups in South Africa: from Jeep owners who want to own the whole brand package, trendy black Sandton consumers, to farmers who don‘t care about fashion or trends, or black bikers wearing Jeep on their Sunday Harley outings.

”The market is much bigger than we had anticipated previously,”says Slotsky. ”The footwear has far exceeded our sales expecations across all cultural groups. Our core range of products are replenishable on a weekly basis and we offer up to size UK 14 on selected styles.

They offer lifestyle and outdoor products in boots and sandals, and recently introduced a camo range of footwear (see p32). Next year a kids range will be added to the current mens and ladies styles.The products are well priced and of high quality.

Slotsky believes that Diesel is probably the most aspirational denim brand in the country, as they have such an unsatiable demand for a product for which no price is too high.”The brand is iconic and always in high demand, and we will never over-expose or over-distribute it.”

Globally, Skechers has been one of the big success stories of the past couple of years. ”This is largely due to their entry into the authentic sports market, where GoWalk, GoRun, GoGolf, GoTrain and GoBionic have had major successes in the US,”says Kotkin.

Skechers GoRun is one of the top women’s sports footwear sellers in the US and Meb Kefliezghi became the first American to win the Boston marathon in 30 years wearing these running shoes.

”The GoWalk category is, however, the jewel in the crown, locally and internationally,”says Kotkin.”Skechers Kids, which has always been popular, continues to grow.”

Another reason why they are able to weather the economic downturn is because they have several Levis, Skechers, Diesel and Tommy Hilfiger brand stores. The revamped Levis store in the V&A Waterfront, Cape Town, was acclaimed by the Levis‘ San Francisco headquaters as one of their best stores worldwide, says Kotkin proudly.

The stores not only offer them an opportunity to showcase the brand by showing the full range of products available, they also provide a valuable testing ground for new product. By first introducing new products in their own stores, they are able to advise retail customers on the styles and colours that sell well in specific areas — and know which ones not to offer to their customers.

”Retail was a whole new learning curve,”admits Kotkin. ”It’s a totally new business and each store is like a separate business, each with their own challenges.”They had to adapt to trading seven days a week, handling challenges like shrinkage, staffing issues, delivery issues, etc. ”It’s not simple and we made mistakes, but I think we’re more or less on track,”says Kotkin.

While their chain store retail customers were not adverse to them opening their own stores, certain independents took umbrage, admits Kotkin. Most of them eventually overcame their opposition and started ordering from them again. One independent, who proclaimed ”we don’t buy from our competitiors”, is now one of their biggest wholesale customers.

Especially independents trading in the same mall where they opened brand stores, saw it as a challenge. Yet, Footwear Trading has experienced that their stores actually grow business if there is competition close by.

”It is the wider awareness,”Kotkin says. ”When we open stores in new malls, we want competitors in the form of brands at our own level around us.” Because that is what attracts the footfall.

The good old days of easy trading will never come back, he concludes philosophically. ”You have to keep on innovating, otherwise you’ll fall behind. When you’re climbing up on the sunny side, time goes slow, but on the dark side you slide down, and that goes quickly.”

That is why they are constantly travelling, watching trends and planning their next innovation.

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