“We’re in one of the best places we’ve been in. … Everything is focused on the quality of the brand,” CEO Steve Birkhold told Footwear News during an interview at Diesel’s showroom in New York last week.
A key component of the brand’s new strategy is taking its footwear production in-house. Following the collapse of its former licensee, Global Brand Marketing Inc., and the end of its 10-year relationship with the company, Diesel USA hopes to shed its former image of being widely distributed at retail with a limited amount of styles. The plan is to offer more styles and SKUs, but target new wholesale accounts at luxury retail heavyweights such as Saks and Nordstrom, which already carry the brand’s apparel line.
“We’ve always had a rather extensive [footwear] line. I’m just not sure the U.S. market has seen it the way they’re seeing it now,” said Birkhold, who unveiled the firm’s new footwear line at the FFANY show June 3-5.
Though the Diesel parent company is based in Molvena, Italy, and designs footwear in Italy, its U.S. subsidiary now oversees all aspects of its own footwear. That change occurred in late October after a footwear license fallout with now-defunct GBMI, as previously reported. Now, Diesel has unified its design, merchandising and sales in the U.S., the company’s only market that still had distribution rights licensed out. There is still litigation surrounding a breach of contract lawsuit in which GBMI alleges Diesel failed to pay for $16 million worth of Diesel-branded shoes and caused millions of dollars in damages. But Birkhold said Diesel has “a solid case,” and the brand has not been injured, which is helping it move forward with its footwear push.
“When you don’t go direct to a customer and you’re going through a distributor, there’s a filtering process where the line gets edited. I’m not saying anything negative about what GBMI did because … they’re distributing product to make money, so they have a slightly different agenda. For us, it’s about brand building, brand equity,” Birkhold said.
Diesel’s past focus had been on sneakers, and although that trend will continue, “it’s not just about sneakers,” Birkhold said. “It’s about balance.” He added that Diesel USA is focusing on the hybrid category and will court consumers to shop the label for both dressy and casual styles, ranging from $65 to $120 for women’s casual and $95 to $300 for women’s dress styles.
There also will be a premium footwear collection for men and women called Diesel Black Gold for spring ’09. The dressier and less logo-driven line will retail 40 to 50 percent higher than the typical Diesel men’s footwear line, which ranges from $120 to $400. Birkhold said Diesel’s men’s business in the U.S. has been performing well the past 18 to 24 months, justifying the higher price points. Details about the women’s line couldn’t be confirmed at press time.
“We’re not going to sell Diesel Black Gold footwear to an account unless it’s a very high-end footwear account that carries competitive brands,” Birkhold said. He added that early numbers for the apparel component of the Diesel Black Gold line have done well in the last few weeks at some of the brand’s key wholesale customers, including L.A. Sporting Club. He expects that success will replicate with the footwear. So far, Diesel’s fall total sales were up 35 percent to 38 percent over last year, which Birkhold partially attributes to its Diesel Black Gold apparel sales.
Showing its commitment to footwear, Diesel USA plans to name a new SVP of footwear sales in the coming weeks to work in conjunction with VP of footwear sales Tony Strippoli. With this, the company hopes to leverage its key apparel accounts, such as Saks, Nordstrom and Bloomingdale’s to align with footwear wholesale efforts.
Saks and Nordstrom buyers told FN they haven’t seen Diesel’s latest footwear lines yet. But Boston-based Tannery co-owner Tarek Hassan, who was one of the early Diesel footwear retailers when it was licensed under GBMI, said the footwear brand’s initial success has set the bar high.
He said he has already bought into the new line. “They are definitely heading in the right direction,” Hassan said. “What really excites me the most is Diesel’s efforts in being more selective and cleaner with their distribution.”
Birkhold added that the strength of Diesel’s business and brands lies in its own retail stores, including its New York, Los Angeles and San Francisco flagships. Though he declined to disclose locations of future flagship stores, he noted the potential for the new location on Manhattan’s Fifth Avenue, slated to open in November at a site previously leased by Gucci. The brand has announced plans to open four to seven additional stores in 2008.
“For me, that’s the best place to reach the consumer. … That’s where we have to succeed. We have 50 percent-plus growth in our own retail stores,” Birkhold said. “We actually have expertise in the shoe section, [who] are professional shoe-selling specialists. Since we’ve instituted that [in] some of our key stores, we’ve seen a huge lift in our business.”