That’s the advice Wolverine World Wide CEO Blake Krueger gave footwear executives during the summit’s opening panel, which also featured three other top execs: H.H Brown chief Jim Issler, Brown Shoe CEO Ron Fromm and Reebok North America head Jim Gabel.
Here are some excerpts from their discussion, which covered diverse topics, from the digital storm to the importance of full-price retail to the new mergers-and-acquisitions climate.
On finding the upside in the downturn:
JI: We’ve got an economic recession and the continuation of retail consolidation, which has been going on for 10 years. On top of that, we have a lack of consumer consumption. But there is opportunity. [This time period] gives all our companies a chance to take a step back, 30,000 feet up and reorganize and redeploy our capital and reduce expenses and focus … on what’s working for the consumer.
RF: We think a lot about our partnerships. Anything that’s happening at Brown is a result of the great vendor community that has stepped up. At Famous Footwear, where the family is the customer and trust is so important … it should be no surprise that the biggest and the best brands, Nike and Converse … are leading the way. They have great value and come to us and work with product offerings. The more time we spend with our vendors, the more opportunities they create for our customers.
BK: Our industry as a whole is less volatile than most. It isn’t all doom and gloom, especially when you see what’s happening in other industries. Someone once said, “Never waste a good recession.” A couple of the big opportunities that are coming out of this are, first and foremost, people. We need to increase our talent base.
JG: We’re trying to reshape our business as fast as possible and reallocate a lot of people within the organization. With that, you have the ability to reengage the staff and communicate. They are starved for information about what’s going on. If you’re going through a reshaping exercise, you have to be candid with them and, more important, you have to involve them in that decision-making process.
On potential in the M&A market:
BK: There was a time when money was free and unlimited and a lot of nonstrategic players were able to outbid a lot of the strategic players in this room. We’ve now entered a time when that has flipped. Crazy multiples are not being paid. Brands are being valued for what they are. We have a pretty good plug-and-play model. We constantly go through a pretty disciplined white-space analysis to see what is out there and what fits with us. You have to work hard sometimes to do an acquisition — you have to work three times as hard to integrate [a new brand] into your culture.
JI: For us, we’ve got a unique business model where we’re pretty lean and narrow. We’d like to find a lot of extra things, but it’s not always easy to find something that fits.
On the dramatically changing consumer:
JG: The customer is changing so rapidly right now. People are so brand-aware, but they’re not brand-loyal right now. There are so many ways you need to be touching the consumer. We have moved so much to the digital piece. With blogging, the success or failure of the product is instantaneous.
RF: We probably spend more money on research to make sure we understand every consumer segment. We think we’ve got three distinct women who come in to shop and we need products to address their individual needs. Understanding the consumer on a very personal level is what’s going to drive it. The digital world is going to change the way we shop. It’s about how fast we can embrace that.
On when the business will turn around:
BK: We take a global view. The U.S. has felt its way to the bottom. There are some other regions that are trying to find the bottom.
RF: We have to be a little careful. The next quarter is going to be a tougher one. We’ll get into the fall season cleaner. There will be some good things happening in the back half. [But] we need some real help with the consumer. Unemployment is still a big driver, credit is still getting tightened.
JI: We’ve got another 12 to 18 months that are going to be tough. Until you start seeing key elements in the economy change, we’ve got to be prepared to hunker down, take our assets and redeploy them in a different way. There are things happening that are very positive, but we’ve got to find them.