WSA Wrap: Footwear Vendors Court Cash-Strapped Retailers

WSA Wrap: Footwear Vendors Court Cash-Strapped
Pricing was a major part of negotiations on the show floor.

LAS VEGAS — As the economic situation continues to darken, footwear vendors are taking extreme measures to court cash-strapped retailers.

Vendors interviewed at the WSA Show, held here Feb. 12-14, were touting price reductions, strong in-stock programs and smaller minimums.

“Everyone is working harder to stay the same,” said Barry Ryan, senior salesman at El Naturalista, based in Somerset, N.J. “If we can hit last year’s numbers, we’ll feel we accomplished growth.”

The weakening euro also has given El Naturalista an opportunity to adjust pricing this season.

“As the euro has [dropped], we’ve tried to give back to our retail partners,” Ryan said. “We’re rolling back prices on 20 percent of styles that have become core business.” And the company is giving a 5 percent discount on early bookings.

David Ben-Zikry, president of Spring Footwear, based in Pompano Beach, Fla., acknowledged the economic slowdown, but said his firm is still planning to have a 5 percent to 6 percent increase in 2009 business, thanks to its price-cutting strategy.

“By reducing prices due to the recent strength of the dollar against the euro, [we can] be more competitive and offer even better value to the consumer,” he said.

Dansko also has taken an aggressive pricing position. “Even though we’ve received cost increases, we made a decision in early 2008 not to increase our prices,” said Dave Murphy, EVP of sales and marketing for the West Grove, Pa.-based company. “Our concern was retailers would not be able to pass on price increases to consumers.”

Reducing prices while maintaining quality has been a key objective for Auri Footwear. “We’ve watched our price points and taken a pro-active stand,” said Andrew Tastad, VP of sales for the Laguna Beach, Calif.-based company. “We’ve taken prices down without taking out content.” For fall ’09, Auri is cutting prices 5 percent to 10 percent compared with spring ’09.

Helle Comfort, out of Scottsdale, Ariz., is enticing retailers to place orders by offering discounts of $10 to $12 per pair on select in-stock styles for both spring and fall, said President Martina Helle.

And Restricted Footwear, based in City of Industry, Calif., has also cut wholesale prices from $18 to $20 on some of the more popular flats, said Midwest Sales Manager Carol Thompson.

In addition, she said, the company came to WSA with a plan be flexible with struggling retailers and to offer them incentives such as free shipping on any orders placed during the show. “That’s new. We’ve never had to offer something like that,” Thompson said. “We’re taking a hit. It might be temporary, but we have to adjust.”

Other vendors, meanwhile, have been working with factories to create less-expensive styles to entice retailers.

Cynthia Vincent, whose Los Angeles-based Twelfth Street collection of apparel, accessories and shoes has become a $12 million business, said she felt that the best way to weather the market’s downturn was to find less-pricey options. So she moved production for much of her footwear line from Italy to China and dropped price points to $200 to $450 from $350 to $700.

“I was very aware of the situation that was coming and was very conscious of the price of everything [I put into the shoes for fall ’09],” she said. “I’d price it out with the factories before I sampled, and if something was too high, we’d come up with something that would fit the price without compromising the aesthetic, value or quality.”

Cindy Traub, president of Los Alamitos, Calif.-based Cindy Says, said retailers began asking her to see a few styles that could retail for $79 to $89 — a slight departure from her average $90-to-$290 price point for flats and boots. “I wanted to be very, very careful not to compromise what Cindy Says is all about,” she said. “I listened to [my clients] and decided to add six shoes that could retail for less than $100. The refreshing thing is that they aren’t buying those in place of [regular product], they are buying those in addition.”

Some, like Vincent, have been asked to make more exclusive lines for retailers. “The stores really want something that is just for them,” said Vincent, who has created several styles exclusively for Intermix. “They need to have items that no one else has to draw in customers and to keep from competing with markdowns.”

Several smaller wholesalers, however, said they have not been forced to make major adjustments because they were already accommodating retailers’ needs. “When you’re so little, you’re already managing your business that way,” said Frank Zambrelli, co-owner of New York-based Banfi Zambrelli. “It might be easier for [the smaller brands]. In our world, we aren’t in a position where we have to reexamine everything.”

Allowing retailers to place small orders, vendors said, has also encouraged buying. “Anyone can buy as few as six pairs,” said Helle, about the company’s minimum order requirements. “There’s no excuse not to buy.”

Vendors maintaining strong in-stock positions also are allowing retailers to take a wait-and-see approach to buying.

Since many of Spring Footwear’s retail clients are waiting until the last moment to place orders, Ben-Zikry said the company will expand its fall ’09 stock program by 5 percent to 10 percent. “Our product is necessity-type looks, not trend-driven,” he said. Sixty percent of the business is reorders on bestselling styles, he added.

As a new brand, Ori Rosenbaum, president and CEO of Auri, agreed. “Open stock is crucial for us,” he said. “Everyone’s so cautious and buying smaller quantities.”

While many vendors are taking steps to move product, some execs warned about the dangers of going too far.

Fred Salerno, VP of sales and marketing at Fenton, Mo.-based Footwear Unlimited, said that while his company might take smaller margins, offering too many incentives or price cuts could be detrimental to business.

“Our responsibility to retailers is to provide the best service, and that doesn’t always mean saying yes,” he said.

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