Moderate Brands Thrive in Weak Economy

NEW YORK — The bad economy is being very good to some footwear makers.

For companies catering to the lower-priced, fast-fashion parts of the market, consumers’ penny-pinching ways has translated into mountains of money.

“Our business has been fantastic,” said Matt Dragos, president of Rialto Footwear, a division of White Mountain. “The main reason is that we’re giving high perceived value in our product. The consumer is much smarter now than she was a year ago and is recognizing that value.”

No wonder, then, Rialto’s business is up considerably, thanks to its offering of shoes that retail for about $30 a pair.

Similarly, Bearpaw’s brass said the bruised economy has caused the company to pick up more business. The firm’s sales jumped 62 percent in 2009, surpassing the $40 million mark, according to Randy McKinley, VP of sales and marketing.

“Sub-$100 product kills,” said McKinley, whose shoes sell for $60 to $95. “Price was key, and our go-forward strategy is based on that.”

It is clear that many consumers — who once lusted after luxury labels and would pay top dollar for product — are now willing to trade down.

Regardless, companies playing in the value-driven space said product still has to be made well and that retailers must be serviced well.

“The key is to execute and stay humble,” said Footwear Unlimited CEO Mike Mooney. “We want to make sure we don’t lose sight of taking care of our customers.”

Mooney said Footwear Unlimited’s business was up “a lot of double digits, not a little,” largely because of the run on its best-performing brand, Bare Traps, retailing for $49 to $65. And he said he expects 2010 to be even better, as bookings are already up over last year.

While other companies spent much of 2009 slashing staff, budgets and inventory levels, lower-priced manufacturers focused on getting product to market quicker and having plenty of it on hand.

And after several lucrative quarters, many of them are seeking to expand.

For instance, Ara Shoes North America, which sells higher-priced footwear in the $130-to-$269 range, aims to evolve into a year-round business and is adding more comfort features to its shoes.

“What we have to offer is great value and quality to the customer,” said Rob Rask, managing director of Ara Shoes. “When times got tough, we didn’t have to retool our line. We were in a good place. The market came down to us. We were right there and now we’re ready to do even more.”

Likewise, Rialto is moving ahead. The company plans to offer more products, such as career-oriented shoes. According to Dragos, the firm also is in the process of upgrading sock linings and foam padding, and hopes to grow its boot business to half of total sales, up from 25 percent.

Sure, the good times are rolling for lower-priced footwear wholesalers, but what happens when the economy strengthens and consumers return to wanting more expensive wares?

“I’m not really concerned about people trading back up,” said Dragos. “We’ve spent this time establishing our brand as a key player in a particular price point, and our retail performance has been good. It gives us the confidence that consumers are buying and enjoying the product and that they’ll come back.”

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