Estepa’s iPad is beeping with email notifications.
Speaking to Footwear News in a conference room at Genesco Inc.’s headquarters, the retail executive eventually picks it up, eager to show how he stays on top of technology and social media, an ability that’s essential for a baby boomer tasked with keeping up with his 12- to 25-year-old customer base.
Swiping his finger over the device’s screen, Estepa, SVP of Genesco and president and CEO of its retail group, which includes Journeys, said, “Our customer today has technology and instant knowledge in every part of their lives. As a retailer, you truly have to know what’s going on. [Thanks to our] IT department, anything I can get on my computer, I can get [on this device]. And looking at this, I can tell you right now [same-store sales] were up 47.4 percent at noon compared with last year.”
The company’s digital strategy doesn’t stop there.
“We follow everybody on Twitter,” said Estepa. “[Social media] is an experience you have to somehow [integrate], whether into the brick-and-mortar stores or the catalog, and it has to all be seamless.”
Still, even as technology demands a greater percentage of his time, Estepa remains an old-school shoe dog.
The exec started his career at the age of 18, as a salesman at Kinney Shoe Corp. After joining Genesco in 1985, he has journeyed with the chain from store No. 1 to store No. 1,000 and beyond, and is now focused on opening even more doors internationally.
The aim is to annually add about 25 new Journeys and Journeys Kidz stores in North America, and between 10 and 15 stores in Canada. Through its acquisition of U.K.-based Schuh Group in June, Genesco also wants to double Journeys’ British presence and penetrate European markets.
“What is good is that we don’t have any capital restraints, so if we decided we had the opportunity to grow 50 Journeys stores a year instead of 25, we would do it. If it’s profitable, solid growth, we’ll look at it,” said Estepa.
While casual brands such as Converse and Vans are Journeys’ bread and butter, its retail concept Shï, which launched in 2005, stocks more-fashionable footwear, catering to the chain’s female customer as she matures beyond her teens and her fashion tastes evolve.
“We’re doing 25 percent comp increases in Shï, and no matter what retailer you talk to, no one is doing that,” said Estepa. “We knew there was opportunity there [because] we were underdeveloped in the women’s department in Journeys [due to] the athletic contribution with skate. There are women who don’t want to shop in that environment. We wanted to create a specialty store for the woman in her early 20s to mid-30s who graduated out of Journeys.”
Here, Estepa shares his thoughts on the importance of brands in driving demand, the economy’s impact on teen spending and why his team of industry veterans is prevailing even in the depths of a global economic crisis.
How have you been dealing with the price increases affecting the industry now?
JE: We’ve been fairly fortunate because the price increase — and this is mainly because of our size — hasn’t been as difficult as it might have been for some folks [because] we buy so far out in advance. In most cases, we’re going to pass along to the customer what we feel is appropriate. We have [started doing that], and some of the brands, quite honestly, haven’t skipped a beat. You are going to see some of the customers get somewhat squeamish when they see a shoe they’ve constantly bought for $40 get to $45, but even then, a $3 or $4 price increase on a $40 or $50 shoe is not the end of the world.
How do you make sure your customers still feel that the shoes they’re buying are worth the price?
JE: We need to make sure our brands don’t lower the quality of their product to a point where our customers are disappointed when they buy something. Our quality teams have to watch things very closely to ensure the confirmation samples match what’s coming in. We are very strict on that. We have no problem sending product back to our vendors, and we are large enough to be able to do it. If your customer expects to wear a Converse shoe for three to four months before getting a new one, they should be able to do that.
To what degree are price pressures simply a matter of perception?
JE: The kids are happy paying $40 for Converse and they are happy paying $200 for Ugg. If it’s a black Chuck Taylor, it’s probably worth about $40. If they buy a novelty Chuck Taylor, it’s worth about $55. The kids have to believe that while you may be slightly higher in price than a discount store, you will have relevant product that is on [trend] and [be] reasonably priced. The kids also know we spend all our markdown money on slow-moving and discontinued shoes. You’re not going to come to a Journeys on Black Friday and buy an Ugg for $10 off, or a Converse for $20 off, or buy one and get one half price. That’s just not what we do.
Is your target consumer susceptible to price changes, or to the ups and downs in the economy?
JE: Our consumer is, to some degree, insulated because mom and dad take care of them. What may have hurt our consumer a little bit is that there aren’t as many part-time jobs out there. Part of their world is making sure they have enough gas in their car; that their cell phone is working; [and that] if they need a new pair of shoes, they can get them.
But what if mom or dad loses their job?
JE: They feel that a little bit. But part of our strength has been that we sell product that is both fashion-right and affordable. You’re talking about $39, $49 and $59 shoes. We are not selling big-ticket items like cars. Even when the economy gets tough, the parents will always sacrifice so their kids will have what they need.
What do you consider the biggest headwinds to the business right now?
JE: We’ve been facing a pretty tough economy … but all our businesses are up in the double-digit range. All of us are concerned with what is going on outside, but we can’t really let that affect us. You have to always turn internally and [figure out what you] have control over and what you can do better to service your customers. [Most of] my team has been together for 20 to 30 years, so we’ve seen this movie several times before. That’s a big competitive advantage [because we’re] able to draw upon our experiences to weather the turbulence of a tough economy.
With such diverse trends happening in the youth market, do you try to be everything to everybody?
JE: I wish we could, but no, it’s just too much. We’ve been true to our customer since 1986. When they come into our store, they know exactly what they are going to see. Those teenagers who shopped with us in [the late 1980s] are bringing their kids in, and guess what they are after: the same brands that they wore when they were growing up. It really is fun to see the evolution of it.
How do you find that sweet spot, between being too niche and too mainstream?
JE: It’s all [about] what the kids want, and it helps that we are a house of brands. There are vendors in these offices every single day. We [preview product lines of] every single brand we work with several times during the year. And we stay true to who we are. Last year, the hottest thing in the industry was toning. Shoe Carnival and Finish Line were selling zillions of them, yet we bought almost none. Our customer was laughing at those shoes, saying, “Those shoes are for my mom.” We took a lot of heat internally, quite honestly, [from] upper management, but if we had put those shoes out, our core customer would have said, “Can’t do it.”
Why is your Shï concept finding success?
JE: We combined the four or five different private-label names we had created [and] put together an assortment [that also includes] Steve Madden, Jessica Simpson, Sperry Top-Sider, Toms and Ugg, and then consolidated them all into a [branded store], which is Shï by Journeys. [This is] a product-driven industry. When you see something you like and can afford it, you buy it. If you can’t afford it, you try to find something that will give you the same look. What we’ve done with Shï [is offer] both the high and moderate price points. If you can’t afford the $90 look in a 4-inch heel that’s got sparkles and gold, you can buy the $39 one. That has [translated] into some pretty substantial increases.
How well positioned is Journeys to keep taking market share?
JE: We are going to continue to do what we’ve always done. It’s working with vendors to develop product that is different from what our competitors have, sell them at a fair price and deliver it on time, so that when those kids buy the shoes over the weekend, they can wear them to school on Monday. The Internet has allowed us to reach millions of kids by pushing a button. It’s an exciting time. But product is important, and communicating with them the right way is important.
Who are your competitors?
JE: Anyone who sells shoes is a competitor. [But you’ll find] people are truly catering to their strengths. If you look at the great performances that Foot Locker and Finish Line are having, they are all doing it off their core product, which is running, basketball and athletics. We are lifestyle. We are very different and don’t try to do anything performance. If each one of us separates ourselves and tries to do what is most relevant for us, then everybody wins.
What are you most proud of having achieved in the last 25 years?
JE: I’m most proud of how we have evolved. We have taken Journeys through good times and bad times and kept the people intact. We figured out really early on that there was an opportunity to be multichannel … and I’m most proud of the vision we had to be more than just a shoe store. [And I’m proud of the fact] that each and every person who works for me has had the opportunity to go somewhere else many times, [yet] we’ve all decided we are stronger together [than apart].
How will Journeys evolve over the next 25 years?
JE: Our chains, either through organic growth or through acquisitions, will be global [businesses]. As a company, Genesco embraces that type of growth. And it’s just as important for our vendor partners to succeed. So by utilizing their resources and ours, and as long as we can keep the passion and the drive to be bigger and better than we are, we’re limited only by ourselves.
What sort of other additions would be synergistic to the Journeys business?
JE: The Schuh acquisition is a [good] example. There are retailers that are similar in the rest of the world that would be very interesting for us to [snap up]. I don’t think we would be in a position to acquire something different. We are in the teen market and there are a lot teen retailers we could partner with. But our wheelhouse will always be shoes, which is what we know best. And I don’t ever want to discount our ability to grow organically.