Yellow Box On the Rise Despite Economy

The weak economy and shift in trends have combined to position Yellow Box for one of its best years to date.

“It was supposed to be a bad year [in 2009], but our business grew around 25 percent,” said Terry Chen, president of the City of Industry, Calif.-based company. “[Now] we’re having the best season ever. Our backorders are way up.”

Chen said that in the wake of the post-Crocs boom, many retailers and consumers turned to flip-flops and sandal companies, and to labels such as Yellow Box that have garnered strong customer loyalty.

“Our business grew unexpectedly,” he said. “A lot of retailers cut down on their non-profitable vendors and started buying more from us. We have already built a group of loyal customers who will go to the stores and ask for Yellow Box, so demand is growing.”

Part of Chen’s success is based on introducing early spring product and tweaking colors and designs to stay fresh with consumers. “Our spring shoes started [shipping] in October,” he said. “This gives us a pretty good opportunity to get a reading, and we can prepare earlier for the [rest of the] season.”

Mica Morales, juniors’ buyer for Zappos.com, said constant updates on best sellers is part of what keeps consumers coming back. “They have many styles that they update with new colors or embellishments,” she said. “That’s really key to the customer who bought it last summer, and they want to update it this year. [The shoes are] inexpensive styles that are fun.”

Many styles in the line are $40 to $65. It’s quality, not price, that has made the line a success, Chen said.
“Quality is a very important element,” Chen said. “We have a large group of loyal customers who believe that Yellow Box has the best quality product.”

In the past, Chen said, he focused more of his efforts on reorders on hot styles, but the market has changed in recent years. “[Now] I’d rather do new shoes,” he said. “If you don’t move fast, you’ll probably be left behind.”

While Chen has thrived in the current environment, it hasn’t been easy. As the economy has forced many footwear retailers to shutter their doors, Chen has been aggressively seeking out new accounts. “We’re losing 400 to 500 accounts a year, but at the same time, we open 400 to 500 accounts or more,” he said. “There could be a thousand new independents that opened today and a thousand that closed, so we have to keep signing new accounts all the time.”

Looking to 2012, Chen said he plans to introduce a new, more fashion-centric brand priced between $80 and $120, focused on heels and wedges for the juniors’ market. “A lot of Yellow Box customers can use this kind of product, and it can become a pretty decent business,” he said. “I had thought of this two years ago and called it off at the last minute because the organization of Yellow Box wasn’t ready, and then the economic issues hit. In then, it will be right.”

In addition, Chen said expansion into Europe is also on the slate for 2012.

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