13 on ’13: What’s Next in Footwear

New Year, new worries.

After a challenging 2012, the industry is already grappling with a number of burning issues in the early days of 2013, from the political gridlock in Washington and the euro zone crisis to an uncertain consumer and increasingly promotional retail climate. It’s clearly a time of change and challenge, but there is plenty of opportunity, too. With new retail concepts such as Foot Locker’s Six:02 women’s-driven store and several ambitious omnichannel pushes across the retail world, companies are focused on taking their businesses to the next level to drive consumer excitement. One thing’s for sure — it will be a year to remember. Here, 13 top executives offer up their outlooks for the year ahead.

Ken Hicks, chairman & CEO, Foot Locker Inc.
Most pressing issue: “For me, it’s about keeping the organization focused on constant improvement. We are doing well, and our job is to continue to do well, to not let up. The most pressing issue for me is the things we can control and manage, as opposed to things like the economy, which is still going to be tough. That’s not something we have direct control over. We have to operate the best we can within it.”
Biggest opportunities: “To develop our new formats and banners. We’ve got new formats in Foot Locker, Champs, Kids Foot Locker and Lady Foot Locker that we’re looking at. And there’s also the new [women’s apparel and footwear] banner we’ll be rolling out, Six:02. No company has that much newness going on in brick-and-mortar in the industry.”
Overall outlook: “It’s strong, and I feel very good about it. We have lots of opportunities with our banners and dot-com teams. I feel good about us.”

Angel Martinez, chairman, president & CEO, Deckers Outdoor Corp.
Most pressing issue: “[I’m most concerned about] ongoing economic uncertainty in Europe [and] consumer confidence.”
Biggest opportunities: “The ongoing evolution of the [Chinese] consumer market, further development of the Ugg Australia for men business, [and the] ongoing evolution of our Ugg women’s casual and fashion assortments.”
Overall outlook: “From a macroeconomic perspective, [my view on the economy is] neutral, given the uncertainty in Europe. Specifically to Deckers, [I’m] positive, given the way we weathered the storm that was 2012.”

Ron Frasch, president & chief merchandising officer, Saks Fifth Avenue
Most pressing issue:
“Our company just has to be better than the competition and create a great experience for clients — and hopefully get a more significant share of their wallet. People may spend less, but they’ll still spend.”
Biggest opportunities: “The development of the omnichannel approach to business. We’re investing significantly in systems and people to allow this to happen. [Another] big part of our initiatives over the next year is redeveloping our trainee programs so we can talk to the customer as more of a stylist than a sales associate.”
Overall outlook: “It’s a great time in fashion. Emerging designers have emerged, and they’re bringing a lot of newness, life, excitement and buzz to our industry. Then there’s a whole new group of developing designers beneath. I just feel this energy throughout, and the recent changes at various design houses have been a catalyst for everyone, including all of us as retailers.”

Mindy Grossman, CEO, HSN Inc.
Most pressing issue:
“Though we are cautiously optimistic, consumer confidence is tepid, which will continue to affect the retail industry in 2013. Economic and political uncertainty does not create confidence. However, we believe that our extensive product assortment and price range, as well as our unique shopping experience and content, better positions us in an uncertain economy to gain share and create loyalty.”
Biggest opportunities: “We see significant opportunities for 2013 — all are centered around creating unique experiences for our customers. The biggest opportunity will be digital expansion and growth. Our digital redesign launches this month across all our online and mobile platforms. Mobile continues to be a key differentiator as we are able to make our content more eminently portable and we expect accelerated momentum.”
Overall outlook: “2012 was a strong year for HSN, especially during the holiday season, and I’m optimistic that the momentum created over the last few months will continue into the new year, particularly in terms of digital sales.”

Herbert Hainer, chairman & CEO, Adidas Group
Most pressing issue:
“The euro zone crisis.”
Biggest opportunities: “The appetite for being active and living a healthy, sporty lifestyle continues to be strong and will only get stronger in the future.”
Overall outlook: “The last two years, we have made great progress toward our ‘Route 2015’ objectives [to achieve sales of 17 billion euros in 2015]. In 2013, our trajectory will remain strong.”

Glenn Lyon, chairman & CEO, Finish Line Inc.
Most pressing issue:
“Shifting fashion trends. In our world, there’s been a shift from running to basketball. Our heritage has long been running; it is by far the largest category. But since back-to-school, the customer has shifted preferences to basketball silhouettes.”
Biggest opportunities: “Our digital business is our biggest opportunity, along with the Macy’s [athletic footwear department] initiative, which we will be testing in a dozen stores in February and March, and then rolling out over the following 18 months in 20 to 25 [stores] per month.”
Overall outlook: “We see a bit of slowing in our comp-store velocities, and that’s based on a shift in fashion trends away from running.”

Stephen Rubin, chairman, Pentland Group Plc.
Most pressing issue:
“We’re concerned about the economic uncertainty, which then results in lower consumer spending. Really, it’s a fear of the unknown — that’s the way to describe it. Not by us, but by our customers.”
Biggest opportunity: “The continued expansion of our Lacoste footwear brand.”
Overall outlook: “Reasonably content. Why? It’s based on the fact that … orders are up compared with previous years. We find that our customers — young people — are continuing [to purchase] when it comes to sport, and their physical activity won’t stop. That’s good for business.”

Blake Mycoskie, founder & chief shoe giver, Toms Shoes

Biggest opportunities: “We have an opportunity to turn Toms into a brand that resonates with people around the world, but it won’t be easy. The only way we will do this is by continuing to develop and design exciting product on the commercial side of our business and diversifying the types of shoes we give in a responsible way.”
Overall outlook: “Consumers will continue to seek products that inspire them, but also that are a good value. I believe we’re in a fortunate position to do both. We’re looking at the world with hope and approaching our business with optimism and more out-of-the-box thinking, which is how we started.”

Peter Harris, president, Pedder Group
Most pressing issue:
“[Competition continues to build] as our customer is truly global, well traveled and has access to the world of online retail. The key to customer retention is building [a product mix] that creates a strong competitive advantage. That means brand exclusivity, special styles, unique partnerships and being the first to have the product in store.”
Biggest opportunities: “The Lane Crawford Shanghai flagship store will open in the fall, which will result in the Pedder Group operating an additional 30,000 square feet of footwear and accessories. Also, through the joint venture between Pedder Group and Christian Louboutin Asia, we will open freestanding locations in Taipei and Chengdu.”

Bob Goldman, CEO, Chinese Laundry
Most pressing issue:
“The big concern is China and the increases in sourcing costs. The consumer isn’t necessarily willing to pay for those kinds of increases.”
Biggest opportunities: “The biggest opportunity is the Internet. It keeps growing and [consumers] are spending more and more [online]. [As far as trends], the opportunities are in the dress footwear business. It’s become so casual that there is an opportunity in dress that people are missing.”

Bob Campbell, chairman & CEO, BBC International
Most pressing issue:
“Sourcing. Finding ways to maintain our pricing [structure], while keeping an eye to quality control, continues to be a major challenge.”
Biggest opportunities: “[Our new licensing partnership with] Heelys is a huge opportunity for us. We’re excited to build it into a true global footwear brand with and without wheels. We’re also focusing on continuing to grow our Polo brand.”

Diane Sullivan, president & CEO, Brown Shoe Co.
Biggest opportunities:
“In retail, Famous Footwear has strong momentum after the successful launch of their ‘Victory’ campaign during 2012’s back-to-school season. We have a lot of exciting things going on with our wholesale brands, such as building on the success of Sam Edelman with the launch of the Sam & Libby line at Target and through other product line extensions. Dr. Scholl’s Shoes has exciting plans as well.”
Overall outlook: “With our portfolio realignment behind us, we are in a great position.”

John Varvatos, chairman & chief creative officer, John Varvatos Enterprises Inc.
Most pressing issue:
“Europe’s economy is most concerning. It will have a positive or negative effect on the rest of the world, whichever way it goes.”
Biggest opportunities: “I am looking forward to all the new initiatives we have in our plans, including five new retail stores, a new website, international growth and celebrating our first year as a private company.”

On the Agenda
More execs weigh in on the big issues.

Playing Politics
“Dealing with Congress and the administration moving forward is going to be a challenge. The animosity that was in the 112th Congress has carried over into the 113th Congress, and we saw that with the fiscal cliff [negotiations]. All of that stuff affects our industry because of the consumer confidence issue. If [consumers] have any hesitancy about their jobs or job security, it will have a direct effect on spending and our industry. It’s going to be an interesting year.” — Kevin Burke, president & CEO, The American Apparel & Footwear Association

“The big ‘if’ is whether things will settle down on the political front so consumers can have confidence in their leadership. There’s a lot of uncertainty from an economic standpoint, but there’s also some signs of life that will hopefully translate into stability and growth.” — John Florsheim, president & COO, Weyco Group Inc.

Sourcing Squeeze
“[Sourcing] price increases will be an issue that will continue. That impacts everything through to what the consumer pays. We will continue to find ourselves in a recovering economy, with prices going up.” — Matt Priest, president, Footwear Distributors & Retailers of America

Tax Talk
“There is no question that tax increases, even though we averted some of it, will have an impact on American consumers. Most of our business is [concentrated in the] mid-tier and below, and our [typical consumer] is going to have less disposable income. Consumer budgets are going to be squeezed. The situation will continue until we address this debt crisis.” — Bernie Leifer, president & CEO, SG Cos.

Hitting the Trends
“We’re really thrilled about the return of the single sole, which has always been Manolo’s trademark. We’re so happy it is back, so now keeping up with production is a bit tricky.” — George Malkemus, president, Manolo Blahnik USA

“The fashion customer has gotten so caught up in trends. The most pressing subject [for the women’s market heading into 2013] is to find her next trend — the thing that goes beyond low boots. What is next after low boots? What is next after riding boots? Searching for that new trend is going to be the most exciting opportunity in 2013.” — Sam Edelman, founder & president, Sam Edelman Shoe division at Brown Shoe Co.

“Fashion trends are changing. The consumer is moving away from [the] tried and true — things that have been working, big items. There’s no replacement for [them] yet. [Next], consumer spending. The holiday season wasn’t great. Consumers are worried about employment, the economy. It’s affected how consumers are thinking and spending. The issue is how we’re going to continue to compel them to want to spend in our stores.” — Jim Salzano, president, Clarks Cos. N.A.

Brand Building
“We are excited about growing the VC Signature and Two by Vince Camuto brands and building our apparel and accessories classification. Our men’s apparel launch for fall is a great opportunity, and we are looking forward to building a lifestyle brand for the man.” — Vince Camuto, founder, chief designer and CEO, Camuto Group


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