Gore-Tex’s Tariff Trouble, Merrell Collab

This could be an important year for Gore-Tex footwear.

The company, as well as the entire outdoor industry, is confronting widespread pricing uncertainty due to a now-expired tariff relief bill currently before Congress. The expiration has raised prices by as much as 37.5 percent on the majority of shoes imported to the U.S. that use Gore-Tex and other membrane constructions. And while the Newark, Del.-based firm hasn’t made any significant changes to its business model, its focus on product — including a new collaboration with Merrell for fall that promises better fit and increased breathability for its minimal product — has become even more important.

“You have to assume you are going to be able to sell the value of your product, and that our product and intellectual capital in the market, even at the price points that the tariffs will put into effect, still represent value to the consumer,” said Matt Schreiner, global footwear product specialist at parent company W.L. Gore. “To me, the Merrell project is a great example. For the consumer, price is always a consideration, but it shifts when the product is compelling — and that’s the challenge.”

The collaboration, called ConnectFit, fills an emerging need in the footwear space, Schreiner added. “Consumers really got used to having a glove-like feel and fit — supple, soft, with no hot spots — and they want that experience in all their footwear,” he said. “We’re understanding more about fit and how Gore-Tex needs to integrate that in a way that enhances the fit as opposed to interfering with [it].”

For fall ’13, Merrell will launch three styles each for men and women within its barefoot-focused M-Connect series. All the shoes prominently feature ConnectFit, a waterproofing system that Gore-Tex developed exclusively for the Rockford, Mich.-based brand, a division of Wolverine World Wide Inc.

Shaun Bohnsack, category business manager for outside and athletic at Merrell, said the brand wanted a membrane construction that would allow for increased breathability and flexibility, as well as a smoother, more natural fit that would echo the attributes of its M-Connect styles.

The ConnectFit product combines several of Gore-Tex’s product technologies, including Stride, a thinner, more-breathable membrane than Merrell has used in previous footwear; and a new four-way stretch waterproofing membrane over the instep. And when paired with Merrell’s open upper textiles and reduced overlays, Bohnsack said, the breathability is significantly improved.

“This is a great solution, and it optimizes what we wanted to achieve,” he said.

The partnership also takes Gore-Tex in the right direction, Schreiner said.

“One of the things we’ve been focusing on, coming out of minimalism, are the developments on the running side of the business and how we translate that into outdoor [product],” he said. “Merrell is stepping up and really bringing the minimal interpretation to the outdoor market.”

But even as Gore-Tex focuses on fall, big questions remain unanswered. The expiration of the tariffs bill means that virtually all the company’s partners face steep price increases for footwear manufactured and brought into the country this year. And while many hope the legislation, which enjoys broad bipartisan support, can still be passed sometime this year, even a temporary tariff hike will resonate throughout the outdoor industry, said Alex Boian, senior director of public affairs for the Outdoor Industry Association.

“Any gap that puts the full tariffs back is extremely harmful to footwear companies and ultimately to American consumers,” he said.

Schreiner noted that Gore-Tex is keeping that situation in mind. To counteract potential increases, the firm is looking closely at costs, including considering changes to manufacturing and supply-chain processes. But what it won’t do, Schreiner added, is create less-expensive products to hit lower price points.

“The Gore-Tex brand means something to the consumer. We don’t want to have Gore-Tex Lite for those who are budget conscious. We take a best-in-class approach, and we’re going to stay the course on that,” he said, adding that the company remains confident in the market. “The consumer is looking for reasons to go into the store and buy. It may cost a little bit more, but they’ll trade up for quality and for something that is innovative.”

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