By almost any measure, Vans is riding high.
The Cypress, Calif.-based brand, a division of Greensboro, N.C.-based VF Corp., posted double-digit sales increases in the fourth quarter of 2013, for the 17th quarter in a row. It reached $1.7 billion in revenue for the year, becoming the company’s second-biggest label. Sales in both Europe and Asia rose about 20 percent during a time when many industry players struggled in those areas.
“We’re feeling good about how 2013 wrapped up,” said Kevin Bailey, who has been president of the brand since 2009. “It’s saying that the strategies we put in place are taking hold and are being successful.”
Bailey noted that Vans’ recent prominence can be traced to a risky decision: to stop defining itself by its skateboard heritage.
Watch on FN
“We set out on a path to change perceptions of the brand almost five years ago,” he said. “We’re not just an action-sports skate company, that’s just part of the story. Vans is really a youth culture company, and youth culture as we think about it is defined by the intermix of action sports, art, music and street culture.”
The brand’s new lens was refined by an in-depth global consumer study conducted by VF in 2012. The initiative, according to Bailey, helped Vans identify and target an older, more sophisticated customer than it had in the past.
“[The core] wasn’t the high-school kid we always said it was — the 15-year-old skater boy. We realized we weren’t a teen brand as much as we were a 19- to 24-year-old’s brand,” Bailey said.
“We’re still going to feed the product from a commercial perspective to the teen and tween who wants to buy neons and run to the Warped Tour [music festival],” he added. “But we’re also going to make sure we offer the right products for that [older] consumer.”
The new focus has paid off, market watchers said. “They’ve done an amazing job with the brand,” said Mitch Kummetz, an analyst with Robert W. Baird & Co. “It transcended being a skate shoe brand and moved into fashion lifestyle. [But] we spend a lot of time talking to core skate shops and even as they’ve become more mainstream, Vans is still one of the leading brands.”
Tarek Hassan, co-owner of The Tannery and Concepts boutiques in Boston, said his stores carry product from a variety of Vans’ lines, including its skate-specific Syndicate and higher-end California collections. The label’s appeal to both men and women is proving fruitful for the retailer.
“The slip-on is going to [play a big role] for spring, and who is better than Vans when it comes to that look?” Hassan said. “We’re paying a lot of attention to the brand this summer. We expanded [our buy] this spring more than any other time.”
Vans also is resonating at Foot Locker and Footaction doors, in both the U.S. and Europe, said Ken Hicks, chairman, president and CEO of Foot Locker Inc. “They are definitely a leader [with] a strong customer base and a great understanding of their customer and what they want,” he said. “They have a long history of success that really is an indicator of the customer’s desire for Vans.”
Here, Bailey sounds off on segmenting the market, making direct-to-consumer pay and what VF brings to the table.
Was there any worry that moving away from your skate roots would be perceived as selling out?
KB: Yes, absolutely. You have the staunchest critics in the world out there — the world’s youth — who decide whether you’re being real or not. And then you have people inside the brand who grew up here, wearing Vans every day, and that group tends to be our fiercest loyalists. The message to them was, this isn’t an “or,” this is an “and.” We’re not going to abandon skateboarding; we’re going to do everything we can to make sure we’re No. 1. But we were so focused on this one little slice of who we were that we were doing ourselves a disservice. We don’t want to be the brand that forgets our roots. Our argument was that we didn’t even understand our roots.
VF is known for its expertise in global brand management. Has that been as asset to Vans?
KB: About a year ago, we changed to what I call a regionally led business model with regional general managers, [from a centralized U.S.-based model], and it aligns with VF’s structure as well. The regional GMs understand the brand really well, and their plans inform the creation of product and marketing at the brand level.
Where are global areas of opportunity?
KB: We still have emerging markets that need to be activated in a stronger way, places like Russia and Turkey. We’re continuing to grow our business in Latin America, and we just added South Korea as a subsidiary in 2013. But on top of that, here in the U.S. — which is our most mature market — and across Western Europe, a lot of [focus] is on key city activation. We [just] added a Boston House of Vans pop-up installation, and across Europe, we’ve opened stores and pop-ups in cities like Berlin and London. We’ve added our eighth country to e-commerce in the last year and a half, so it’s getting bigger. I’ve seen some staggering stats on the number of consumers in China who are shopping online.
At wholesale in the U.S., you’ve seen growth in multiple retail channels. How do you balance those different needs?
KB: We’re one of the few [brands] that can manage top-tier as well as mid-tier product. We are very specific about the product and marketing we put into each channel of distribution. So are there overlaps? Of course. But we recognize that the person who’s shopping the streets in New York is different from the person who’s shopping the mall in suburbia, who’s different from the person shopping stores like Kohl’s or JCPenney.
You ended 2013 with 415 branded stores globally. Do you get pushback from your retail partners when you enter a market?
KB: We still believe that [our own stores and e-commerce is] the best place to tell our story, to show the breadth of our line and have a constant conversation with our consumers. We’re in the process of starting to roll out a new prototype. And it’s not just our own direct-to-consumer business: Partner stores and shop-in-shops are becoming a larger part of what we do. It’s not easy. It’s a careful balancing act, but we believe it lifts the brand in the region by putting a few Vans stores in places where the consumer can see it. We generally leave the street stores to our aspirational retailers and our core board shop retailers, so we don’t have a Vans store in midtown Manhattan, but we do have stores in a few key suburban malls. It’s a very careful strategy.
With so much growth, have you felt pressure on the manufacturing side?
KB: Supply chain is a constant challenge, and it’s one that VF has truly helped us with in a big way. [Production locations] are changing: Southeast Asia is evolving, and manufacturing is happening more and more in new regions, so the supply chain team has helped us open up manufacturing in a variety of new countries to make sure we can meet our business needs. They also have helped us with a lot of cost and margin improvement. And the fact that the supply chain has kept up with our growth rates without a hiccup, with all the global challenges? I don’t know how those guys do the kind of job they do. The fact that I don’t worry about it is a miracle. Seriously.
VF recently revealed plans to open dedicated apparel and footwear innovation centers. What impact will those have on Vans?
KB: We have an in-house innovation team. The North Face and Timberland have them, too, and we all innovate in different ways. [What will be interesting is ] how we tie in what we do [with the rest of the brands]. That platform will be critical to make sure we’re putting the right product in the pipeline. Speed-to-market is getting faster, so it will create big opportunities for us.