Aldo CEO David Bensadoun on New Deals, Bad Landlords & How AI Is Saving the Firm Millions

David Bensadoun is not what he appears.

The friendly, unassuming — somewhat professorial — executive harbors a wild side that involves riding motorcycles around the world and twice completing the 14-day Dakar Rally race from Argentina to Peru. (His was the first Canadian team to accomplish the feat in a car, in 2012.)

Similarly, as the son of footwear legend Aldo Bensadoun, he has spent his life in and around shoe stores. But the 47-year-old, who was named CEO of Aldo Group in March 2017, more resembles a modern tech entrepreneur than a traditional retailer.

His vision for the global firm is laser-focused on omnichannel innovation and corporate responsibility — phrases heard more often in Silicon Valley than on Fifth Avenue in New York.

“The most effective CEOs bring together insight, focus, decisiveness and optimism to inspire the people around them and make things happen,” said Neal Newman, president of Two Ten Footwear Foundation. “Add in a dose of honesty, integrity, a kind heart and a sharp mind — that’s David Bensadoun.”

David Bensadoun Aldo
David Bensadoun inside Aldo’s Montreal headquarters.
CREDIT: Courtesy of brand

Since joining his family’s company in 1996, the younger Bensadoun has grown through the ranks, taking positions that trained him in all aspects of the operation, including retail real estate, the private-label division and the Aldo and Call It Spring brands — not to mention two years as head of IT.

Even today, he continues to gain insights from his father. “I enjoy being able to bounce ideas off him,” said David Bensadoun. “He has 50 years of experience in fashion footwear, so there’s a lot to learn.”

Bensadoun added, “The main thing I’ve learned is how to combine capitalism with a human touch. We still have to make tough decisions, but we believe that if you can have a softer side of capitalism, you actually end up with more value for everyone concerned.”

In his first year as CEO, the company has continued to invest heavily in game-changing technology and pursue overseas growth by entering markets and forging new partnerships, such as a recent deal with Bata.

And while Aldo’s proposed acquisition of Camuto Group faltered, Bensadoun said he’s grateful for the freedom that comes from being a private firm. “We feel like we have the time to make the right decisions for the long term,” he said. “I’m a new CEO in an industry that’s in full transformation. I can’t even imagine being at a public company right now.”

How would you describe your vision for Aldo Group?
“My vision is for it to be the best fashion footwear and accessories company in the world. It doesn’t mean the biggest; I just mean the best. I would judge us on three criteria: First, strong but sustainable profitability — in other words, profitability that’s built for the long term. Second, that we would be viewed as the top employer in our industry by our teams. And thirdly, that we be viewed as the best partner for our wholesale clients, franchisees or digital partners.”

What initiatives are you focused on right now?
“One is completing our transformation from having been a brick-and-mortar-focused company to being a true omnichannel company. As of the end of 2017, we only do about half of our sales in stores. To be exact, it’s 53 percent in stores. By the end of 2018, the majority of our sales will be done outside of our store base.”

How did you pull that off?
“It started a few years ago. We always knew that the paths for us to grow would be on the wholesale side and e-commerce, so those have helped with the [sales] shift. And like every retailer in North America, we’ve been rationalizing our store portfolio and closing any stores that were not strategic or profitable.”

An Aldo location on Fifth Avenue in New York
CREDIT: Courtesy of brand

What are your next steps for the transformation?
“A big part is implementing a new platform with SAP. By the time we get to the end of 2019, we will have invested $160 million in new technology, and all of it is about building that platform. It includes the SAP product lifecycle management system, but we’ve also put in very strong systems in artificial intelligence and data analytics. A lot of people talk about AI, but we started working on it two years ago. We had three projects we developed — two of them didn’t work, but one of them has been a huge success. It’s around optimizing our fulfillment for e-commerce, and it’s saving us millions of dollars.”

How are you utilizing technology in your stores?
“We have a very strong tool called mFind. It’s the size of an iPhone 4. Our associates are holding them in their hands, and they have a huge amount of functionality. The core of what it does is, the associates are now able to check inventory from the sales floor. But more importantly, if we don’t have the style you ask for, the system will offer alternatives that are in stock. And if the customer is fixated on that first item, then we can order the style for you and have it shipped to your home for free. It’s helping to drive conversion. It was a big investment; it was something we’ve been developing over the last three years, and we’ve perfected it in the last six to nine months. Three-quarters of our corporate stores are using it.”

Has that had a significant impact on sales?
“I can’t share the exact number because it’s too exciting, but let’s just say it went a long way to offsetting the drop in traffic that we’ve seen in the shopping malls. More importantly, it’s created a great customer experience, especially for millennials. They love it — it’s fast, it’s really accurate. And our salespeople spend less time in the back of the store looking for shoes.”

As an omnichannel company, what role does brick-and-mortar play in your plans?
“We still have budget to open new stores in 2018 and 2019. It will be fewer stores than we used to open, but we’re still looking. I see our stores as incredible assets to drive brand equity, customer experience and data collection. That being said, the pendulum has swung, and until the landlords recalibrate their expectations, we will close [as many locations] as needed. It’s a bit of a harsh statement, but it’s something that needs to be said. There are some landlords that are doing an amazing job, and we’re proud to be in those malls for the long term. But there are a lot of shopping centers that are behaving as though it’s 2014. The reality is that mall traffic has fallen off a cliff, and there’s a limit to how much we can offset drops in traffic with more conversion. At some point, the math doesn’t work, and we have
to make tough decisions.”

What should mall owners be doing to help?
“The mall is becoming a place of convenience rather than a place of entertainment. The owners have two choices: Either make it about entertainment and then you can charge us a premium, or make it about convenience and let’s bring the rents to something that’s affordable.”

An Aldo store in Florence, Italy.
CREDIT: Courtesy of brand

Overall, what are your feelings on the retail climate?
“We’re in a time of tremendous change, and I believe the current wholesale paradigm in the U.S. is flawed. There isn’t enough value reaching the customer. We need to do more to streamline decision-making and supply chains so we can reach the customer with a compelling proposition. I don’t believe in trade fairs, I don’t believe in sales reps, and I don’t believe in fancy showrooms. What I believe in is exciting product, consumer insights and data analytics. Right now, the fashion footwear industry in the States hasn’t transformed itself quickly enough. But that creates opportunities for companies like us to come with a new approach.”

Where are the opportunities in the overseas markets?
“The markets that are doing well for us continue to be Southeast Asia, the Middle East, Southern Europe and Latin America. I’m frustrated that we haven’t found the solution for Australia. That’s a market that we should be able to do well in, and I’m looking forward to finding the right partner. We also think we can do well in Germany. We’re there with a strong e-com presence and are starting with wholesale.”

How does private label fit in?
“Private label remains an important part of our mix. We recently signed an exciting deal with Bata to be the private-label supplier for their Bata Black label, which is their fashion collection. They sell shoes in 70 countries around the world and are very strong in India, Africa, Asia and Europe. It’s a great partnership, and it’s an example of us reaching customers and creating market share without opening stores. We’re working on two other big deals on the international side that we hope to announce in the next few months.”

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