In a new series, top leaders from across the footwear industry discuss the deep impact of the coronavirus and the challenging road ahead.
More people have turned to running amid the escalating coronavirus crisis, whether its for fitness or a mental break — giving market leaders an opportunity to connect with consumers during a very challenging time.
But the right messaging is critical, according to Brooks CEO Jim Weber.
“We have to be very careful with our brand and our voice right now. Running has become an important part of people’s day because of this environment we’re in. They’re finding us and we’re finding them — but it’s not a megaphone right now,” the executive explained. “We’re trying to be sensitive of how people are going through their day right now, because some of them are struggling.”
Instead, Brooks is using its platform to direct traffic to local specialty run retailers.
“We’re firm believers that the local running shop is not going away. They’re community stores that are engaged and connected and create their own traffic, but right now they’re struggling to do commerce with their stores closed,” Weber said.
Below, the executive discusses the importance of the industry working together to get through this tough moment.
What is your strategy for this immediate moment and the rest of 2020?
Jim Weber: “That’s exactly the question we’re putting in front of ourselves every day here and we’re building tactical plans around exactly that. The health crisis is driving everything, it’s not in our control. So phase one, retail is closed, people are basically at home. This first phase is about hunkering down and getting through this. Essentially, the entire economy is going to have a two to three month pause. Phase one is going to be tough so it’s about managing cash and working with each other, vendors and landlords and accounts, to do what we can to delay requirements in cash because everybody needs to survive the best we can in this period. Because we’re so consumer driven the whole value chain and the cash cycle is frozen, inventory isn’t moving. So it’s about doing everything you can to stay engaged with your consumer. Some of them are buying on e-commerce and picking up in store, and everybody is getting super creative and savvy around that. We see phase two happening in maybe Q3 because Q2 is going to be tough. We think running is going to recover a lot faster and more completely than almost any other category in sport and lifestyle.”
What are you doing to keep business moving?
JW: “We’re most focused on not missing any demand from people who are ready to run and want to buy gear. We’ve got a fully-developed digital marketing capability, and we’re trying to engage with runners on a regular basis. We’re executing our own e-commerce business as well as we can. Also, what we’re doing through our local dot-com network is trying to push volume their way if people are interested in shopping local. We’ve been marketing this on our social media channels and seeing great response. We typically see 1,000 visits to our store locator on Brooksrunning.com a day, once we turned on this campaign to help drive customers to shop with their local retailers, we saw visits jump to over 9,000 in a day. It shows that the shopping that’s happening right now is happening digitally and a lot of them are doing curbside pickups, The shoe gets ordered locally and they set up a time to pick them up — and the shoe comes out for them with gloves and all the other paraphernalia that’s necessary right now.”
What should the industry do as a whole to survive this moment?
JW: “As an industry, everyone has to help out, everybody has to give relief. The big landlords have to give relief, the small ones do, the banks do, the vendors do. We’re going to our vendors and asking them to support us in expending payments and cash flow because if everybody can accommodate each other more of us are going to come through this healthy. I think the government support is interesting. A lot of people might have political opinions on that, but this economic pause is huge and it has the biggest impact on local restaurants, local events, local sports venues, travel and local retail. I am hopeful that these small business programs that are supposedly in this bill can be accessed in the next two to three weeks and are used by our retail partners. They’re going to have to get help from their landlords, they’re going to have to get help from their vendors — including us — and they’re going to work very hard to hold on to their staff. Many large retailers said they are paying their staff through a period of time. There are no guarantees in this thing. If it goes on for a long time it’s going to cause a lot of pain.”
What other specific programs have you put in place to help your independent retailer partners?
JW: “We are not going to force them to take any orders that are on our books. I’ll just say that other brands don’t always work that way, I’ll leave it at that. We’ve already given them an ability to replenish purchases if they are selling whatever products they’re selling, we’re giving them 15% off of their normal programs just to build margin in. We’ll give them more time to pay — 60 days more — and we’re giving them flexibility with orders. And we’ll revisit that as we go. I think another thing that makes Brooks unique is we understand our business really well. Our wholesale business and our e-commerce business are really close so we’re fairly indifferent on whether the sale happens at a store or on our website and we’ve run our entire marketing mix that way. These shop local initiatives that we’re doing right now, I think we’re the only brand doing that.“
How would you assess the current state of Brooks’ e-commerce business?
JW: “Last year, we ended it with about 15% of our revenue in dollars. In the United States it was about 8% of our units. That just tells you something about the athletic footwear and apparel business: retail still really matters. And of course, many of our retail partners are e-commerce, multichannel — Fleet Feet has an e-commerce business, Dick’s Sporting Goods has an e-commerce business — so in addition to our 15% of dollars going through e-commerce, our partners have digital businesses and that’s significant for many of them.”
How are you protecting your delivery and warehouse workers who are an integral part in keeping your digital operations going?
JW: “We have offices all over the world. Our associates in Italy have been working from home longer than any of us. The impact of this health crisis in Europe and Italy, it’s just been it’s just been devastating and scary. And then we have teams in Taiwan, China, Vietnam, so it’s different everywhere you operate. We’re committed to following all the local health authority guidelines. Our distribution center is in Indiana, there’s a lot of them that are centered there, and it was decided that they were critical infrastructure — so distribution centers are open. Now, we’re doing a lot of things to make sure we are safe as possible. We created a completely distinct shift so there’s an hour in between the time the first shift ends and the next shift starts so those people don’t cross paths. We’re wiping down every piece of equipment that anyone would come near or touch between shifts. If people are not feeling well or sick at all, stay home — we’re continuing to pay them for it. We’re at seven-hour shifts and we’re paying them for eight hours.”
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