In a new series, top leaders from across the footwear industry discuss the deep impact of the coronavirus and the challenging road ahead.
While coronavirus continues to cripple business in the US market, K-Swiss president Barney Waters has benefited from parent company Xtep having navigated the health crisis in China.
“We don’t have to explain to our Chinese owners what’s happening over here because they already know and they’ve done quarantining and shutting down retail and experienced the e-com dip,” Waters said. “We can follow a little bit of their path since they’re the few months ahead of us, we’re able to look at their recovery and map it to ours.”
Below, Waters shares insights he’s learned from Xtep and offers predictions of what the next six months will look like. One tip? “The keyword is empathy,” he said. It’s a mistake to “pushy” with consumers right now, he said. For more, read on.
How are you working to ensure business keeps moving forward?
Barney Waters: “We’re really just managing day to day. Orders are shifting on a daily basis, so it’s a really fluid forecast that we’re trying to understand. So first and foremost, it’s monitoring the order book and trying to [adapt] the forecasts with every change that comes in, which is happening constantly. We’re also focusing on the team and making sure they are focused and productive now that we’re working from home — and obviously making sure everybody’s safe and secure. It’s been quite surprising how well that transition has turned out. It’s been positive. And a lot of my time is spent on just assessing…what’s happening with our retail partners and suppliers and shipping and cancellations and credit. That’s what everybody’s doing right now. It’s about communication and collaboration with our employees and retailers and suppliers.”
How has the experience in China of K-Swiss’ parent company, Xtep, guided you?
BW: “Maybe it’s a little bit reassuring. For example, we were able to see where their e-commerce went in the early days and how long it took before it started to come back. Now the e-commerce is back to where it was. And about 80 percent of their stores have reopened in China, but the mall traffic is still way down. So we can go, ‘Okay, maybe we know that this is going to be a couple of weeks and then we’re going to get back to normal levels.’ I’m doing impact assessment reports for them all the time and it would be a lot harder to convince them of what we’re going through if they hadn’t experienced it themselves.”
How have you managed Xtep’s plans for K-Swiss retail expansion in China with your responsibilities stateside?
BW: “Their plan is to open K-Swiss stores in China, and even if we’re a small part of the footprint of Xtep, it will be hundreds if not thousands of stores at some point. So on the one hand we’re battening down the hatches in survival mode in the U.S., but we’re also generating new concepts and marketing plans to line up the China launch in 2021. It’s interesting how these two different things are happening. You’ve got to manage every penny on a day-to-day basis but you’ve also got to realize that the smoke is going to clear and you can’t stop your future planning. This is a hard balance.”
K-Swiss has several products in the pipeline. How has the coronavirus crisis impacted the release schedule?
BW: “Now is not the time to drop your best stuff. That’s not where people’s attention is. The keyword is empathy. Brands definitely shouldn’t be acting like nothing’s going on. There are people with serious health concerns. Brands have to have the correct tone of understanding and empathy and not being like, ‘Hey, look at this great new product collaboration we’re dropping.’ You can’t be too sales [driven] or pushy right now because it turns people off and people will remember how you acted in a crisis. So we’ve delayed some drops where where we can and pushed some things back.”
To keep digital operations going, you have to keep people in your delivery system and at the warehouse. How are you protecting these workers?
BW: “We’re in California and we’ve had to take extra precautions with how everybody is operating our warehouse. We’ve had to limit the amount of people there and adjust shifts and lunch breaks to not have groups of people together. We’ve had to make those operational adjustments to follow the guidelines of social distancing. And at the same time, we’ve experienced a lot of decline in shipments because retailers out there are canceling orders, so it’s been a big change in terms of managing the workload at the warehouse. And we’ve we’ve definitely decreased some shifts because of that.”
How will coronavirus change consumer buying patterns?
BW: “What my experience has been is that when there are rough economic times, people tend to go back to tried-and-tested product. I experienced this in my days at Palladium when we came out with Palladium Boots original. If you remember back then, it was like a utilitarian, really good value. The timing was great because it was an authentic brand that had great value that people responded to. It’s more considered consumption, buying better and buy less, because now we’re in that mode where where people have gotten used to — at least for a small period of time here — spending based off of need versus want.”
Where will we be six months from now?
BW: “Hopefully life will be back to normal, but we’ll definitely be digging out from this for a while. The quarantine will cause us to strengthen our bonds with our family and reconnect us to some simple things in life. We’ve gone back to basics in many ways, and I think brands will do the same thing — go back to their organic core, simplify operations and shed underperforming parts of the business. So in six months, I think we’ll be healthier. But there’s going to be a lot of short term pain. We’ll be leaner, meaner and probably healthier in the long run.”
What should the industry do together to survive this moment?
BW: “We’ve got to step up with strong leadership for our people. And I do think there’s a role for the industry to come together to kind of share strategies and approaches. I’ve been on a couple of industry webinars to listen to what other companies are doing and what their thoughts are, seeing what people are doing. And this is a really tough balance because you want to treat your people well in tough times, but at the same time you’ve got to manage the cost base more tightly than ever. Obviously, Footwear News can play a role role in that by putting forums together — I’ve taken advantage of the most recent webinar. As [Foot Locker Chief] Dick Johnson said, we’re built on this culture of consumption. We have a huge consumer base and the lights will go back on at some point. It’s a question of getting through this dark time.”
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