Paul Grangaard, President and CEO of Allen Edmonds Shoe Corp.


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The annual Economic Trends Event, presented by BizTimes Milwaukee, hosts a vibrant discussion between prominent Wisconsin business leaders, state representatives, and industry experts on the state of the economy. This annual event includes a macroeconomic outlook on the economy from Michael Knetter, Ph.D., the Albert O. Nicholas dean at the University of Wisconsin School of Business in Madison.

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Paul Grangaard, President and CEO of Allen Edmonds Shoe Corp.

  1. 1. Paul Grangaard President and CEO
  2. 2. Allen Edmonds – Pertinent Quick Facts <ul><li>Founded in Belgium, Wisconsin, in 1922. Great heritage . </li></ul><ul><li>Recommitted to core customer base and classic products in early 2009. Now expanding product line significantly -- from all business dress to evening and weekend shoes (including classic golf shoes). </li></ul><ul><li>Die-Hard dedication to Made in USA manufacturing, but no longer forfeiting the mid-priced market segment . Made 95% in USA, 5% in Dominican Republic. Driving diverse employment growth . </li></ul><ul><li>32 U.S. store locations. 2010 Comparable Store Sales increased 19%. AE website sales increased 160% in 2010. E-commerce is now 8% of total revenues. </li></ul><ul><li>20% of Concept Store revenues from non-shoe items – mostly Made in USA, Allen Edmonds style, quality and value formula. </li></ul><ul><li>60,000 pairs of shoes Recrafted® in 2010. Local customer service a strategic asset (i.e. there’s no “Peggy” at Allen Edmonds) </li></ul>
  3. 3. After 25 Years of Historic Prosperity, Welcome the “New Normal” <ul><li>Bull Market Habits Have Changed To>>> Lasting New Normal Behaviors </li></ul><ul><li>Load up debt; rampant splurging above income level >>> Value-conscious; saving; surgical splurging </li></ul><ul><li>Luxury brands for all, image, throwaway products >>> Classic, heritage, authentic, fair value pricing </li></ul><ul><li>Baby boom focused on kids, success, hobbies >>> Fewer & focused priorities, values, sustainability </li></ul><ul><li>5% unemployed; 10-15% worried >>> 10% unemployed; 20% (?) worried; i.e. 70% buying again </li></ul><ul><li>Corporate: High ROIs; 10% + growth goals >>> Growth and returns hard to come by; pressures on margins ; Wall Street focus on reduced inventories; ROC efficiencies </li></ul><ul><li>Stockholders’ place 1 st -5 th >>> Customers first ; owners, yes, but employees, communities, vendors, too </li></ul><ul><li>CEO as “CLW” (Chief Lottery Winner) >>> Stewardship expectations and performance standards much higher </li></ul>
  4. 4. Manufacturing in U.S.A. – Fundamentals for Resurgence <ul><li>Focus on core customers ’ needs and wants. Engage. Listen . Listen more. Exceed highest expectations. </li></ul><ul><li>Re-commit to being entrepreneurial in non-manufacturing cost structures, processes and actions. </li></ul><ul><li>Innovation is absolutely crucial . Expand product line and then customer base. Never stop thinking or acting like a growth company. </li></ul><ul><li>Know thy competition in-depth; then build closer partnerships with customers and key vendors. </li></ul><ul><li>“ Partnership of Pros” leadership structure to let best ideas flow. Encourage a candid and active internal dialogue. </li></ul>
  5. 5. Manufacturing in U.S.A. – Fundamentals for Resurgence <ul><li>Employ low-cost foreign sourcing and first stage manufacturing to your advantage. Blended costing . </li></ul><ul><li>Become great at production scheduling , product customization and WIP and finished goods inventory management . Say “yes”. “Easy to do business with” (ETDBW). </li></ul><ul><li>Use domestic fulfillment capabilities to your advantage. Ensure great customer service at all steps. </li></ul><ul><li>Eliminate the middle man when possible. Manage “weighted average margins” across direct/indirect customer relationships. </li></ul>
  6. 6. Retailing in the New Normal Era <ul><li>Department store consolidation nearly finished , but not quite. Target, Costco and Walmart continue to grow share of household spending. </li></ul><ul><li>Nordstrom RACK, Sak’s Off-Fifth and single-brand outlet stores (e.g. Coach) receive real estate growth investment from developers and retailers. When is widespread outlet product availability and much lower pricing the dominant force in the brand’s image ??? </li></ul><ul><li>“ A” shopping centers will thrive. “B” shopping centers have to adjust return expectations. “C” shopping center real estate will be gradually re-purposed . </li></ul><ul><li>Shoppers are now multi-channel , depending on desired experience at the time and on convenience factors. </li></ul><ul><li>Branded product E-commerce sites become information sources, web-community hubs and integrated retailing sites. Advantage over general sites. </li></ul><ul><li>Unrelenting intense pressure to provide promotional pricing, improved value, higher quality, superior longevity and more responsive customer service. Competitors are just a click away … </li></ul>
  7. 7. Quick Primer of Men’s Style Trends <ul><li>Classic looks, authentic American heritage (i.e. pre-WWII) brands, Made in USA production, long-lasting quality, sensible values, fewer luxury brands, Mad Men attire. </li></ul><ul><li>Brown shoes (different shades for different uses) are the “new black” in high quality leather shoes for the office. </li></ul><ul><li>It’s all about brogues! Leather shoes for weekend wear. </li></ul><ul><li>Stylish vests in place of sport coats. French cuff shirts with personal-connection cufflinks (hobby or city themes). </li></ul><ul><li>Plaid and Brooks Brothers’ rep stripe ties over $150 Euro-aristocratic prints. </li></ul><ul><li>Leather for briefcases, duffel bags, rolling carry-ons. </li></ul><ul><li>Logoed baseball caps in winter replaced by Stormy Kromer , Scottish, Indy Jones caps. </li></ul><ul><li>Leather coats (but longer than aviator cuts) make a comeback in 2011. </li></ul>
  8. 8. Final Thought – Words of Wisdom <ul><li>“ Skate to where the puck is going to be, not where it has been.” </li></ul><ul><li>--- Wayne Gretzky </li></ul>