Everything is done on a huge scale at Wolverine World Wide, and chief executive and president Blake Krueger’s ambitions for the footwear group are no different.
Former lawyer Blake Krueger is a polished performer when it comes to giving interviews and his presentation is as slick as his surroundings.
It was earlier this year that, from his US base in Rockford, Michigan, Krueger led the consolidation of the European headquarters of footwear group Wolverine World Wide’s brands by pooling them in the glossy and newly constructed Kings Place in King’s Cross, north London.
Located above a concert hall and art gallery, it is one impressive office complex. Once through the main door, a corridor sweeps around a central atrium splitting off into various meeting rooms, offices and break-out areas.
A quiet meeting room hosts our interview, while outside on the corridor wall a graphic timeline reminds us of the weight of history borne by the company’s footwear brands, which include Hush Puppies, a label celebrating its 50th anniversary and which sells nearly 18 million pairs of shoes a year.
Also in the portfolio are Bates, a military footwear outfitter dating back to 1887 and part of Wolverine since 1969; Harley Davidson footwear, bought under licence in 1998; utility brand CAT, bought under licence in 1994; and outdoor brand Merrell, bought in 1997. Also part of the line-up are nautical shoe specialist Sebago, outdoor retailer Track ’n Trail, the footwear licence for outdoor brand Patagonia, and safety brand Hytest. All share a rugged lifestyle characteristic, which makes Krueger, a man who enjoys fishing and hunting, a natural evangelist of his company’s portfolio.
Krueger is well aware of the power of Hush Puppies’ heritage and is proud of this distinguished past, which he says is one of Wolverine’s most powerful weapons. But, he chuckles: “People in the UK always think that Hush Puppies comes from here. But actually the UK was the second licence.” The US brand’s first licence was Canada.
Krueger can forgive the UK its misconceptions. “Hush Puppies came here back in 1958 and it was unusual then for footwear brands to think internationally, so it’s natural to believe that it comes from here,” he says. Krueger smiles at this impressively lengthy history. “It gives us a 50-year head start on other companies.”
Krueger is under no illusions about the state of the trembling world economy but earnestly believes that the company’s early, historical expansion into international
territories, which has been rigorously followed through with continued and extended expansion, protects it from any local tremors.
Certainly, with its current penetration into 180 territories, it is a robust business model. A quiver in Japanese sales is mitigated by a boom in Dubai, says Krueger; or a slow year in the US is balanced by growth, yes growth, in Europe. Krueger says: “Europe presents a big-time opportunity for us, as our brands are under-represented here,” he says. “Only five years ago it made up just 4% to 5% of our business, now it’s 21%. And it still has lots of growth potential.” It is Krueger’s faith in Wolverine’s European potential that paved the way for the relocation of its European offices, previously in Leicester, Bristol and London, to the centralised plush new London headquarters. “It was a big decision,” he says, and his naturally cheerful demeanour takes a turn for the serious as he discusses the move, which could have been disruptive.
The headquarters for Merrell and Patagonia, which between them form Wolverine’s outdoor division, were based in Bristol, while Hush Puppies was centred in Leicester along with the group finance department. The heritage brands – CAT, Harley Davidson and Sebago – all dwelt in Farringdon, north London.
Bringing the brands under one roof was always going to have an effect on the company. The most high-profile casualty was Mike Lynskey, who was managing director of the outdoor division in Bristol. After he left, he became European wholesale director at outdoor brand Timberland.
Krueger says: “When you consolidate Leicester and Bristol you’re going to lose some good people who are not prepared to relocate. In that respect it was a difficult
decision, particularly as we are pretty people-oriented in our approach.”
Adie Callaghan, brand manager for CAT, makes the point that the relocation has had a surprisingly minimal effect on the staffing. “The amazing thing is that so many people stayed with the company and that includes staff that continue to live in Leicester and commute daily,” he says.
Krueger emphasises that the different brands will continue to operate individually but will benefit from the improved economies of working under one roof.
Callaghan agrees. “There has been a big shift in mindset,” he says. “From working at three locations to now being under one roof makes a big difference. The various managers didn’t even know each other before but now we can talk to each other, informally or otherwise. If only for simple things like swapping contacts and working better with agencies.”
A shift in mindset may be just what the company needs to underline. According to Ghassan Hodeib, buying director for Office, Wolverine faces some challenges. He says: “The company is built around brands, each with strong inherent personalities and easily identifiable looks, which is great. But once it moves beyond those it comes up against other brands that are already strong in those areas. It is difficult. Until we all go back to that chunky workwear look the company will struggle. Look at some of those brands that were big 10 years ago – the likes of Acupuncture. That look won’t come back without some evolution.”
An eye on the futureOne option for the business would be to buy its way into different markets. After all, Wolverine has acquired six brands since 1994. However, Hodeib dismisses this option, quoting the weight of competitive brands like Adidas. However, he says: “What Wolverine has done really well is acquiring complementary companies.”
Will the company be adding to its portfolio? As you would expect, it does have a dedicated acquisitions team so it goes without saying that somewhere in the world, brands are being scrutinised for their potential. Krueger is tight-lipped on names but is open about the ingredients needed to make a brand worth examining. “It needs to have some sort of name,” he says. “It may not be doing well in terms of sales but it needs to have a heritage that means something to people.”
That said, Krueger says: “You have to be brave enough to walk away from a deal if it doesn’t seem right, even if it is a long way along.” He is keen to add that the company’s record on brand acquisitions to date has been 100% success. “Some companies have a one-in-three success with buyouts. Not us. Some have a 50% failure rate. But all of ours have worked.”
Krueger puts this success down to the scope of Wolverine’s international business. “We have immediate distribution around the world. We can just plug and play.”
Every Wolverine brand is then, by default, a global brand. And that, says Krueger, is critical. “The world is still interested in global brands, especially in the emerging markets,” he points out. While some of the most sophisticated consumers may actively seek the unknown, the niche, the underground, he says the bulk of the world’s spend is still aimed at the big names. But how does he back up this claim? “Partly it’s instinctive, we just know it. But there is research to back it up too. There is a report by the Harvard Business School that underlines the power of the global name.”
Corporate speak is never too far from Krueger’s idiom but he gives it a decent spin. “We are brands without borders”, he says. “We are used to dealing with different cultures.”
Big is beautiful for Wolverine. And just to put some flesh on the bones here is the sort of global market penetration its brands enjoy: Hush Puppies is sold in 135 countries; CAT has accounts in 145; and Merrell is sold in 160. It is a breathtaking scope that takes in the Americas, Asia, Africa, Europe and Australia.
Wolverine’s sheer scale is impressive. In 2007, it sold about 48 million pairs of shoes worldwide. Last year was the firm’s eighth consecutive year of record turnover, hitting US$1.199 billion (£714 million), and 2008 is set to record a turnover of US$1.23bn (£785m). Turnover in 1999 was US$666m (£425m).
Krueger has gone on record saying that he wants the firm to hit the US$2bn (£1.27bn) mark. How realistic is that ambition? The company sold 48 million pairs of branded footwear last year and profits for 2008 are projected to be up 17%.
In these credit crunched times, it is true that stockists are happy to partner with some of the bigger suppliers rather than risk shelling out on orders from less stable companies. The manager of one Midlands-based footwear independent said: “Most of our shoes are Merrell. Part of the reason is that I have never come across a company like Wolverine; it’s so big. If we ever have a return we send it back and it’s replaced without question. It’s good for us and great for our customers.”
But this is an outdoor retailer, not a fashion-led one. According to Office’s Hodeib, this is part of the difficulties that the business faces. “What the company has done well is gather momentum on the back of successful looks,” he says.
“Merrell is a good example. For Merrell it was the Jungle Moc. It sold millions of pairs. But after that one big success, you have a company that has to go back to its traditional market and that is fine. But it can be tough work – you have to work hard for a lot less business. Guaranteeing continuous growth is a problem in that situation.”
But what is Krueger like to work for? One former employee says that a return to life under Krueger’s charge is very much on their radar. “I’d love to work for him again and he has kept in touch,” says the former employee. “The thing about Blake is that although he has this immensely powerful position he is still really personable.”
Whatever the challenges, Krueger is convinced that Wolverine World Wide is well geared up to prosper.
2007 Chief executive, Wolverine World Wide
2005 President, Wolverine World Wide
2004 President, heritage brands division, Wolverine World Wide
2003 President, CAT Footwear Group, Wolverine World Wide
1996 Executive vice president, Wolverine World Wide Partner in law firm Warner Norcross & Judd
Who is your fashion mentor?
One of the people – and businesses – that I respect the most is Ralph Lauren. The Polo Ralph Lauren brand compass has always pointed in the same direction, and his ability to extend the brand into new product categories (originally from men’s ties) and to sub-brand with a consistent hand and eye has been superb.
Which is your favourite retailer?
One of my favourite retailers is [US cookware retailer] Williams-Sonoma – and I hardly cook at all. The in-store visual merchandising and consumer experience is excellent. You can hardly walk by one of its stores without going in and, of course, buying something from it.
What is the best-selling product you have ever worked on?
When I had the opportunity to run the global CAT footwear business we needed to come up with a big new product marketing concept. That turned out to be iTechnology. Originally it was only offered in boots but it now accounts for approximately 30% of the product in the global CAT footwear line.
What is your proudest achievement?
Probably my children (with most of the credit going to my wife), and secondly being offered the privilege to lead Wolverine World Wide and the talented and dedicated global team that outperforms every year.
What would be your dream job apart from fashion?
My first instinct is that I would like to be a creative writer, and secondly a painter. I do have a little talent in relation to the former but unfortunately none in the latter. Or, alternatively, I would like to have been an archaeologist – I have always been fascinated by the origins, development and progression of mankind.