Although most businesses are taking a defensive stance during the economic downturn, Skechers’ president is sure of continuing the footwear brand’s dramatic growth.
At the age of five, Michael Greenberg was already preparing for a career in management. Now president of footwear brand Skechers, he tells Drapers that as a precocious young boy he would walk around the head office of his father’s footwear business telling off the employees.
“As a kid in Boston [in the US] I was always in awe of my father being the boss,” he says. “I fell in love with whatever it was he did. I hope he is around for another 20 years and we are still running the business together.”
Robert Greenberg, Michael’s father, set up Skechers in 1992 on the back of the LA Gear business he developed in the early 1980s. LA Gear was an international success, and Robert took the company public in 1986. However, following differences with investors he resigned at the end of 1991.
Today, Michael and Robert are back in the game but this time in the driving seat of Skechers, the third biggest-selling athletic footwear brand in the US in 2007, after Nike and Adidas, according to a report by market research firm Sporting Goods Intelligence. Manhattan Beach-based Skechers celebrates its 17th birthday this year and turnover stands at about $1.5 billion (£1bn). Michael is convinced it will become a US$3bn (£2.01bn) brand within five years. In November 2008, the brand posted a record set of third quarter net sales with its first US$400 million-plus (£268m) quarter performance, compared with US$395m sales in the third quarter of 2007.
Skechers’ sprawling range offers 3,000 styles and in the group there are more than 20 brands, including Skechers, Marc Ecko and Zoo York. Skechers sells through more than 200 standalone stores around the globe, not to mention a massive wholesale stockist base selling about 70 million pairs around the world each year.
The UK market is the second largest for the brand after the US in terms of sales and in 2008 two million pairs of Skechers were sold in the UK through the likes of footwear chains Barratts, Office and Schuh, plus a network of independents.
Greenberg pins much of the brand’s UK success on Pete Youell, Skechers’ managing director UK and Ireland. Former independents and mail order sales director at Adidas, Youell joined Skechers from Adidas in January 2005. In early 2001 Skechers’ distribution was brought in-house from former distributor Pentland Brands when the business decided to go direct to the UK market. Skechers managing partner Marvin Bernstein did the groundwork and set up Skechers’ UK subsidiary, with Youell coming on board to build on that. Since then, Youell has pushed the brand forward on a growth trajectory of more than 50% year on year since 2005. The business has also expanded dramatically and the brand split is now 50% women’s, 25% men’s and 25% kids’. Before 2001, 95% of the UK offer was made up of women’s styles, says Greenberg.“We have great retailers in the UK who believe in the brand,” says Greenberg. “Skechers is right up there as the number one or number two brand for them. We offer something for everyone.”
Greenberg is a master marketeer and the success of Skechers is down to the brand’s ability to harness the power of high-profile US celebrities and appeal to teenagers and kids across the western world. Pop stars Britney Spears, Christina Aguilera and Ashlee Simpson have all fronted campaigns for the brand and currently David Cook, winner of US TV talent show American Idol, is the face of Skechers, while High School Musical star Vanessa Hudgens is the face of the group’s Red by Marc Ecko brand.
Greenberg says: “[Success] comes from understanding the power of advertising, whether it is brand marketing or celebrity endorsement. You have to be a marketeer. If not you are just ‘shoe people’ with little hope of building a global brand.”
While it is hard to dispute the success of the marketing campaigns Greenberg has engineered, one long-term stockist of the brand in the UK says he would like to see a more country-relevant marketing strategy for the brand. “The marketing is very American,” he says. “I don’t think the American guys understand what we do here.” He adds: “Because Skechers has such a big range it is very eager to take more and more of your space, but as a retailer it is hard to find space for all of the looks.” On the upside, he says: “Skechers is a very good operator and is aggressive. The product is well made and the business is very organised. Relative to other sports brands, Skechers gives a handsome margin.”
Greenberg describes the Barratts chain as a “living, breathing catalogue of Skechers”, and Michael Ziff, chairman and chief executive of Stylo, the retail group which owns Barratts, says: “In these difficult times, people turn to brands for security and Skechers is one of those brands that people feel secure with. It is not as expensive as [other sports brands] and comes with reliability. We have a tremendous working relationship with it.”
Ziff has signed a confidentiality agreement on details of pairage and sales and will not divulge details. However, a source close to the retailer estimates that Barratts sells more than 80,000 pairs of Skechers a year. Over the past 12 months Skechers has been boosting its portfolio by focusing on acquisitions and licences. Skechers bought two brands, Punkrose and Public Royalty, last summer, which will be bolted onto its burgeoning youth offer. Along with acquisition opportunities, its standalone retail strategy and international expansion offer further growth avenues. Although Skechers typically sells to a mainstream customer, rather than a fashion-forward customer, it has struck a chord with thousand of shoppers in the UK and translates across markets. “We can connect in the UK or the US,” says Greenberg. “Kids dress alike, play alike and like the same music. Globalness is about being local.”
He says there are “new frontiers” to be conquered by the company, and although many businesses talk of global domination, Skechers is one brand that is actually on its way to achieving that goal. China is the latest target market and Skechers has just entered the market via a joint venture. In three years it aims to have 1,000 points of sale in the country from a standing start. India is also an attractive market for Greenberg.
As the global economic crisis spreads, Skechers is well placed to take advantage of the downturn. Greenberg says: “Retailers want brands they can depend on. Why waste your time with a fly-by-night brand? [Retailers] are shedding peripheral brands and doing business with brands that ring the register. When Skechers sneezes, the retailer catches a cold. They depend on us.”
2005 Skechers hits the US$1bn (£665m) per year sales mark
1992 Joins Skechers as co-founder and president
1988 National sales manager, LA Gear
1985 Joins family-owned brand LA Gear, where he works in various roles
1980 Sales assistant at The Shoe Connection, a footwear store in Woodland Hills, California
Who is your fashion mentor?
So many great fashion leaders come to mind, from Ralph Lauren to Marc Ecko, and the many designers who work behind the scenes at fashion retailers. But I most admire all the wonderful designers that have turned their dreams into a reality, regardless of how big or small their businesses are.
Which is your favourite retailer?
Harvey Nichols and Barneys because of their directional attitude towards fashion and style.
What is the best-selling product you have ever worked on?
Commercialising the first logger boot and turning utility footwear into a major lifestyle category in 1992-93 is something that Skechers set out to do from day one. Our Skechers Sport line led by the Energy range continues to boom. The Energy sneaker has become an iconic style and sold more than 100 million pairs in its first decade. I would classify that as a bestseller.
What is your proudest achievement?
First, my family: my wife, Wendy, and my three children are the people who drive me every day. I have never been one to admire people who are proud of the fact that they have not taken a vacation for the past number of years. As far as I am concerned, we work hard towards success so that we can enjoy time with our loved ones, and create a quality of life. Spending time with my friends and family is something that I will always take full advantage of. In business, my proudest achievement is the fact that we, Skechers, have built an amazing company, and it’s one that I really enjoy being a part of.
What would be your dream job outside of fashion?
I really cannot imagine life without Skechers, or being involved in any another industry other than the footwear trade.