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Birkenstock strides beyond the comfort zone

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Oliver Reichert, CEO of heritage footwear brand Birkenstock, tells Drapers why it is broadening its product offer, entering new categories and expanding into new markets

When Frances McDormand presented the Best Actress gong at this year’s Academy Awards to British star Olivia Colman, the American acress was wearing a Valentino gown and acid yellow Birkenstock sandals.

The most glittering night in Hollywood’s calendar might not be the most natural habitat for a comfort-focused orthopaedic footwear label, but the German brand is having something of a fashion moment. Clunky – some might say ugly – footwear is in vogue. Birkenstock was once synonymous with hippie culture, today it is the must-have summer shoe for fashion’s in-crowd.

Birkenstock’s anatomically shaped footbeds, which are made from cork and latex, are at the heart of its products. The brand can trace its history back to 1774, when its founder, Johann Adam Birkenstock, was working as a cobbler in the German town of Lengen-Bergheim.

His knowledge was passed down the generations to great-great grandson Konrad Birkenstock, who, in 1896, alighted on the idea of selling flexible footbeds designed to ease pressure on feet. In the 1960s, Karl Birkenstock, Konrad’s grandson, placed the flexible footbed within a sandal, which launched the brand as it is known today.

The business is still owned by the Birkenstock family, and, in 2017, expanded to include a line of cork-based skincare, as well as a range of mattresses and beds.

Even if somebody hates the shoe for how it looks, they’re going to love it for how it feels

Oliver Reichert, Birkenstock

Birkenstock is not relying on this long heritage, however. Collaborations with big-name designers help to keep it relevant, and its programme of select store openings is intended to keep it in the consumer’s eye. Beyond this, its dedication to own manufacturing helps it to stand out in a market that is often licensed and outsourced.

Global reach

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Based in Neustadt in western Germany, Birkenstock has 49 stores around the world, including one on Neal Street in London’s Covent Garden. Although it does not release profit figures, the business says that sales increased from 11.3 million pairs in 2012 to 25 million pairs last year.

Birkenstock has around 420 wholesale accounts in the UK, which include Asos, Schuh, Office, John Lewis, Selfridges and Matchesfashion. Wholesale makes up around half of the business, 30% comes from distributors and 20% is direct to consumer. It established its own office and showroom in London, after taking UK distribution in house in 2017. 

“We focus on one thing, which is the footbed,” chief executive officer Oliver Reichert tells Drapers, when we meet at the brand’s Parisian office in the middle of a summer heatwave. “Normally, the footbed is enclosed inside the shoe – it’s like the technology inside a computer. Every aspect of our shoes is a question of quality or function. Even if somebody hates the shoe for how it looks, they’re going to love it for how it feels. We have fans on both sides of the street.”

Unusually, Birkenstock has two CEOs. The strikingly tall, German-born Reichert has been at the helm since 2013, alongside company veteran Markus Bensberg, who became CEO in the same year after a long career at the company. The business was previously divided into an array of different legal entities, each with a different structure and management and overseen by three members of the Birkenstock family – brothers Stephan, Alex and Christian Birkenstock.

We started the clunky shoe trend. I promise we’ll still be here when the current fad fades

Oliver Reichert, Birkenstock

They have since relinquished operational control and the business is run according to a framework set out by a family constitution. Birkenstock says that Reichert and Bensberg do not split responsibilities, but both “take care of each and every aspect of the business in a holistic way”.

Previously the managing director of German sports channel DSF (now Sport 1), Reichert became involved in the business as a consultant in 2009 after a chance meeting with Christian Birkenstock. The pair got chatting over beers and Christian asked Reichert to join the brand. Reichert agreed, in part because he was already a lifelong fan of the product. He chuckles that Birkenstock was the only place he could buy shoes in his size – a UK 12 – when he was growing up.

Refreshingly frank, Reichert is adamant that Birkenstock’s appeal will endure even when the tide inevitably turns against the craze for ugly shoes: “We started the clunky shoe trend. We’ve seen so many trends come and go. I promise we’ll still be here when the current fad fades.

“If you talk to people today, they’ll say, ‘Oh, I’ve been wearing Birkenstocks for years because old hippies loved them.’ Perhaps in 20 years, they’ll be saying, ‘Oh, my father pushed me to wear Birkenstocks because they were so cool and fashionable.’”

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‘Paranoid about quality’

Alongside its footwear’s unique footbed and “clunky” shape, Birkenstock’s vertical production ethos sets it apart from much of the industry. It has four factories in Germany, the largest of which is in Görlitz, a picturesque city in eastern Germany. Around 1,350 people work at the Görlitz factory, which has the capacity to make up to 18 million pairs of shoes each year. In total, Birkenstock employs 4,500 people around the world.

“The question isn’t why did we keep production in Germany – the question is why did the other brands move away,” Reichert says. “The simple truth is that other brands need to create very expensive media campaigns and marketing buzz around their product, and because of that, they erode their margins.

“They have to start cost cutting, and so they move production to foreign countries. In the near future they will have to come back, because costs in those countries are increasing dramatically. We just stayed as we were – the others sold their souls to someone else.”

Reichert also argues that Birkenstock’s devotion to quality requires the brand to control its own production: “We are paranoid about quality, which is the second reason not to shift production away from Germany. If you ask someone else to do something for you, he might listen carefully to what you say but, ultimately, he will still do it his way. If he needs better margins, the first thing he will do is decrease the quality.

”I can call someone now and get 2,000 pair of shoes delivered tomorrow, which is only a possibility because we own the factory. That’s a big luxury in a market where brands are suffering because the trends are moving so fast.”

Birkenstock is trusted by our customers for both style and fit

Emma Alexander, Shop Direct

Birkenstock’s bestselling product is the Arizona simple two-strap sandal in black, which retails for around £60. Retail prices in Birkenstock’s main line range from £30 for its waterproof EVA sandals, which are available in a spectrum of on-trend shades, to £155 for women’s black leather boots. It declines to reveal wholesale prices. 

Emma Limn, digital and ecommerce assistant at Cornish lifestyle independent Roo’s Beach, which has stocked Birkenstock since 2017, says: “We want to give customers products that feel good when they wear them and, for us, Birkenstock really ticks that box. They promote comfort first while offering vibrant styles. We love the heritage, and believe our customers really trust the brand.”

Emma Alexander, fashion director at Shop Direct, which stocks Birkenstock on its Very and Littlewood platforms, agrees: “Birkenstock is trusted by our customers for both style and fit. The brand has a wonderful heritage and continues to inspire with interesting colourways, fabrications and contemporary styles, such as its vegan products. Our customers love the classic Arizona range while the colourful EVA range, always popular for the beach, is also successful.”

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Birkenstock x Il Pellicano

Nonetheless, Birkenstock is branching out beyond its core styles. It is prepared to experiment with both new designs and higher prices through its 1774 project, which launched in 2018 and focuses on limited edition styles created in collaboration with artists or designers.

Styles include woven raffia sandals (which retail for £360) and a cherry red satin pair with pink trimming (£310) from a partnership with hotelier Marie-Louise Sciò, creative director of Tuscany hotel Il Pellicano. Birkenstock has also worked with Californian designer Rick Owens, who added extra-long straps and chunky rubber details for his spring 19 line.

First refusals

Reichert hit the headlines last year when he said Birkenstock had turned down potential collaborations with achingly hip brands of the moment, Supreme and Vetements.

Although most labels would be champing at the bit to partner with such powerful industry names, he is adamant that any potential collaboration must bring something special to Birkenstock: “We want to meet with other creative people and create something new. The calculation is simple – it is 1+1= 3? If that’s the case, then it’s a collaboration. If not, then we don’t do it. It is like any relationship, any partnership where two people come together and something special happens.”

 

We are investing in retail because we want stores that can act as lighthouses for the brand

Oliver Reichert

Retail refresh

As well as expanding its design options, Birkenstock is also experimenting with new retail formats. It debuted the “Birkenstock Box” at Berlin Fashion Week in July 2017. Housed in a converted freight container, the mobile retail concept will partner with retailers across Europe, Asia and the US, and has already travelled to New York’s Barneys and Milan’s 10 Corso Como. Each retailer will be able to customise the box’s interior to suit their own aesthetic, and limited edition Birkenstocks will be on offer to consumers.

The brand is continuing to invest in bricks-and-mortar stores in key cities and plans to open a further three stores worldwide in 2019. It unveiled its first own US retail store in New York’s Soho in October last year, and opened a branch on London’s Carnaby Street last week

“We believe Birkenstock is a brand you need to have contact with,” Reichert explains. “You need to be able to go into a shop to get a proper feeling for the brand and the footbed. We are investing in retail because we want stores that can act as lighthouses for the brand in the epicentres of the world. Online is by far the most vivid channel for us, so, commercially, opening stores isn’t that important, but emotionally it is very important. We’re waiting for spots with the right history, the right social demographic.”

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When it comes to international opportunities for growth, Reichert points to India as a particular focus: “India is somewhere we’re pushing into. We’ve just opened an office and built a team in the market. It was a very big decision to go into that market, but we felt it was a good opportunity.

A lot of people in India are very wealthy, they like to travel and, culturally, they like open-toe shoes

“A lot of people in India are very wealthy, they like to travel and, culturally, they like open-toe shoes. Import taxes can be a problem, because bringing products into India is hard. However, we’re doing well so far, selecting shops in good malls and building the online offer and that’s how we grow.”

With designer collaborations, range extensions and a global expansion plan, Reichert is not simply relying on Birkenstock’s heritage to keep the brand afloat and growing. Its dedication to own manufacturing and quality also make the brand stand out in today’s fast fashion market.

But although he is confident in Birkenstock’s ability to outlast the current ugly shoe craze, fashion is fickle and he will need to keep innovating to ensure this heritage label stays one step ahead.

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