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Building on quality: Ecco's ambitious plans

Steen borgholm ecco

Steen Borgholm intends to grow Danish footwear brand Ecco through its dedication to quality and comfort

A metal sculpture of a shoe perches on top of a hill outside Ecco’s modern headquarters in Bredebro, a small town 250 km west of Copenhagen. This quiet corner of Denmark has been synonymous with the footwear brand since 1963, when its entrepreneurial founders, Birte and Karl Toosbuy, chose the town as the base for their new business.

Karl, a trained shoemaker, was managing a Copenhagen-based footwear factory but dreamt of running his own business making comfortable shoes that could be worn straight from the box, causing no blisters or rubbing. 

Believing they would find a more reliable workforce in the provinces of Denmark, the couple placed an advert in a Danish newspaper reading “Who wants us?” , which outlined their business idea. After receiving the biggest response from Bredebro locals, they sold their homes in the city, left their jobs and moved to the town to begin Ecco. They chose the name because it is easy to remember and pronounce in many languages – it also means “look here” in Italian. Karl was the shoemaker and Birte was in charge of bookkeeping. By the end of its first year, the business employed 74 people. 

Still based in Bredebro and now owned by Birte and Karl’s daughter, Hanni Toosbuy Kasprzak, who is chairman, today Ecco is considerably larger. From one small shoe factory it has grown into a global empire employing 21,000 people worldwide, which sells more than 20 million pairs of shoes across 88 countries each year. It has more than 2,200 stores and 14,000 points of sale globally, including 42 stores and 200 stockists in the UK. 

Revenue hit €1.27bn (£1.12bn) in 2017, the brand’s last published financial results – up 1.6% from €1.25bn (£1.09bn) the previous year. Profits before tax rose 8% to €184m (£161m).

Drapers visited Ecco’s headquarters to meet Steen Borgholm, who joined the company in 2000 as an executive assistant in the finance and administration department, and worked his way up through several roles, including leading the brand’s Canadian and Asian arms, to become chief executive in 2017. 

Once determined to be a professional footballer, Borgholm’s love of travel first drew him to Ecco when he spotted an advert to work for the brand in Indonesia. Although he did not get the job, he was offered the executive assistant role, and has since flown up the career ladder. Now settled in his leadership position, he is expanding the brand’s digital reach alongside carefully considered bricks-and-mortar growth, drawing customers in by emphasising the brand’s focus on both quality and comfort.

Despite its now considerable size, Ecco has stayed true to its founders’ principles of high-quality product and manufacturing. 

To make the most comfortable footwear possible, Ecco uses a method called direct injection production. Polyurethane is injected into the sole of a shoe without using gluing or stitching, which the brand argues improves both comfort and durability. It also continues to innovate with new leathers at its tanneries. Developments include water-efficient “DriTan” leather, which the brand launched last year, and it estimates will save 25 million litres of water a year at its Dutch tannery alone.

Ecco sells women’s, men’s and children’s shoes, as well as outdoor boots and golf shoes. It also has a range of bags and other accessories.

Our founder’s mind-set was that if he didn’t find anyone making shoes to his standard, he’d do it himself

Steen Borgholm, Ecco

“Ecco is a good comfort brand, but it also has some style and there’s a nice fashion element,” explains stockist Andrew Slater, owner of Manchester independent Andrew Graham Shoes. “Their products are very supportive and really hold the foot well. We do find that two or three styles will work each season, but there will be two or three that won’t, and we’ll have to discount to sell them.” 

Another independent stockist agrees that comfort is “key” for Ecco: “Our customers come to the brand because they know they will get a perfect fit.”

As well as comfort and fit, own production is a key part of Ecco’s philosophy – it operates factories in Portugal, Slovakia, Thailand, China and Indonesia. It also owns and operates four tanneries – in the Netherlands, Thailand, China and Indonesia – which provide Ecco, as well as other premium brands, with high-quality leather. 

“It’s amazing – over the past 50 to 60 years own production has been the business model that everyone is moving away from, but now we are starting to see it swing back,” Borgholm tells Drapers. “For us, it is about ensuring quality. Our founder’s mind-set was that if he didn’t find anyone making shoes to his standard, he’d do it himself. That’s what we’ve stuck to, whether it’s on the leather-making or the shoe-making side. There is a real pride around owning our manufacturing.”

Ecco 2

The vertical manufacturing, however, does not greatly increase its speed to market. Some limited edition styles can go from design to market in 12 weeks, but Borgholm hopes to further leverage Ecco’s ownership of its supply chain and increase the amount of products that are brought to market in this time frame.

“We are starting to look at our supply chain and make that a competitive advantage in terms of speed, agility and time to market,” he says. “We’re not there yet – these are complicated matters – but it is becoming very evident now that this is what will be needed to be successful in the future.”

The first dedicated Ecco store was opened in Aarhus in Denmark in 1991, followed by a rollout across Scandinavia. Own stores were introduced in the UK in 1994. 

Borgholm now wants to increase the percentage of sales made through its own stores and ecommerce: “Our strategy over the past few years has been to build a closer relationship with consumers, and our ambition is to have 50% of our business direct to consumer, which we’re getting pretty close to.”

Customers, he argues, are in the driving seat more than ever before: “Understanding the consumer is what matters today. By talking to them directly, we can convey the passion of our employees and our brand story to customers. Ultimately, that is to the benefit of our [wholesale] partners as well, because the brand gets clearer and stronger in the market in the mind of shoppers.”

Ecommerce makes up around 10% of sales and is the fastest-growing channel. Driving the digital proposition has been another area of focus under Borgholm’s leadership: “Previously, there was a bit of a siloed approach to our functions online – all the different areas were sitting separately and all working on slightly different agendas. We’ve introduced a cross-function set-up with a digital focus, to ensure we have a much better view of customer behaviour and the consumer journey.”

However, Borgholm is keen to stress that Ecco is still investing in its bricks-and-mortar proposition. Last year, Ecco unveiled a new “prime” store format that uses high-quality finishes, leather detailing and careful lighting to create a more premium shopping experience. The collections in these stores are designed to fit the local customer, whether that be more targeted at suburban shoppers or tourist crowds. The format is in place on London’s King’s Road.

“We are rethinking some of our portfolio to concentrate on city centres,” explains Borgholm. “There’s still net growth in the number of stores we are opening, but we’re getting to that point where we’re starting to see a smaller net. If we open 120, we may close 90. There’s still growth opportunity in retail, but everyone, including us, is being careful because retail formats are changing.”

Borgholm adds that further experimentation with store formats could be on the horizon: “Thinking strategically, perhaps we could look at opening a showroom format where orders are fulfilled online. And who’s to say we couldn’t open a men’s store? Customers like to shop where it is relevant to them – I don’t go and shop in women’s stores.”

The brand may have been born in Denmark, but Ecco is increasingly international in its make-up and its approach. Borgholm is the only Dane on the brand’s three-strong board – Michel Krol, executive president of sales, is Dutch, and Panos Mytaros, executive vice-president of global shoe production, is Greek – and he estimates there are around 30 nationalities working at its head office. 

People still buy shoes, of course, but consumer behaviour has totally changed

Steen Borgholm, Ecco

In terms of markets, roughly a third of sales come from North America, a third from Asia and the remainder from Europe.

Ecco is planning to open three new stores in the UK in the first half of this year, Borgholm says: “If you look at the overall size of the market, there’s an opportunity for us. The retail market in the UK is as challenging as it is everywhere else – perhaps even more so, because of how promotional it is. Our ambition is to grow our retail store portfolio in the UK but we’re constantly reviewing what’s working. We are a strong global brand and there’s a lot of tourism in London especially, which helps drive the business.”

Ecco

Vietnam, Russia and Ecco’s native Scandinavia are other strong markets. It will open its first store in India in the first quarter of this year, as it seeks to appeal to the country’s growing middle class.

“We’ve agreed a joint venture in India,” says Borgholm. “India is not a short sprint – it is a couple of marathons. But we think it is the right time. Organised retail is developing in the market and online is also growing.”

South America is another market to explore, he says, although there are some significant barriers to entry: “We’re not active in South America yet and there is potential there, but, generally speaking, you have to manufacture in those markets to be successful because the import duties are so high.”

Prioritising direct-to-consumer growth is not an uncommon choice in today’s retail market, and Ecco’s focus on international markets is also canny. But it will have to continue balancing style and comfort, and make good on Borgholm’s ambition to increase speed to market, to satisfy today’s fickle and demanding footwear shopper.

Reflecting on his long career in the footwear industry, Borgholm concludes: “Things are changing and, having been in the shoe business for almost the last 20 years, it’s the last three to five years where the pace of change has really sped up. People still buy shoes, of course, but consumer behaviour has totally changed. The whole business model of retailers and wholesalers and brands is being challenged, and we have to find the answers that will work for tomorrow.”

 

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