In her first major interview in three years as Clarks’ chief executive, Melissa Potter sets out her blueprint for global supremacy.
With 14,000 employees worldwide and distribution in 100 countries, being at the helm of footwear giant Clarks is no mean feat. However, it’s a challenge that chief executive Melissa Potter, who is about to complete her third year in the role, seems to be taking in her well-heeled stride.
Seated in an imposing glass office on the site of the original Clarks factory in Street, Somerset, Potter talks animatedly about its plans to crack the international market.
In her first three years in charge of Clarks, where she has worked since leaving university, Potter has restructured the firm so it can deliver in a “global way”.
“We’ve been creating global teams for product, for marketing and for supply chain and now we are setting up four regional teams that are going to be focused on the Americas, Europe, Asia Pacific and the UK and Republic of Ireland,” she explains.
Appropriately enough, the revised organisational structure comes into effect on the first day of Clarks’ new financial year, which also happens to be the day of Drapers’ visit.
Since Potter took over from former chief executive Peter Bolliger in May 2010, Clarks has entered India, relaunched in China and expanded its business in North America.
“Half of our business now comes from outside of the UK,” she says. “[India] is a really exciting market for us because the economy is growing at an incredibly fast rate and there is a very young population profile.”
Since launching there two years ago via a joint venture with Indian franchise operator Future Group, Clarks has opened 25 stores and has 250 wholesale accounts, representing £7m (0.5%) of Clarks’ total turnover.
“The younger population profile in India makes it interesting for Clarks, as it means we have a slightly younger customer than perhaps we do in the UK,” she explains. “That said, business out there is going very well for us.”
Clarks has had a presence in China for about 30 years but under Potter’s leadership it has been relaunched to ensure it is seen as more of a fashion product, as Potter puts it, in “a more mainstream fashion way”.
This has been done by finding new partners to work with; the most notable being footwear retailer Belle, which is the biggest women’s footwear retailer in China with a 22% market share. Through this, and other partnerships, Clarks has opened around 400 shop-in-shops in China and is growing its business there by around 30% year on year.
“The Chinese are very, very interested in Western brands and they absolutely regard Clarks as an iconic, classic British brand, so get very excited about the heritage and history.”
In addition to China and India, Clarks now sells around 20 million pairs of shoes in the US. While it does this mostly via wholesale, the retailer also has about 230 standalone stores.
However, Clarks will continue to design and sell its product with a global strategy, says Potter: “The core of the offer is going to be product we can sell in markets all around the world, and then there will be a bit of tailoring for markets that need a very specific kind of product.”
And what about the perception of Clarks and its product overseas, Drapers asks, referencing the fact that some UK consumers tend to view it as not particularly fashionable.
“When you are in China, the perception of Clarks is as a stylish, iconic British brand. When you are in Jamaica, Clarks is regarded as a stylish, iconic brand,” says Potter, defiantly. “In the UK people have a slightly different perspective, largely I think driven by the affection people have for our children’s product.”
However, she is sure the tide is turning, and since 2010 Clarks has worked on its image, making its campaigns more stylish, and placing that advertising in high-end fashion glossies. “Fundamentally, the style credentials of the brand in the UK are rising,” she says.
And it appears stockists agree. David Spencer, product and marketing director at footwear chain Schuh, says: “We see a new generation discovering the brand and buying not only into classic silhouettes, but also new styles and reintroductions from the archives.”
Potter cites recent collaborations with design firm Eley Kishimito on its women’s styles, and an upcoming collaboration with premium brand YMC on its men’s Clarks Originals, as evidence of its trend commitments.
According to the former buyer of one UK premium footwear retailer, such are Clarks’ style credentials that its creative director took six pairs of its women’s shoes with the labels taken out into a sign-off meeting and told the buyers she wanted this type of product in its offer, and asked if they knew what brand it was.
“There were murmurs of Prada and Miu Miu,” explains the buyer. “So you can imagine the shock when we found out it was Clarks. They must be doing something right if their footwear is inspiring other retailers like that.”
Potter also believes Clarks’ winning formula, particularly in its women’s business, is one which combines style with comfort.
With a smile she recounts how one of the brand’s male employees in technical development, who is based in Boston in the US, has had a pair of women’s high-heeled shoes made in his size, which he puts on and also makes the other men in the office wear to demonstrate what it’s like wearing high-heels. Potter says that this “makes them think about how you add comfort”.
It is no secret that the 2011-12 financial year was pretty challenging for Clarks. In the full year to January 31, 2012, group pre-tax profit fell 2.39% to £106.1m as increased promotional activity and manufacturing costs took their toll.
“The UK has been pretty challenging economically,” says Potter. However, while she wouldn’t be drawn on any specific figures she did hint that 2012-13 had been much better.
She anticipates labour costs in the Far East will continue to rise but has no intention of shifting Clarks’ manufacturing base, which is primarily in Vietnam.
“We have long-term partnerships with suppliers and have been working with most of them for over 20 years. So we are taking on the challenge together and making all kinds of refinements in terms of efficiency in manufacturing,” she says, citing innovative technologies being used to save costs, such as using 3D printing to manufacture prototypes.
Clarks is also a force to be reckoned with online. Sales via its transactional website continue to grow and now comprise 3% of total sales. For the year to the end of January 2012, online sales accounted for £45.9m. The business is also tackling digital markets internationally, with a US site launched at the beginning of 2012 and an Indian site unveiled last December.
In addition, Clarks also trades online in Europe via an English language site that sells in euros, and local language sites in Holland, Germany and France.
However, three years in and Potter isn’t resting on her laurels. With plans to launch online in China later this year, she’s doing everything she can to make Clarks a truly global brand.