Evolution Brand
Not one to rest on last season's laurels, James Matush, general manager of Restricted Footwear, discusses the advantages of continually adapting to answer the demands of a rapidly changing market.
Greg Dutter | December 3, 2010
General Manager of Restricted Footwear
How does a former insurance salesman turned apparel wholesaler make a seamless transition as general manager of a fast-paced women's footwear fashion brand—one that has registered solid growth every year since his tenure began three years ago? James Matush, general manager of Restricted Footwear, can tell you how. It all started with a willingness to take a chance on the then small start-up company, coming aboard first as the customer services manager. "During my first meeting with our owner and CEO, Joanne Yang, I could see she was driven," Matush recalls, noting she was one tough interviewer. "She wanted to find the right person, and I realized, 'This is someone who really wants to succeed.'" Matush decided then and there that he wanted to be a part of the fledgling City of Industry, CA-based company, now in its eighth year. "There were about five people in-house and we had one Northeast sales rep at the time," he says. "Today, we are a nationwide brand with four sales reps and 15 employees, and we have grown more than twice in size." Even in the face of the Great Recession, Matush reports that Restricted was able to post a 20-percent increase in sales volume this year.
Such growth flies in the face of many naysayers who claimed success could not be possible, especially for small, stand-alone operations facing China's labor shortages, factory closings and rising currency rates. But Restricted has proven the conventional wisdom wrong. Matush credits the company's success to a couple of factors. First, Restricted was proactive when it came to preparing for the downturn. "We saw the writing on the wall at the end of 2008. We took it upon ourselves to stabilize current wholesale prices or lowered them if we could," he says. The strategy opened up more buying from retailers, since receiving comparable shoes at the same or lower price became an attractive selling point. But Restricted didn't stop there. The company then asked its retail partners to keep prices in check as well. "We asked them not to gouge the consumers—even if we were offering the same pricing—and our partners complied." That strategy increased consumer awareness about the brand significantly. "We were in stores offering a decent product at a decent retail price," Matush says. "That translated to increased sales."
Restricted's second major initiative, also considered unconventional in a recessionary landscape, was to increase its marketing budget significantly. "Our belief was that if we were not in the consumer's face then they would forget about us," Matush maintains. In addition, with everyone else cutting back on marketing efforts, it was the perfect opportunity to stand out amid a quieter marketplace. "We ran ads in magazines and we did grassroots efforts via MySpace, Facebook and Twitter," Matush says. "We threw dollars at that segment, and it really helped with building consumer awareness of our brand."
That awareness has been built on a platform of fashionable shoes at an affordable price. It translates to $40 for flats, $55 for pumps and $75 for boots. "Our original niche was a retail price that the average consumer can afford," Matush says, adding that the strategy laid the foundation for the company's expansion to higher-priced products it introduced this fall. "Once that 'fashion at a price' message got into consumers' minds, we believed they would be willing to purchase our higher-priced shoes because they knew they were going to get quality from us." Restricted tested the waters with several leather boot styles this fall with, as Matush describes, "some nice bling touches." The boots retail for $150 and have sold well, he reports. Next fall, the line will include a few boot styles priced as high as $200.
Matush believes the key to Restricted's long-term growth and success requires continuous evolution. And while fashion at an affordable price will always be part of the brand's DNA, the danger of being labeled a "one-trick pony" is too risky. "We have to evolve in order to stand out because more and more affordable fashion brands are entering the market," he says.
Restricted aims to push further into becoming a premium brand in 2011. In addition to standing out from the crowd, Matush believes the timing will coincide with an increase in customers looking to lighten their wallet. "We expect the market will improve and consumers will spend more money," he says. "We have to evolve with that." Matush adds, "You have to evolve and broaden your customer base. If you stagnate, the only place to go is down."
Hence the decision to launch Unrestricted this year—a teen-driven brand targeted to appeal to that demographic with a lower price point than its predecessor. Suggested retail is $39 to $55 for shoes and $65 to $70 for boots. "Unrestricted is edgier, younger and bitchier," Matush offers. "It's our 'Jersey Shore' customer." Originally, the plan was to keep Unrestricted's debut line tight by offering 5 to 10 styles, but Matush says close to 20 styles were produced because the initial response was strong.
As for expanding the company's portfolio further, Matush never says never because the mission is to always keep evolving. "Without giving too much away, we have plans that don't strictly involve footwear," he hints. In the meantime, Matush says Restricted has plenty on its plate for 2011, including launching a new website, expanding its marketing programs and increasing its international distribution. Overall, he is bullish about the company as well as the industry for the coming year. "Shoes are a feel-good purchase and I expect sales will increase for us as well as for many other brands," Matush says. "Business has already changed for the better: We booked well for spring and as the year progresses, I believe it's going to only improve."
How did your apparel experience prepare you well for the quick-paced nature of shoes?
The apparel company I had been working for was very fast-paced, although I didn't know it at the time. We sold millions of shirts each year. While it was a basic style, what was featured on the shirts constantly changed. We had to keep up with the changes, and that fast pace translated to the footwear industry. Shoe fashions are always evolving. In fact, this business moves at even a faster pace than apparel.
Speaking of which, what styles are trending strong for Spring '11?
Clogs and oxfords, which have been big for us this year, look to be strong for spring. Laser cuts and perfs are also trending for spring. In addition, bling is kind of back. But it's a subtle bling, if there is such a thing. It's not overkill. It's more of an element of flashiness in the design.
What about dance-inspired shoes a la the '80s?
I think it's safe to have one in the line.
Unlike recent seasons, there doesn't seem to be one particular style or brand driving consumers into stores, which can be both a good and a bad thing. Do you agree?
Yes. You are not as pigeonholed in needing [to carry] one particular style or brand. But that also presents a challenge with regards to inventory management. Going into next spring, we think sales will be flats- and wedges-driven. It's going to be simple in a fashionable way. For example, I have a perforated flat that is selling in very well and I have a two-tone oxford that is also doing really well.
Might the clog trend be overblown?
The clog is a bit scary to me. While we do have a number of clogs in our spring line and they have booked very well, I feel it's an in-and-out trend possibly. I didn't want to be saddled with too many styles in our line. However, I have one particular style that has done phenomenally. It's cusomizable that features interchangable bling elements, but they are removable so it can be dressed down.
How were Restricted's boots sales this fall?
For us, boots were big—probably our best category. We thought one style was going to be the hit because it was a favorite with retailers, but instead it was a sleeper style that sold best. You can't always tell within the boot category which style will click.
My pet peeve with this category is that from a glance, it's difficult to tell whether a pair is $65 or $900, which can be both good and bad for business.
You really don't know whether it's an expensive pair or not. In addition, boots are worn in any season now. I think there is a lot of perceived value in boots, and that's why the category has been so strong. And to your point, the consumer can purchase a $69 pair of boots and look like she is wearing a $900 pair. And they can wear it for a while because boots tend to have a longer fashion shelf life.
Are you more often right than wrong when it comes to projecting how a particular style performs at retail?
It's tricky. Retailers do a lot of homework on their customers in an effort to predict what might sell well. I think they are more right than wrong, because if they weren't they would probably go out of business. But I also think there is something to be said for the wholesale companies knowing what's going on in the market—even before the retailers might know.
What is the current mood of your retailers?
They are still cautious, but I would say they are less scared. They are becoming more confident in the brands that they are carrying as well as in the belief that consumers are going to come back in larger numbers next year and be willing to increase their spending somewhat. So that has opened up dollars for us. I'm also hoping that this will translate into more re-orders in 2011. This year, I don't think they worried as much about the potential of leaving money on the table by not reordering. They didn't want to take the risk. In the past, we have had many shoes [that were a] hit at retail and our buyers would come back and buy big. This year, they were more likely to use a one-and-done approach. It basically says, "OK, I made my money, and now I'm done. I'm not going to risk bringing in any more inventory."
Is this strategy a healthy approach for retailers to take over the long-term?
I don't think so. From a selfish point of view, I would rather they buy more boots from us. But I also believe that you have got to get behind a shoe when it's working. If it's not broken, don't try to fix it. Just keep returning to the well. However, I do understand that it is pretty scary out there right now and sometimes a style can just drop off. That's where we have tried to help our smaller independent retailers by swapping shoes with a style that is selling.
How do you think the retail landscape has been altered this year?
From a footwear perspective, it was not as bad as most people expected. Shoes are always a feel-good purchase for many consumers. They can buy a $65 pair of shoes and not feel buyer's remorse. The customer enjoys wearing them, they're going to last a while and they can be paired with a variety of outfits. Compared to a car or house, it's much less risky purchase.
Perhaps it follows then that consumers are buying from a broader price range.
They are. And we have to realize that customers aren't dumb. They are looking for a good shoe at a bargain price. Specifically, our customer looks for style first. If it doesn't look appealing on the shelf, then they are not even going to bother picking it up. But if it looks good, the next step is [to determine whether] it's a brand they know and trust. Right behind that is fit and comfort. But if you are a brand they know and trust, they are willing to sacrifice the latter a little bit. Not that they have to with Restricted, but they will compromise fit and comfort if they really love the style. And if all three purchasing decisions line up, then they usually won't mind paying a higher price for that particular shoe.
If you had to put an APB out on the Restricted customer, how would you describe her?
It's actually a wide-ranging audience. She's about 20 to 50 years old—a college student all the way up to a working woman or soccer mom. She can fit pretty much any ethnicity. She likes fashion, but doesn't want to be over the top. She reads fashion magazines and follows trends, but she translates them into her world. She's also located anywhere in the nation—from the more conservative Midwest to the forward Northeast to the downplayed Southeast to anythig goes on the West Coast.
Yet some trends now have uniformity across the country almost simultaneously.
When Restricted first started, the marketplace was very different from today. It's one of the reasons why we feel we have to keep evolving to adapt. The digital age—be it the Internet, smart phones or TMZ—enables consumers to be very savvy. They know what's up—and quickly. I'm not just referring to New York and L.A.; I'm talking about places like Minnesota and Oklahoma. They are on it—and we, as a brand, have to be on it too. However, sometimes less is more. So we also have to be basic enough to translate to a broader audience. Some people don't want to be over the top. They just want to wear their basic pumps to work.
Have consumers really changed all that much since the financial collapse?
Not really. For me, there are two types of consumers: shoppers and spenders. Both of them spend money. The spenders do so right away. They see what they like and don't really care what the cost is. But the percentage of these people has gone down over the past year. There are definitely more shoppers these days. Those people shop for the best value, but ultimately they spend something.
Where is your customer primarily shopping these days?
Online. Our online sales are higher than they've ever been. And that's just from our sales on Endless, Piperlime, ShoeBuy, Kohl's and What A Pair, as well as other major online retailers. Even our sales to brick-and-mortar online divisions are growing. Online shopping meets the demands of our busy customers.
Might online retailing eventually rule the world some day?
Who knows? Online shopping is definitely here to stay and, as an industry, we have to be on top of our game, product- and production-wise, to meet shoppers' demands. For example, if you sell online, the shoes better be well-made and look almost exactly as they appear on that computer screen. Because, thanks to free shipping, if it doesn't look right or fit well they will send it back. Wholesalers want to keep their rate of returns down. So we need to raise our game on the production level.
Might the offer of free returns end some day?
You know, Nordstrom was the first to make that offer. Customers could return a pair of shoes in their stores without even a receipt. It's like with the airlines; if one carrier does a special offer then they all do it. With respect to online retailers and the offer of free shipping, it's really their most effective way to keep consumers from going into stores. The fact is you want consumers to be able to touch and feel the shoes as well as be able try them on, and this is the online retailer's way of doing that without having the consumer go into an actual store.
Speaking of the Internet, in what ways is Restricted utilizing social media to build brand awareness?
It's still grassroots, but it's becoming an important piece of our marketing puzzle. We utilize Twitter, Facebook, MySpace, etc. In the consumer's mind, visibility on these sites gives your brand legitimacy. Currently, we have 5,000 fans on our Facebook page, and they are telling their friends about us. There's strength in numbers. We just ran a Halloween contest where Facebook fans with the five best costumes received a free pair of shoes. We are also going to hold a "name that shoe" contest with regards to an upcoming collection. Each winner will win that respective style.
Are you conducting focus groups through these portals?
For starters, I check our Facebook page every morning to see how many fans we added and how many may have "unliked" our page. I also read our followers' comments. In addition, we are asking questions and posting pictures of some of our latest styles to generate feedback. We can see if it's a shoe that they really like or not. We can get early reads on an upcoming season. Of course, I don't want to put too many styles out there because I don't want to be copied, but I can test the waters. I want to know what consumers are saying about our shoes. It's not our primary focus group—because we use our retail partners for that—but it doesn't hurt.
So how is Restricted coping with China's labor and currency issues?
You had to go there. The factory closings and the appreciation of its currency is difficult enough, but then there's the increasing delays caused by U.S. customs. They have been much more intense about letting shipments through. And it's not just checking one or two boxes, it's a full examination of the container. While we have to let them do it, it delays getting products onto store shelves.
With 90-plus percent of shoes made in China, nearly everyone is being affected by these issues. It's the elephant in the room and it must be dealt with. How successfully you deal with it will determine how much business you will be able to do. We are fortunate to have a great factory partner. We are able to get re-orders and deliveries on time as our lead times have increased only slightly. But price increases have hit us with respect to raw materials and labor costs. We are doing our best to keep prices stable, but we have to pass some increases along.
The people. We are in the business of fashion, but ultimately it's a people business. My co-workers and the many industry colleagues that I'm fortunate to call friends are the part of my job that I love the most. —Greg Dutter