September/October
2024
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SHOP TALK
Retailers Weigh in on How Brands Can Reduce DTC Friction
“The footwear industry is one of the only industries I can think of where retail stores’ main competitors are now their own brands. Can you imagine going to a car dealership and being able to pull up the manufacturers’ website while there with the salesperson to compare color, price, availability?” Ted McGreer, Ted’s Shoe & Sport
In any conversation with independent footwear retailers about business issues and challenges, the topic of Direct-to-Consumer (DTC) sales by their vendor partners is always at or near the top of the list of challenges. But, retailers say, when footwear brands make commitments to avoiding online discounts, opening access to online inventories, and steering shoppers to local stores, the negative impact that brand DTC (direct-to-consumer) expansion has on their independent footwear retail partners can be minimized.

Jeffrey Seidman, owner of Ahh Comfort Shoes, Arlington Heights, IL, said that on the positive side, DTC enables brands to present a full presentation of their colors and styles as well as to tell their story to both drive brand awareness and boost their image. He said, “Those are positive for us as well. When a good brand presents a great message — even on a DTC level — that’s still a positive for us.”

His biggest problem with DTC is the online discounts brands offer, which may include coupons for first-time buyers or even regular weekly or monthly sales that often violate the brand’s own MAP (minimum acceptable price) policies set for stores.

“That’s inherently unfair,” said Seidman. “They’re holding [retail partners] up to one standard and they’re doing another. When you do that, you’re creating an unfair marketplace.”

He offered SAS and Birkenstock as examples of two brands avoiding conflicts around online discount selling. A shortcoming he still sees with Birkenstock is not having access to all their product online as a retail partner. He said, “When you’re only making a limited number of pairs available, that’s different. But if it’s on your website in numbers over a period of time, we should have access.”

Lauren Menendez, head buyer at Austin-based Karavel Shoes, noted that while a brand may be reducing inventory access, providing less favorable terms or offering online exclusives as they drive DTC growth, a store may still have to work with them because they drive traffic. She said, “This dynamic can lead to a challenging environment for small businesses that rely on carrying popular footwear brands to attract customers.”

“As a small business we are limited in our stock room and sales floor. This can make it tricky when consumers can go directly to the [vendor] website and see hundreds of styles, colors and sizes.”Alicia Murray, Murray’s Shoes

Alicia Murray, VP and head buyer at Murrays Shoes, Littleton, CO, cited Dansko and Taos as “amazing partners” over the years.

“Their customer service is great at communicating with us and answering any questions we may have to support our customers directly,” said Murray. “Our representatives for both brands work with us to make sure we have a great assortment of product and help us manage backups, so we don’t run out of product. We are in constant communication with these brands.”

Both brands, she added, hold MAP pricing on their website and always send out alerts when specific styles go off MAP. Both have a store locator at the top of their website to help direct customers to Murrays Shoes’ location and ship orders within a reasonable time.

Similar to Seidman, Murray’s major pain points with brand DTC are online discounts, particularly on in-season product, as well as limited stock availability. She said, “As a small business we are limited in our stock room and sales floor. This can make it tricky when consumers can go directly to the website and see hundreds of styles, colors and sizes.”

Her store has also increasingly faced significant delays in getting fill-ins and special orders from some vendors. Murray said, “Brands five years ago were able to get orders to us in five to ten days. Now it can take two to three weeks for some orders to come in. It makes it too hard to compete when we must quote two to three weeks to get a pair of shoes in for a customer and they say they can get it in three to five days from the company.”

Still, Murray said the “overwhelming amounts” of information and marketing now available from brands online can be a benefit as consumers more often arrive in stores informed and ready to buy.

“It’s up to us to give them the opportunity to try on the product and feel the difference,” added Murray. “We are also able to offer multiple brands for comparison, something the consumer can’t do easily online. It is also beneficial when the consumer sees brands online all the time, then when they come into the store, they recognize the brands and are excited to be able to try them on.”

John Luck, president of Lucky Shoes, Fairlawn, OH, appreciates his role as a “builder of brands” as an independent retailer.

“We play our part in helping a vendor build and grow, knowing that one day the brand might outgrow us and no longer have need of our services,” said Luck. “A couple of the signs that this might be occurring would be the opening of questionable channels of distribution or taking in-season DTC discounts on premium product. At that point, the brand no longer serves our purposes, and we start looking for the ‘new and fresh’ product that doesn’t need a DTC discount for it to sell.”

However, he also believes a “strong, regular-priced” DTC business for a brand supports sales elsewhere. Luck said, “It keeps them financially healthy, so they don’t have to seek out those brand killing channels of distribution. A healthy DTC business also helps keep MAP price integrity and eliminates the need for whacky discounting like we see from some brands that have started circling the drain.”

As far as solutions to DTC conflicts, he cites Locally, a tool that lets consumers visit brand’s websites to see what inventory is available at nearby stores. Luck cited Brooks, Hoka and Oofos as vendors particularly adept at maximizing Locally’s technology. He said, “Brands that utilize this to highlight retailers of their products raise both the awareness of their brand and awareness of the retailer.”

Karavel’s Menendez likewise called out Locally as an effective tool to help local stores benefit from traffic heading to vendor websites. She said, “These websites can serve as a powerful marketing tool, raising brand awareness and driving interest in products that consumers might then seek out in our stores. That is why we feel so strongly about brands driving business to our stores with Locally.”

She cited Brooks, Hoka, Clarks, Taos and Ecco among brands having Locally embedded on their websites.

Menendez further pointed out that brands have a wide range of other methods to support local stores that may offset DTC pressures, including hosting in-store events, collaborating with local influencers, offering exclusive products or promotions only available at local retailers, co-branded advertising and social media shoutouts. She said, “All of these efforts not only boost foot traffic to local stores but also strengthen the brand’s presence and reputation within the community.”

“When a good brand presents a great message — even on a DTC level — that’s still a positive for us.” Jeffrey Seidman, Ahh Comfort Shoes

Ahh Comfort’s Seidman suggested that for e-commerce sales, brands could include cards inside boxes directing customers to their local stores for future service. He also feels the industry should be doing more to support brands such as Halsa that don’t push DTC sales. He said, “If they’re willing to give us that commitment, we need to give them that commitment.”

Brenda Felger, owner at Felger’s Footwear, Houma, LA, agreed brands’ websites can be beneficial to independents by providing consumers information before making a purchase and promoting store locator tools. However, she lamented that too many brand websites feature discounts ranging from 30% to 40% off the suggested retail price that her store can’t match.

“Vendors should be more concerned about preserving the integrity of their brand,” said Felger. “I get that they need to discount older, discontinued merchandise and I don’t have an issue there, however, they should never go off ‘MAP’ on current and continuing styles — ever! When brands go ‘off MAP’ on continuing product, then there really isn’t any such thing as ‘MAP pricing’ and that behavior conditions the consumer to just wait and purchase when it’s less expensive and skip brick-and-mortar altogether.”

She cited Birkenstock, Dansko, Naot, Revere, SAS, Taos, Hoka, Brooks and New Balance among brands doing an “excellent job” committing to MAP pricing online. For those that don’t, face-to-face conversations with reps or other vendor personal can help. Said Felger, “Retailers should not be afraid to voice their concerns directly. Some will listen and offer alternatives; others just don’t care what we think and will continue off-pricing product.”

“When brands go ‘off MAP’ on continuing product, then there really isn’t any such thing as ‘MAP pricing’ and that behavior conditions the consumer to just wait and purchase when it’s less expensive and skip brick-and-mortar altogether.”Brenda Felger, Felger’s Footwear

Adam Griggs, owner at Soft Shoe, Richmond, KY, highlights Twisted X as a “great partner” because they don’t sell through DTC. Twisted X’s site displays the full range of their product but directs consumers to a store locator app to make the purchase at nearby stores or buy the product through a list of “trusted online sites.” Griggs said, “We have very successful fill rates with them as a result and are more eager to try new product because we are comfortable knowing they won’t get in our way of success with their SKUs.”

Griggs also highlighted Brooks because they always offer independents a chance to purchase special SKUs and have ample fill-ins. Also, when Brooks marks down a product, independents have a chance to buy pairs at discount to maintain margin.

By comparison, a few top athletic brands reserve “cool prints and designs” on some of their best SKUs for online selling, creating confusion with consumers. Griggs said, “When our loyal customers come to us looking for the appealing new design they saw in a social media ad, we have to dance around to avoid plainly saying, ‘We don’t have access to their best merchandise, sorry.’”

Griggs did note that those same athletic brands do a capable job of holding MAP and policing discounts online, “so at least our margins are protected.”

Griggs said that while brand DTC expansion has created situations where his store will lose a sale to an online purchase after measuring and fitting a customer, stores can benefit from the bigger marketing output coming from brands. He said, “As long as we’re doing our job properly with customer service, we can knock a customers’ socks off and build loyalty in ways that a mouse click could never compete with. If vendors hold prices well and don’t gate keep fresh product, we have more opportunity and exposure with some of our DTC-using brands.”

Ted McGreer, owner of Ted’s Shoe & Sport, Keene, NH, highlights Saucony, Brooks, On, Altra, Dansko, Merrell and Topo for their efforts to assist on “save the sale” situations, or when a style is out of stock on a brand’s B2B inventory reserve but available on their DTC stock. He elaborated, “These brands have allowed their reps to issue us DTC online coupon codes, to buy the product online between 30%-50% below retail, save the customer, and maintain some margin.”

He also said some brands, including Brooks, Asics and Hoka have partnered with Locally to create a BOPIS [buy-online, pick-up in-store] event for their wholesale partners.

McGreer believes many people “realize how important a community is, and how important shopping locally (owned) is to building a better community.” However, he believes brand’s DTC pushes only compound the challenges independents face competing against the convenience offered by online shopping and the perception that in-store shopping, particularly at independents, is more expensive than online.

McGreer said, “The footwear industry is one of the only industries I can think of where retail stores’ main competitors are now their own brands. Can you imagine going to a car dealership and being able to pull up the manufacturers’ website while there with the salesperson to compare color, price, availability?”

“It is frustrating when retailers like ourselves help to establish and build the line to what they are and then the manufacturer decides to sell direct to the consumer,” concurred Bruce Wesley, owner of Chicago-based Wesley’s Shoes.

Wesley contends a DTC-first strategy is flawed, citing Nike’s recent lost market share as the latest example. He also pointed out that despite early hype, Allbirds has been challenged in securing a strong foothold for growth as a DTC-first brand while brands such as Hoka and On, legitimized by independents, continue to flourish.

“The numbers don’t lie,” said Wesley. “Organic distribution through retailers is absolutely best for the consumer and for the suppliers.”

“A healthy DTC business helps keep MAP price integrity and eliminates the need for whacky discounting like we see from some brands that have started circling the drain.”John Luck, Lucky Shoes
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