RETAIL, LEATHER, LeatherNaturally!
Building a brand is expensive and extremely difficult
“Building a brand is expensive and extremely difficult. It is right for the industry in our country to work as OEM manufacturers and not develop brands.” If you are a senior executive in a government institute set up to support the shoe and leather business this is a strong position to take. It is well considered, well argued and heartfelt. But is it right?

 It is a hot Saturday afternoon and we are in Guanajuato a remarkable World Heritage city 30 miles north of Mexico City.  Guanajuato is just a few kilometres from Leon which is the footwear, and leather, capital of Mexico.

Mexico is a protected market and has used import barriers for some decades to limit the amount of competitive footwear that can get into its market. At the same time its shoemakers have made little effort to export so they have brands but only in two or three cases have these brand ventured overseas to test their quality and value against others in the world market. Frankly speaking without strong branding and a capability to fight in a global market they will be overwhelmed.  So in Mexico you can expect the top companies like Flexi to do well and some of the smaller niche businesses also to survive but the middle ground will most likely be swept away when the import barriers fall.

There are many other countries in the world where the footwear industry is a significant employer and where decisions have to be made about what strategy to adopt and increasingly one meets the fear of opting for a branding solution. A fear of the risk and cost of moving to the levels of competence needed to create a competitive brand.  Yet none of these fears can really be based on the cost and complexity.
 
Nike, ECCO and Keen were born out of great ideas, not deep pockets

Think of companies like Nike, ECCO and Keen Footwear. In rough terms we are looking at companies that are 50 years, 40 years and less than ten years old. These were built out of an idea, not of deep pockets. There was a determination to satisfy a consumer need – for middle distance running, outstanding comfort, or sailing sandals with a protected toe – that was not being served.  There was no thought of branding at the start of those companies, just making a product that filled a clear and obvious requirement. The brand naturally followed.

Likewise with Google, Microsoft and Apple the three big companies battling for control of our digital lives. These were fanatics designing and developing great ideas for which they knew there was a need. Branding and logos came later. Nike paid $30 for the design of the Swoosh when they realised they needed something and branding for Google and Microsoft came was very much secondary.

Geox was raised as evidence that to get a footwear brand moving today you have to be founded with deep pockets as Geox had from the wine business, but in reality Geox is the exception and even they were founded on an idea that they felt met a consumer need. No, modern brands do need deep pockets to launch them, quite the reverse as Keen shows. They need great products, great determination and a quick wit.

A focus on the role of brands in footwear is very relevant today. Indeed it has been an issue in footwear since the founding of Nike by Phil Knight. He created the virtual corporation – the brand that others make for – and in doing so made many Asian factory owners very rich and created a model that everyone from adidas to Clarks was to follow.

We all know that countries look to light industry to provide employment for developing and the wealth to start to grow richer.  South Korea and Taiwan began the story in recent times and China, India, Thailand, Indonesia, Vietnam and so many others have followed this format with leather, footwear, leather garments, leather gloves and leather goods at the forefront. 

Shoemaking after China

But as we are seeing in both China and India there comes a time when GDP starts to rise in these countries and domestic demand rises for the products they have been exporting. This coincides with rising costs that lead the brands to move their sourcing to lower cost countries. This is exactly what we were debating at Prime Source Forum in March of this year.  What new strategies will brands take for sourcing as China gets more expensive? So every country in the world is re-examining its policy and trying to decide what its new business model should be. It certainly is time to look at shoe making after China, not just where it should be but how it should be done. We are not saying that every shoe company in the world should become a brand and give up making for others, but there are some places where brands are potentially very good.

Think of Morocco, or of Portugal.  These are countries with huge character, tradition and skill with leather and craftsmanship. They are perfect homes for brands with character.  Morocco even has a leather and leather sector named after it. As a shoe maker what you need to know is what your core competencies are and from that what your niche might be.  The world is full of new markets and routes to market from the Internet through to private shoe stores who are desperate to find that understated luxury for their customers, that exclusive item.

At least Benson had a go
 


Both Morocco and Portugal have had a go at brands but like so many other footwear companies need to push a little harder to make a bigger global mark. This means a number of things. First looking at internal matters such as initial concepts, designs, sizing and fit and then being very clever about fitting into the market. And it means listening once you are out in the market since the major of part of this at first is to see how well you can compete. For example the Moroccan brand Benson has three shops now in Brussels which is a perfect location for a company making classic men’s footwear as worn by diplomats and politicians. But why not just try Chengdu next? And why not sell on line, at least to loyal customers and those they recommend? Most of all protect your brand name as any search for Benson on the Internet shows – confusion. And use social networks, these are how people live and communicate so you need to be there, even for the staid traditional footwear sector. Do not hide from it, get involved.

For many countries in the world the footwear industry policy should not be to hunker down and try and do only CMT or OEM business.  No it is time to be brave and raise your head above the parapet and represent your skill through branding and full business development.
 


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