America's Best - Allen edmonds

Welcome to our welted shoe production plant, Allen Edmonds. The days of command and hierarchy are long gone in American business. So the question then is, if it's a successful business model, how do you go beyond that? Our export business is also taking off right now. The Allen family founded a shoe company in 1922. So did the Edmonds family. They quickly got together and formed Allen Edmonds. And the Allen family was really the driving force behind. The company made shoes for the armed forces during World War II. Obviously, founded in 1922, we survived the Great Depression, and we've survived the great recession, now, as well. My background in shoes really goes back to the late '70s when I had the privilege of studying in Italy while I was in college and I got complete connection with that country and things Italian. Every year after that in my life, I've noticed when people were wearing great shoes. I started a career in finance as a commercial banker at the First National Bank of Chicago. Had the chance to work in international banking and I worked for almost 20 years in the investment banking and securities industry in Minneapolis. And in that, I worked with lawyers, accountants, company executives... How did I go from being a finance guy to knowing so much about shoes? And it's just my curiosity. When I came here, we had to do a lot in the area of product development. We also had to reengage our customer base significantly, because they were losing contact. And we go about that in two ways. We are fully committed both to the wholesale business, selling through other retailers, and selling ourselves. We have 28 stores as of today. We sell online. We got a man with 35 years of senior retailing experience to run our retailing store. As our lead director of merchandise, we have similarly got a man who'd been doing men's clothing his entire career and understood how shoes and clothing fit together. We brought in a very senior marketer to lead marketing for us. We brought in a former CEO of other men's brands to lead our wholesale effort. What works for me in leadership, I think, is to be the number one fan of what we do. I think it's also important to realize that the days of command and hierarchy are long gone in American business. It's much more about participation, about involving people in decisions. We have a number of employees who are actually second or third generation here at the plant. And it's a little bit like the United Nations in there, with a lot of people working together. And we work hard here at involving people in the whys and the whats, in addition to the how and the whens. Every person who works here is very proud of the fact that they're perpetuating our manufacturing here in the country. In order to stay competitive in our manufacturing costs, our head of manufacturing, Jim Cass put in lean manufacturing processes. And one of them is to keep track of what we're doing. You are what you measure. So we have a board, an electronic board, at the front of our main production line which talks about how many shoes have we made today, in which styles, and of those shoes, what percentage have been first quality when they came to the end? Allen Edmonds is still, even this many years after our founding in 1922, a very much an entrepreneurial company. And as a result, we have to do things the way entrepreneurs do things. And so we do things with our antenna up to what our customers are telling us, what our store managers are telling us, what our dealers who sell our shoes to their customers are telling us. Just as they say in politics, a candidate needs to first solidify his base. In consumer products, you need to first solidify your relationship with your best customers. Our core target is a 35-year-old to 55-year-old business professional. So, our primary media is still the traditional print of the Wall Street Journal. I became involved under my name, Allen Edmonds CEO in a Web community that is a bunch of men talking about fashion. It's called AskAndy.com. And I just went on one day into a discussion about Allen Edmonds shoes and where is that company going. And I registered as myself and said, thanks for all this input. Here are some of the things we're doing. And I think I surprised a large number of them that I would actually participate. We simply announced on the Facebook page, shoe of the month. We're selling the Easton, and boom! We couldn't believe how many shoes we sold and how fast. The SBA helps companies, small companies, get over the hurdles that every company goes through. But when you're a small company, your margin of error is a lot tighter, and you don't have the momentum from maybe another division to help a division that's in a difficult spot the way a large company does. So, problems of customer connection, economic times, the SBA is there to help small companies. And I think that's great for the American economy. It's part of why our business community continues to renew itself. The last several years have been tough times. When you think of what we were five years ago, we were known very much as a men's dress shoe company. The last 20 years of the conversion to casual dress at work, even more casual dress on the weekends, and the puck was definitely not coming our way. So we've decided over the last few years, we've got to be really strong at dress shoes, but we also to need to skate to where the puck is going. And we needed to strengthen our shoe portfolio in rubber bottom shoes, and we've done that. We needed to get stronger at casual shoes, and we've done that. But one of the things we've been developing and working on is new products. So we've been very diligent about accessories and bringing in accessories for men that would want shoes, but also need ties or socks or belts or anything else that goes with their wardrobe. We not only get information from our own stores about exactly which shoes sold this last week and in what quantities, we also get information from a couple of our largest customers about exactly which shoes sold that week and in what quantity. Over 90% of the shoes that are purchased in the United States are made somewhere offshore. A lot of them are made in China. Our shoes are made here in the United States because we believe strongly in American-made labor and we believe strongly in the importance of American manufacturing as part of the Allen Edmonds story. In terms of being an American manufacturer, you can do that. You just need to provide an equation of value and quality that appeals to people not only in this country, but around the world. Our export business is also taking off right now, and there are only two manufacturers that we could find who could still make socks for us here in the United States. And the one we chose is actually moving equipment back from Malaysia because the demand for Made in the USA sock products is growing so rapidly. And we said, we want great socks, but we want them made here in the United States. Having come out of the service industry before I got here, I think I'm acutely aware of the fact that we can't all sell insurance to each other for our career. The economic base of the United States needs to have manufacturing and production as a significant part of it and we need to be much more creative and also much more committed, not just at the government level, we have to be as individuals. These last four years have really brought a complete switch in fashions. For many years, the trend was toward Italian-looking styling in shoes and clothing. The reverse has suddenly happened, which is we are finding that American styling is what it's all about today, across all age groups of men. And it was interesting to go to the shoe show in Florence, Italy in January and see all these Italian shoe companies showing American wingtips with rounded toes as their great new offerings, and we're, we think, the best wingtip maker in the world. The way we got involved in overseas markets is pretty simple. Rather than invest in stores, which can be very expensive, we've invested in agents. So we have international representatives who go and sell in our shoes to the various stores around the world. There's no investment on the agent's part, but they make commission and they make a living doing this. They place their orders with us and we fulfill the orders and ship directly to those stores, so there's actually no inventory that's carried by those agents. And you have to know you can trust that partner. If you don't feel that way, then you should never get into that business. When our agents go and open a new account for us, we insist on prepay so that we make sure we have money deposited before we ship shoes over to partners that we've never worked with before. Over a very small course of time and a couple of orders, we'll go ahead and change those to payment terms. But you cannot just assume that everyone's going to pay you. You've got to get out of your headquarters and go visit these people, see where the stores are, see how the products are being displayed and make sure the pricing is correct, and over time, develop that relationship of trust. One other trick that a small business should look into is the cost of shipping and duties. If they have a number of countries, is consolidating their shipments. In our case, we ship roughly every two weeks to a port in Europe, say Amsterdam, for example, where they'll break down the shipment and then reship directly to the customers. By consolidating across the ocean, it makes the shipment a lot less expensive than shipping single pairs of shoes every single time either directly to customers or any other way. It takes a little bit more organization on the company's part, but it's a lot more efficient for both the receiver and for yourself. So the question then is, if it's a successful business model, how do you go beyond that? Well, we have a pretty good representation in the core of Europe, the European Union, but now we've recently partnered with folks in Turkey and throughout Scandinavia, some of the non-EU countries. We went down to South Africa. We're looking at deals now in Moscow and we're also looking back over at Asia. Especially in Asia, there is a great desire for Made in America products. Being in America is a great thing these days. In terms of being an American manufacturer, you can do that.