Polishing a worn brand

Saving a company on the brink of collapse is no small feat.

For Paul Grangaard, president and CEO of Allen Edmonds, the Milwaukee-based shoe company known since 1922 for handcrafting fine men’s dress shoes, returning the fading brand to profitability involved a return to its roots.

That this course correction took place during the height of the Great Recession makes the turnaround all the more remarkable.

Grangaard will discuss his experience turning around Allen Edmonds as the keynote speaker at the 2016 CONNECTion event on March 3 at the Overture Center for the Arts. The event is sponsored by CONNECT Madison, a young professionals group that offers career development opportunities to young local leaders. The theme of the night is “a great American comeback story,” and the featured community organization for this year is the United Way.

Darkest days

Prior to joining Allen Edmonds, Grangaard enjoyed a long career in finance and private equity.

When the private equity firm he was a partner in took control of Allen Edmonds in 2006, it knew it was getting a company on the downswing. But by 2008 the struggling shoe brand was in dire straits.

Paul Grangaard, president & CEO of Allen Edmonds

Sales were down by about one-third and profitability had all but evaporated. “We were in the midst of the Great Recession and the CEO at the time decided to leave in the middle of that,” Grangaard explains, “so I jumped in as the interim CEO, brought the team here together, and we started talking about what we could do to right the ship.”

Like many companies during the economic downturn, righting the ship involved cutting expenses. That meant the unfortunate task of letting go of about 50 employees — about 8% of the company’s workforce at the time — in addition to cutting salaries and bonuses for management, delaying some investments and just about anything else you can think of to tighten their belts, including no longer using a cleaning service. Factory workers were not asked to take a pay cut but they did have to endure a salary freeze for a couple years.

However, one of the changes that Grangaard directly points to for helping the company reverse its fortunes was also one of the simplest to implement. Allen Edmonds brought back three of its most popular shoe styles, which had been discontinued around 2004 or 2005 by the previous management regime in response to a perception that the company had lost touch with what its customers wanted.

“We were more of a wholesale shoe company at that time and Nordstrom, our biggest customer, told us they feared we were losing our relevance and we were out of touch with the fashion trends,” Grangaard notes. “They were partially right on that, but we didn’t need to discontinue our most popular shoes to respond to that critique.”

Grangaard says it’s a popular joke within the company now about whose idea it was to bring those three styles back, but the decision stopped the company’s downfall. “They were three styles I’d seen throughout my 30 years in finance and they were also the most popular styles within the company, as well as outside the company. The year we brought them back they were three of our top five sellers, and they’re still top sellers now, just in different colors.”

(Continued)

Becoming a lifestyle brand

Men are replacement buyers, especially when it comes to shoes, notes Grangaard.

That’s been changing with business casual trends, but for a person wearing a suit to work, with or without a tie, when it comes to their dress shoes they tend to just get the ones they’ve already bought and like.

That helps explain why Allen Edmonds struggled after abandoning three of its more popular styles in favor of something new. Bringing those styles back brought back old customers, but the surprise for this heritage brand is its newfound appeal with millennials.

“Our core customer has stayed the same but the size of the circle has broadened significantly now,” Grangaard says. “We’ve gotten better at casual shoes you’d wear on the weekend, as well as the kinds of shoes you might wear with a business casual look. The core customer has always been professional men in all walks of life and it skewed toward the more senior people, but now the millennials are much more smart about buying long-lasting products. They may pay a little more but they realize that if it lasts five to 10 times as long you’re going to end up saving money over that time frame.

“So we have a lot of millennials now as our customers,” he continues. They’re buying their first dress shoes and they’re going straight to Allen Edmonds, which didn’t used to be the case. People used to sort of graduate to Allen Edmonds. We’re no longer viewed as your father’s shoes to these guys.”

Grangaard says one of the most important things the company did was take control of its own destiny. Allen Edmonds stopped being frustrated by how it was presented to the marketplace through other retailers that had pigeonholed it as a black shoe company for a dress occasion, and it started going directly to its customers through its own stores.

Allen Edmonds now has 59 retail stores across the U.S., up from 18 when Grangaard joined the company in 2008, and it’s built a major ecommerce business. “We do a tremendous amount of digital marketing, emails, social media, Facebook, Twitter, and Instagram,” notes Grangaard. “We like to say we learned to skate where the puck was going, to quote Wayne Gretzky”.

Grangaard says he’s seen a lot of companies try to expand too quickly and they end up getting themselves into trouble. Allen Edmonds has employed more of an evolving mission.

“Our first transition was to get back on our feet by bringing back what had made us great,” says Grangaard. “Our second transition was in shoes; let’s extend what we stand for and become a business casual shoe company, and then a seven-day-a-week shoe company. Then it was let’s go beyond the shoes into belts, wallets, and a few accessories. Now that’s evolved into a much stronger position in leather bags and briefcases, and in apparel from shirts to jeans to outerwear for the winter. We’ve expanded into more of a lifestyle brand.”

In his shoes

Businesses struggle and fail every day.

For the leaders of those companies, Grangaard offers this advice:

• Build a team of pros. “The first thing is make sure your team is deep in its knowledge and if you’re trying to go to someplace the company has never been before, hire someone from someplace else who has been to where you’re trying to go.”
• Run the team as a partnership, not as a fiefdom. When Grangaard arrived at Allen Edmonds he found the company had been managed in silos. He quickly reorganized into more of a roundtable management structure, where everybody had input. That move was responsible for the decision to bring back those three discontinued shoe styles. “Like I said, we joke about whose idea it was to bring back those three styles, but the guy who has the most documented story is our head of IT. Under the previous style of management he wouldn’t have even been in the room talking about product.”
• Be highly visible, highly optimistic, and highly communicative — not just within your company but also with your customer base. The role of the CEO has changed drastically in the era of ecommerce and technology. It used to be a CEO’s role was very much to communicate within the company but they often got kicked upstairs and lost touch with the customers, Grangaard notes. “I communicate with customers everyday via email or on forums like Reddit. It’s very important to be very visible with an optimistic, clear vision and direction for the company.”
• Vision isn’t a philosophy statement; it’s a mission statement. So many companies talk about quality, integrity, excellence, and more being very important to them. “That doesn’t tell you what you’re trying to do, it just tells you how to behave,” says Grangaard. “Values are really important but you’ve got to go beyond that to what’s the vision for the company. You’ve got to have a game plan and a clear idea what your goal is.”

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