The last several weeks have been difficult ones at Sole Technology as its executives were faced with hard decisions around their éS brand. After 16 years, they decided to put the brand on a hiatus due to numerous market pressures and were forced to let just under 20 employees go. We caught up with Sole Technology Owner and CEO Pierre-Andre Senizergues to learn more about the decision, the future of the brand, and the strategic implications of the decision for the other labels in its brand portfolio.
As a big fan of éS, I’m really sorry to hear about this decision.
Thank you, it’s been a really hard few weeks as I know that many people, like you and me, are fans of éS.
Please give us some background on what led up to the decision to put éS on a “creative retreat”?
We’ve been making skate shoes for over 25 years now and etnies was the first skater-owned shoe company. In the 90s the economy picked up and skateboarding was on a growth spurt again. We were able to create more footwear companies. Everything was good until we reached a point where we realized we had too much going on. We knew that for etnies, Emerica, and éS to grow we needed to focus, so at that time, we let some things go because we needed focus if we were to continue to be a profitable company. The market dynamics today have changed. The population of skateboarders has declined, core retailers are challenged with too many choices, new mainstream non-skate companies have bought their way in, and there are more skateboard brands in the market place than ever. We had to make a really, really tough decision to put a brand on hold so we can concentrate our focus and get through these challenging times that we’re all having.
How long have you been experiencing difficulties with éS and why do you think this brand in particular wasn’t resonating with the current market?
For the past few years, éS has had some ups and downs, mostly because the trend in the market changed so dramatically. éS was always about delivering technical, premium skateboard footwear. When the market shifted to cheaper, vulcanized shoes, it really took away the demand for what the brand stood for. It is hard for éS to go down to that level and so it has been a major factor as to why we’re experiencing difficulties with it.
How will this decision impact your retail partners?
There’s two sides to this. éS will be missed, but there’s still opportunities to buy éS products all the way through Spring 2012. We will continue to market the brand through this period. The other side is that after Spring 12 there will be much more energy and focus going into Emerica and etnies and sell through will increase for our retailers partners.
How about éS team riders?
We’re skateboarders, and so we’ll of course always take care of our riders. They are family to us and we will honor their contracts. We’re still working through the details with them. The good thing is that even though they ride for éS, they are still part of Sole Technology, so it gives us strong options working with them in the future. We’ll keep you posted as we figure out more on this.
How will this decision allow you to better focus on your other brands?
The popular saying of “less things better” truly applies to us in this situation. Though it was an incredibly hard decision for us to make, we knew that if we wanted to stay competitive in the complex marketplace, we needed to focus. We decided to look at our portfolio and figure out what we could do to focus and free up resources in order to pour into our strongest brands. Whenever you do less things, your time, your resources, your staff is freed up to generate energy into doing the things in front of them better. We are confident that by taking a break with éS for a bit of time will allow our teams to focus on delivering the best that they can on the brands that are our strongest.
What will your focus be on going forward to strengthen the rest of your brand portfolio?
The important part of having multiple brands is making sure each brand has clear distinctions and that they don’t cannibalize each other. Now we will have an intensified focus on Emerica, which is 100% skateboarding, etnies that represents all of action sports, 32 that makes the best snowboard boots and outerwear, and Altamont which is the apparel brand within Sole Technology. We’re all looking forward to condensing our focus and doing fewer things much, much better.
Right now, we’re working hard to keep the growth going on our other brands and with that we’re embracing SKU efficiency across the board. etnies is focusing on the categories that are driving revenue. It is narrowing down categories to maximize efforts to deliver more efficient and profitable collections. Our men’s category is seeing growth and Europe continues to be a strong market for us. 32 will continue to build upon our robust snowboard boots program and our expansion plans for outerwear are on track and moving forward. Emerica remains solid and consistent in all product offerings and has even booked at 49% growth for early bookings for SP12. Altamont will stay on track with its original promise to be Sole Technology’s premiere apparel brand with double-digit growth this season and we remain committed to build it into a powerhouse brand.
We are looking at entering into licensing agreements in China and Brazil as these are emerging markets and hold incredible potential for our brands.
Describe the current footwear market and what Sole Tech needs to do to strengthen its position going forward.
There are three things that are happening right now in the market. The first one is the most obvious, the economy has changed and people don’t have as much money to spend as they used to. The second is what I refer to as market homogenization – there is not enough diversity in the marketplace. The slat wall on the retail floor is full of the basic black and white vulcanized shoes, which does not support innovation. Thirdly, the trends in skateboarding have migrated to lifestyle and this has given window to the bigger athletic companies to come in and dominate with their endless supplies of cash.
What we are doing at Sole Technology to combat the current dynamics in the marketplace is to focus on our points of difference. For example, our new STI Fusion technology is doing very well out on the market and we’re going to continue to use the Sole Technology Institute to push innovation. We also see that there is a movement of people who are getting more and more sick of non-skate companies coming into our universe and weakening the core spirit. We feel that we can connect to consumers through skateboarding from the core to hit the mainstream through the diverse brand portfolio that we hold. At the end of the day, Sole Technology is committed to our authenticity through what we’ve accomplished for the industry and where we are going with our riders, our environmentally-driven values and our uncompromised commitment to be a skate-driven company. I’m not selling my company, the company is NOT going bankrupt. Sole Tech is here to stay.
What was the most difficult part of making this decision?
There are so many things that made this decision difficult, especially knowing how much I’ve loved creating and building the brand over the years. Simply looking back to the legacy of éS, the memories, the people behind the brand, those who worked directly with me on it, the team, our retailers and more. In making the decision, I think all of us sat around the table and all we could see were the successes that we’ve experienced with éS for skateboarding – the iconic product that we know we’ve brought to the market that have made a difference and how it helped innovate and push skateboarding to new levels. I don’t think that people realize just how hard it has been to make the decision to park it in the garage for a bit, so that we can retool it and bring it out when the time is right.
What are the upsides to it?
Even though we’ve said it a lot in this interview, the main upside is for us to be able to focus on our most successful brands and free up some resources to be able to give them the boost they need to stay on top of things. If we were really desperate, we would’ve sold the brand, we wouldn’t have put it on creative retreat. We just need this time to get focused on the growth of our Sole Technology brand portfolio and give éS a chance to figure out its place in the market. Time does take care of a lot things, gives new perspectives and can give us entry to make a statement when it is right.
What circumstances would lead you to bring the brand back in the future?
The market conditions have to improve. Everyone knows it’s challenging, but the market needs to ask us to come back in a strong way. Right now with this temporary “creative retreat,” we are seeking what the marketplace will be looking for next. Everyone is looking at what is right now, but éS has always delivered on what is next, pushing things to new levels.