The big idea: When Paul Grangaard became chief executive and president of Allen Edmonds in 2008, he staged a turnaround of an iconic American brand. The creator of classic, high-quality shoes for men — worn during the inauguration of every president from Ronald Reagan through George W. Bush — was on the verge of bankruptcy. How could the company revive sales of its premium quality (and priced) shoes during the Great Recession?
The scenario: At the heart of its challenge was a lack of clarity of what the company stood for in the minds of customers, employees and channel partners — essentially,what the brand should be. This led to problems in all areas of the business, including positioning, pricing, distribution, manufacturing, product and communications. In the 2000s, Allen Edmonds began designing and manufacturing its shoes overseas and altered the product (and stores and communication) to look more European. As Grangaard looked at the numbers, heasked the senior team a few questions: "What do our loyal customers think of the brand change? What does our target customer think of our shoes? How do our shoes stack up against the competition ?"
The resolution: They set out to gain in-depth knowledge of the market and customers. The senior team visited several markets; dissected, analyzed and even wore their competitors' shoes; and talked with customers. They wanted to know why loyal customers had abandoned Allen Edmonds. They learned they had to recommit to the original brand positioning — as a classic, handcrafted American shoe company — while adding a contemporary and more casual twist. They brought manufacturing back to the United States, added more casual styles, revived four iconic ones, redesigned the stores to communicate the "Made in the USA" heritage. The results were strong. From 2006 to 2008, Allen Edmonds's sales had declined about 30 percent, and operating profit fell by 90 percent. From 2009 to 2014, the company more than doubled its revenue.
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The lesson: The Allen Edmonds turnaround was rooted in a deep understanding of the marketplace. If Grangaard had focused mainly on internal operations, he likely would have addressed the challenge in a different way, perhaps looking to increase profits by reducing operating costs, raw material costs and labor. These solutions would have failed to address the central problem, which was aligning the brand and strategy with the perceptions of Allen Edmonds's historically loyal customers.
— Kimberly A. WhitlerWhitler is assistant professor of business at the University of Virginia Darden School of Business.
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