Barbara Howard: Newton-based Rockport shoes is bankrupt, which was announced this week. With us on the line is analyst Beth Goldstein, whose focus is on footwear and accessories at the NPD Group, which conducts market research and follows consumer trends. Hi Beth.
Goldstein: Hi.
Howard: So you noted there's actually been an upswing in some of the shoes that Rockport sells, is that right?
Goldstein: Yes, that is correct.
Howard: So why did it fail?
Goldstein: Well there's a lot of competition. So a stat that I love to quote is that if you think about performance athletic footwear, the top five brands make up 80 percent of the sales. When you talk about dress footwear or non-athletic casual footwear …
Howard: Which is more what Rockport is, right?
Goldstein: Yes, yes. The top five brands make up about 13 percent of sales, and you need around 250 brands to get to that 80 percent that the top five make up in performance athletic. So I always like to put in perspective that the market is very, very fragmented and there's a lot of competition, and with an overall market that is really more flat to very, very slow growth, any growth in a brand is going to come from stealing share from someone else.
Howard: What do you think got Rockport into trouble?
Goldstein: Probably the reliance on the wholesale channel. So for example, their reliance on the department store or other, you know, chain stores that have been struggling …
Howard: The Macy's and Lord and Taylors, those …
Goldstein: Yes, those types of retailers.
Howard: What about their standalone stores, have those done okay? One of them is here in Wrentham, in the outlets there.
Goldstein: In the outlets, right. So I think they were also potentially a little bit more focused on the outlets, which almost devalues the product a little bit. Because, you know, it's discounted all the time, and, you know, you kind of lose that air of quality and authenticity.
Howard: And do you think they were caught - pardon the pun - but flat-footed when it came to online sales?
Goldstein: I think they probably just didn't anticipate how quickly it was all going to shift and many brands have had this issue.
Howard: And young people tend to shop online?
Goldstein: Yeah, I mean, we are seeing that the online consumers actually span ages. Older consumers are shopping online for footwear as well.
Howard: It seems like Rockport had a nice crossover, because they're comfortable like sneakers are.
Goldstein: Yes, they specialize in comfort. I think it's just a matter of making the aesthetics match the function.
Howard: Well now Charlesbank Capital Partners is talking about buying Rockport's assets. 150 million dollars they’re offering for that. It has to clear the courts first, but what does the future hold for Rockport shoes?
Goldstein: I think that hopefully they can, you know, use this time and this investment to work on the infrastructure, to be able to adapt the company to how the consumer is shopping today, and to focus on product innovation and leveraging its heritage in terms of the marketing and the branding.
Howard: Well the heritage, of course - it was founded by a father and son team coming from generations of shoemaking. And they built it up over 50 years into a pretty respected brand before it started getting sold to some of the larger shoemakers.
And, of course, in Massachusetts we have this long history of shoemaking. One hundred years ago, Massachusetts was producing 40 percent of the nation's shoes. But you think the online sales is a major disruptor?
Goldstein: Yes, I think that is definitely part of it. I mean now, you know, 30 percent of nonperformance footwear sales are coming from online for men and a little bit more than that for women. So it certainly is one of the major factors.
Howard: OK. Well thank you Beth.
Goldstein: Sure. Thank you.
Howard: That's Beth Goldstein, footwear and accessories analyst at NPD Group talking about Newton-based Rockport shoes filing for bankruptcy this week.