Footwear First: Early Indicators for Every Specialty Retailer
Footwear has always been a bellwether for specialty retail.
It carries the longest lead times, the tightest vendor relationships, and the most exposure to what's happening in global production. When the market shifts, shoe stores feel it first. In this Indie Insights Live session, Dane sits down with Mark Denkler, President of the National Shoe Retailers Association, which represents hundreds of independent footwear retailers across the U.S. and Canada. Mark isn't just watching from an association office.
You'll learn:
How the footwear business is really performing right now, including traffic, margins, and where the growth is hiding.
The lessons independents in every category can borrow from what footwear retailers are navigating.
What vendor relationships look like today: terms, minimums, exclusivity, and who's actually being a partner.
Production and delivery timelines, how far out you have to commit, and how to plan when you can't.
Where AI and new technology are genuinely helping specialty retailers, and where they're still noise.
If you want a clear-eyed read on where specialty retail is heading, from someone hearing it from hundreds of store owners at once, this session is for you!
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Indie Insights Live:
“Footwear First: Early Indicators for Every Specialty Retailer”
A discussion with Mark Denkler, President of the National Shoe Retailer Organization (NSRA). Hosted by Dane Cohen.
Dane Cohen: Welcome back to another week's episode of Indie Insights Live. We are going to be joined this week by the one, the only, Mark Denkler, the president of the NSRA, the National Shoe Retailers Association. So, before we jump in with Mark. Just a reminder of how Indy Insights Live works. We're, of course, here today, joined by our live audience, which we encourage you, ask questions, participate, you have, Mark and Mine's undivided attention, so feel free to jump in at any moment. You could also watch this webinar back on our YouTube channel. We'll be sending that out to everyone who registered as well. And then, in addition, you can now find us on Apple Podcasts and Spotify, so you can listen in the car, on the way to work, when you have some time in the Stock Room. You can listen to Indie Insights Live. We're coming to you every week, Thursday at 1pm Eastern Live, and then again, you can catch us on all those platforms. So, let's introduce our guest, Mark Denkler. Thanks for being here today with us.
Mark Denkler: Oh, you're welcome, Dane. We've known each other ever since I became president. I don't know if we knew each other when I had my stores, but you're a valuable resource to the industry. This is a great thing. Like you said, it's… the podcast mode, it's great because you can listen to it on your own time. you know, it's tough for everybody to go, okay, I gotta do this. I had a Zoom meeting yesterday, and a guy goes, oh, I had to be on the floor, and he was the guy we needed to talk to. I had 5 staff people waiting for him, and, you know, but it's tough to do, so we appreciate you getting these together and getting it to people on their own time.
Dane Cohen: Yeah, and listen, Mark, you've been a friend of Management One for many, many years, and we've gotten to… you know, we just actually were on stage together at Project in Las Vegas. We've been, you know, to conferences together, and shoe shows, and trade shows, so it's really great to sit down and always have a conversation about what's happening in the industry. But before we get to the now. Now, we want to rewind a little bit. You know, Mark, let's get to know you and our audience to know you. You know, you're the president of the National Shoe Retailers Association, but where did this all begin?
Mark Denkler: Well, actually, working summers for my uncle, my, my… I live in Florida. We had our stores in Florida. We had, 3, 4 stores, over the years in South Florida. And my uncle reached out to me in 1984. I always joke, he wanted to give me $50,000 to manage his stores, but what did I do? I went to go work for a bank for $19,000. But, you know, I… at the time, that wasn't what I needed to do. You know, I wanted to work in big business in a tall office building, and that's really when I wanted to go, and I didn't think he's gonna make it, because guess what? He wasn't in malls. And I'm a stupid 22-year-old who thought malls were the only way to be, and he's not gonna make it, but then… 10 years… let's just say I stayed in Houston, worked for the biggest bank in Houston. I was an auditor for 3 years, because things were tough in the oil patch, and then finally, when that went through, I went their executive training program. Learned financial analysis, was a lender in the national desk for a few years, and then I switched to Fuji Bank. Where I did loans anywhere from $20 million to a billion. Wow. But, working for the Japanese and 15 hours a day, once we had our son, I was like, this isn't gonna work. So my wife, being a buyer for Foley's department store in Houston, and me with my financial background, we decided to take up my uncle's offer 11 years later, and then we're in the business for 29 years, and then we… we'll kind of get into the talk about why, but, you know, our… our rent was going to go from $50 a square foot to, $100 a square foot, so 3,000 square foot store. That meant an extra $150,000 I was going to have to pay. And we didn't want to work for our landlord, we wanted to work for ourselves, but we'd made enough money, so we retired, but before I could retire. I was… I got this job, so… here I've been here for almost 6 years.
Dane Cohen: Okay, so 29 years you and your wife were running the store.
Mark Denkler: Right.
Dane Cohen: Wow, and what year… what year did we take over from… from your uncle?
Mark Denkler: 1994.
Dane Cohen: Wow, okay, so you've seen a lot of eras, I like to say, of the industry.
Mark Denkler: Oh, yeah, yeah, yeah, I mean, as… you know, I looked when we got there, my wife was used to computer systems, so my uncle did it, and we're a $400,000 store. My wife was buying $35 million for the department store. She was Buyer of the year, little shout-out to my wife, so she definitely had the skills, and so after a year, we just said, hey, can we take over? And so, you know, we want to do the buying, and, you know, okay, that $400,000 store, you're buying, what, $200,000 or less, or more, you know, give or take a few thousand? And so, we did it. First thing we did was get a… computer system, because that's what my wife was used to, and I was used to, and my uncle had a fit. I can tell you what's missing from every wall, you know, just looking at it. I'm like, but you have to take sizes. This will be up-to-date, and, you know, it's kind of what you're… competition was doing. You know, they were all start going into it. You know, now it's AI, you know, so it's like, okay, we all gotta get on the AI bandwagon, which I'm sure we'll discuss later on.
Dane Cohen: Oh, yes, and what… listen, what a great… what a great time to take over a retail business, you know, those…
Mark Denkler: Yeah.
Dane Cohen: you know, late 90s is when things really exploded, so I'm sure you rode that wave. Okay, so you're a shoe dog, right? Yeah. As we can see, we got some background images, you know, shoe dog through and through. So, let's take it now to the present. Why don't you give us just a little bit of color of how the NSRA is working with retailers. And what that relationship looks like right now, because I think that you have a real bird's-eye view, you know? I really like talking with people who are, you know, in the associations and conferences, because I think they get a real bird's-eye view talking to so many retailers. So, how is that current relationship structured? How are you working with your retailers?
Mark Denkler: Well, the NSRA, for people who don't know about the NSRA, we're like Management One. You guys help retailers. We help retailers in the independent Footwear channel. So, we give benefits, we give networking opportunities. Actually, I worked with one of your colleagues in Atlanta. We had a seminar on AI, and he was our AI expert. He's helped develop all your AI tools, and…
Dane Cohen: Shout out to Adam, shout out to.
Mark Denkler: Yes, Adam did a great job, and added a lot to it, because you guys have a lot of that knowledge. You and I are numbers guys, so we love data. But, you know, the NSRA is here for people to give them networking opportunities. We give them education, benefits through shipping, credit cards, So there's a lot of different things. Then we have other… I was in a meeting today with a bunch of NSRA retailers. I'll have another one through our NextGen program tomorrow. They meet every two weeks. We're trying to train the next generation of leaders. Of the industry, which is, you know, very beneficial, because vendors like it, because they know there's a future to, very successful stores. So, that program's been… I mean, some of the graduates, I would say, are the who's who of the industry, of the top, stores, and we have, I guess, the next graduating class. There's about 15 in our program right now. Always more, but, you always hear different excuses. Oh, I can't do it, but, you know, we're just here to help people. And that's where I am. You know, I listen to everything, so here we are. We're going to be talking to people about what are the issues facing, and what you need to do to beat those challenges.
Dane Cohen: Yeah, and here's why I like talking, in the footwear industry and with shoe dogs. By the way, fun fact, my dad, was a shoe retailer, so I am very, you know, I'm very familiar with the community and the passion and all that goes into running a business, and this is why I like talking with footwear retailers and getting your perspective. as, you know, as a kind of indicator of the entire industry, because I think footwear retailers are usually dealing with a lot of high volume, they're dealing with really complex vendor relationships, they're dealing with, margins that they need to really be tight on, so they run their business, right? You guys run your business in a very tight way, and in order to be successful. you really have to be working and hustling as a retailer. So I think that getting that perspective, again, why we call this kind of the early Indicators, is because I think that there's so much value in how a footwear retailer approaches the business.
Mark Denkler: Oh, totally, and I will say, when I had my stores, my friends wanted my advice. How is the economy? Because I always had a precursor of what was going on. You know, when the internet boom was dying in the late 90s or so, I could see that coming on. Then when the financial crisis was coming on, I'm like, okay, people. you know, 6 months beforehand, some people were not buying, and you're like, okay, what's going on? So we… you know a lot. owning your own store, and listening to your customers, seeing their buying habits, what has changed. We used to have trunk shows, and a lady would buy 15 pair of shoes. Well, then after 2008, it became 6 pair of shoes, and then later on, it became 4 pair of shoes at these events, you know, because you could just tell the tightening of what they did. I mean, actually, I thought I was a fantastic retailer, increasing sales 25% every year in the early 2000s, and then…
Dane Cohen: 2000.
Mark Denkler: aid comes by, and next thing I know, oh, I'm down 50%. Okay, I just lost a, you know, a little under a million dollars in sales, and you're like, okay, maybe it wasn't that brilliant. Maybe it was…
Dane Cohen: People thought…
Mark Denkler: I was riding the wave up, but we were built for it, because we knew what we were doing. When it came in, we said, okay, something's gonna happen. We decreased our buy 10%. Unfortunately, I was about 30%. too… too low, but, you know, things worked out, but it's… you… it's… it's great. And one reason I left those 15-hour days, it's not that I work… don't work 15-hour days when I had my stores, it was more seasonal. But you're working for yourself. You're making and breaking it yourself.
Dane Cohen: Yeah, that's the life of a retailer. And so, you know, I think that point, though, right, of riding the wave, because.
Mark Denkler: Great.
Dane Cohen: It works both ways. Your business, you know, the overall structure and fundamentals of your business will if they're strong, they'll be able to ride that wave up, and they'll also be able to sustain through those dips. So I think that's, you know, that's what we at Management One try to do. We want the efficiency of the business to be there. So that during those ebbs and flows of the natural economy, you're… you're more focused on what you can control in your business, controlling those controllables. So, let's kind of start with… you were just in Atlanta. Again, shout out to Adam. Mark Weiss, our CEO, was there as well. Can you give us a temperature check? You know, you're with a whole, you know, trade show of shoe dogs and retailers and, you know, some of the brightest minds in the footwear industry. What's the temperature check on the Retail industry right now.
Mark Denkler: Well, you know, if you listen to… don't watch the news, because if you listen to news. oh my gosh, tariffs are 50%, you know, last year, tariff was the big buzzword, and inflation was only 3.5% last year. So, you're like, wait a second, if our tariffs were this high, you know, it wasn't a big percentage. Okay, you buy a shoe for $50, and it went up to say, 55, you know, you're… you're still only marking it up a certain percentage, so I think… you know, retailers are resilient. They have to… like, I always go, okay, in 2008, I paid myself $5,000 for the whole year, because I didn't have any money to pay, because it went down more than what I thought. You know, we had great years, but if you look at your numbers, and then it makes you rethink how things are doing, because after that, then we're like, okay, we need more subclasses, because just… you know, this athletic, I need more running, walking, you know, or tailored dress shoes versus flats or something, so you… you have to analyze better. The strongest, as you said, always survive. So I think right now, you hear everything doom and gloom on the news, but people are doing okay. I mean, Footwear sales are sluggish. But we do monthly surveys, and most people are up for the year. And their margins are under control as well, because they're looking… the smart ones are looking for those hidden areas to grow their business by, okay, let me get some closeouts and sell those, or let me get some off-price, and as we talked in at Magic in a project, you know, building a first-cost business, your own private label, because then you start out at 80%, and when you put that 145 shoe on sale that you bought for 35, mark at 25% off, you're still making 67 points.
Dane Cohen: Right, and we'll definitely talk.
Mark Denkler: Yeah, we'll get into that. But no, but it's, you know, there's a lot of things you, you know, Nike dumped everybody back in the, you know, after COVID thought they could do it themselves, and then you get the others, Hoka and Brooks and on, that all of a sudden were half-billion-dollar companies before COVID, they're now all $2 billion companies. So, but where did they ride that? They rode it with the, the independents, and they find these brands. We go to shows, we find it. I mean, I kind of know a few upcoming brands that I've seen in reports based on what our retailers say. But yeah, you're always looking for the next best thing, and then you're… you're looking for margin builders, you're trying to differentiate yourself. You know, one of the things, athletic, I mean, I was a guy… okay, before 2019, only a leather bottom shoe. Now I wear sneakers with my slacks. I'm not there with suits yet, but… you know, I am with the slacks, but yeah, you look at ESPN, all the guys have suits and sneakers on.
Dane Cohen: Right, well, there's a lot to unpack here, so I want to kind of roll back a little bit, because there were some great points that we just kind of hit on. First, I really want to talk about, the Nike backlash, right? Because this was a huge pivotal moment, I think, in the independent footwear industry, and I think that the lessons learned.
Mark Denkler: Everybody, it was mass market, too.
Dane Cohen: Right, I think that these lessons… but let's fo… you know, we're the indie guys here, we're the independents, so… but I think that this lesson translates, you know, to every type of retailer out there. So, give us a little bit of, kind of, that description of what… what… what really was the impact of Nike pulling out from so many independents, and how… Great retailers kind of evolved with this.
Mark Denkler: Well, and that's where those guys went to, okay, I can't have Nikes. I mean, I know a store that was doing about a million dollars, and Nike. Actually, our store is the second store in Florida to have Nike. My uncle had a great eye, and I know, another… Phil Wright was one of the people up in Maryland, but, you know, when they pulled back, they dropped a lot of business, so what do you have to do? You have to find other brands. My customer still wants Athletic. I can't do Nike, but guess what? They can't get it at Dick's anymore, or Macy's, or Foot Locker. So I used that as an opportunity to find those brands that, you know what, I was kind of doing well with, but I didn't want to lose that name. So that's where, okay, we did more in Brooks, we did more in Hoka, and other brands that, okay, we still need to get the athletic category, but then it exploded with COVID as, you know, during COVID, it was everybody who was doing slippers, and Uggs was the thing that made everybody stay in business. Because they had those things, but independents and mom-and-pop stores always have to pivot was the big COVID word, but they have to find… like me, when my rent went up $50,000 one year in 2015, I had to find… my wife is on top of sales, I was on top of, expenses, so what did we do? We had to develop a private label business, where our margins would be 65% maintained. Versus starting at 55, or, you know, athletics, you could be at 45% margins. So it makes you sit and look at everything, but that's the great thing about being independent. You know your market, and you're like, okay, they're not gonna buy the Nikes now, but I'm gonna get another brand that can help them.
Dane Cohen: Right, and I think that there were a lot of retailers that weren't seeing the writing on the wall, and actually.
Mark Denkler: No.
Dane Cohen: put their noses up at the Hoka and the Ans, and when the wave hit, right, they weren't there to capitalize on it. So, I think that freshness, that newness, you know, continuously searching and being in a sense of discovery is… is super important. Now, you talked about private label, and I know that you have a personal You know, story with private label. Talk about the impact that that's having on retailers right now. I know that you went through that phase where you decided, I need more margin in the business, I know my customer, and here's how I'm gonna achieve it. What does that look like for a retailer today that may be really scared of that term, private label?
Mark Denkler: Well, they shouldn't be scared, and you still need the brands to bring the people into your store. They're still going to be selling those products, so you're not getting away from those. And, you know, I've had some pushback. Why are you having Pillfield build private label, but I'm like, well, the department stores do it. You're not telling the department stores how to do private label, and it's something that you can get for your company. And when we… when I do have people go over to Italy, or Brazil, or wherever, whatever markets there are, you're looking for the things that the vendors aren't providing. So, you're finding something that my customer wants. It could be a shoe that they gave up with last year. I know one customer, she's had this shoe now for 10 years, and, you know, they dropped it. So, actually, she got the vendor who had a relationship with this company to make it private label for her. You know, your vendors will work with you, too.
Dane Cohen: So, I just want to catch that. So, the retailer was carrying a certain shoe that was on fire for her, you know, did her well for 10 years, and then it was discontinued, so that's when.
Mark Denkler: The brand goes, we don't want it anymore, but we knew the factory that made it, so we had it… had it made, and then, then certain things happen, and so next day you know, they're… they're buying it from a different brand. But it's… the word curate, we love the word curate, but you're really curating your buy for your customers. You know, I live in South Florida. I used to have the sweaters at Macy's in the middle of the aisles, and gloves, and I'm like, it's 90 degrees outside in Thanksgiving weekend, it's hot, I'm sweating, and you guys have your buyer in New York thinks this is what every… they just put it to every store, where we can buy What our customer wants, find the new brand. introduce it, then we always get mad, then the next thing you know, they're selling to department stores, and everybody loves it, and you're like, wait, you've dropped us, but… you know, there's… there's gonna be other brands, and there's brands that love independence, you know, so they… they… and those are a lot of our partners. You know, people complain about something, but I'm like, no, they're still here for us, and they still want to build your business, because they know that you were there that brought them You know, the business at the beginning.
Dane Cohen: Yeah, and I've said it here, I've said it at shows and conferences and presentations, brands build their distribution on the backs of independent retailers, right? And that is what gives them that brand awareness. And something that's interesting that's happening now, which you and I kind of touched upon, is now the competition with brands doing D2C. Right?
Mark Denkler: Yeah.
Dane Cohen: And now, vendors are becoming their own retailers to a much larger and larger capacity. How should independents be navigating that?
Mark Denkler: Well, it was kind of like the Nike. Nike was like, hey, we're making a ton of money off this, we can do it ourselves, we're a $65 billion company. Not every… I mean, they're probably the only company that might have been able to do it, but it blew up in their face. Some of the Crocs as well, and now they're going back to the retailers, but no, you can… you can grow your own brand, curated towards your plate. Remember, when we were in Magic, I talked about a store, Henry James. Henry was her one uncle, and James was her other, so they made that their private label. But it just gives you that extra margin to help you pay for those uncontrolled things that happen in your business.
Dane Cohen: Right, so that's almost your stopgap.
Mark Denkler: Yeah, it's your stopgap, because, yeah, okay, I know when athletics started, people, oh, I just, you know, it's so exciting athletics, I'm like, but you're starting at a 45 margin. My store was maintained 55. Now, I was a little bit more… more fashion-oriented, so I… and then with my private label, as I said, so I… when I'd give my vendor scorecard to one brand, I said, I do $150,000 in business with you, and my margin was 50.5. My store was 55. So you're… you're pulling me down at 8% of my sales, you're pulling it down for me. You know, but I needed that to be able to pay the bills.
Dane Cohen: There's some people back.
Mark Denkler: Back in the day, it was a 45 margin, then it became 50, and now there's calls for a lot of independent… we need 55 now. Don't do… don't be Keystone guys. But there's still brands that want to be Keystone, because maybe that's where the department store wants the… the number, and then they can get a better discount, because they do a lot of volume.
Dane Cohen: Right, and I think, listen, you're a big advocate for trade shows, and that's where you have these conversations and get the discovery in. But really interesting, the idea of that vendor scorecard, because this is a place where I think that there's a great lesson to be learned, which is really being able to go into market appointments and negotiations with your vendors, backed up by data. Right?
Mark Denkler: Oh, totally, yeah.
Dane Cohen: Those are gonna be the cops.
Mark Denkler: That is the key. That's where, okay, the motion, hey, Dane, we've been friends for a while, but I need this, and you're like, I can't do that for you. Oh, but guess what? This is where the data shows that this. you know, being a store in Florida, I mean, I… once our store grew and I needed a million dollars worth of merchandise in January to do the volume that I needed to, I would ask a couple vendors, hey, can I have 60 days on my initial run that comes in in January, so… because I just don't… I don't have a million dollars sitting around. To do that, so it is work… and then with the vendor store card, you can go to your vendors and go, okay, if I go in and say your turnover was below my store, your gross margin was above my store, your sales, you're my number 8, then you go in with them and part… vendors want to be partners, your reps want to be partners. If you give them the data, then they can go, okay. wow, we're low on margin. You know, we're gonna have an incentive buy if you do this, so if you can hit 125 pair or 200 pair, we can get you an extra 5 points. They will be able to point that out to you when you go, hey, you're a growing brand, so let's do this.
Dane Cohen: Yeah, and it also will dictate exactly what you need from that vendor, right? So if their turn rate is well below your store, maybe they need to swap out for fresh goods more often, and be open to that, so you could actually ask for what you need. And then, one of the things that we also, kind of hit on is this idea that just because you're growing your sales, you know, we're talking a lot about margin, we're talking about how you grew your business doing.
Mark Denkler: Right.
Dane Cohen: 5%, you know, MMU, just because you're growing your sales does not mean you're making more money. And I'd love to hear your thoughts on that, because I know you have a strong opinion here.
Mark Denkler: Yeah, and it was a… one of my mentors in the business. He worked for my uncle years ago, he was his general manager. He took the job that I guess, I was… was promised, and when I said no, he took the job. But then, I think in 1990 or so, he left my uncle's store, and he… opened up his store about a mile and a half from… or 3 miles… 3 miles from us, and did very well, and I know when I started, he said, oh, I'm doing $650,000. I'm like, wow. Well, then he opened up another bay of a… kind of a private… not a private brand, but just of one brand, and he goes, oh, I increased my business. I asked him, I said, how you doing? He said, oh, I increased my business $250,000. I'm like, oh, wow, that's great! So, how much profit do you have out of that? I said, none. So I'm like, so you went from $650 to $900, and you opened up a new bay, all the lease… the lease for that, all the stock. the employee stuff, and you made no more money, that's where I'm like, no, you gotta make money. The idea isn't to be a $2 million store, or 1 million, or $2 million, or 3 million, it's to make the living that you want to get out of your store. And then there's different ways of doing that.
Dane Cohen: And this is something that we hear a lot. I'm putting in so many more hours, so much more work, and I'm making, you know, my gross sales are going up, but… and my revenue is increasing, but I'm not actually walking away at the end of the day with any more dollars in my pocket.
Mark Denkler: No, and we're… I mean, I made a lifestyle choice. Okay, I'm having a son, I'm working 7.30 to 9.30, 10 every day, and sometimes on Saturday, I will never have a relationship with my son. But with the store, I could do, you know, during my January, February, March, April, when it's tough. My daughter hated spring, because we were always gone working. But guess what? I had the summer off, because there's no business in Florida. Everybody's back up north at their own stores. Hopefully, I sold them the shoes first. But, you know, it's… You know, it's… It's a lifestyle choice, so you make that decision Yes, like I said, I made $5,000 in 2008, but I made great money in other years, too. So, there's the good and bad, as we said earlier, about being your own merchant and owning your own store. You know, when times are tough, yeah, it's bad, but when times are great, it's good. So you… plan for that, and then if you use best practices going forward, then hopefully when you have that year where you don't have any money… I had money to pay my bills, but I didn't have money to pay myself.
Dane Cohen: Right, and that happens, and you know, these are the decisions that independent retailers have to make. And the reason why I love having conversations with you and other people in the industry that have been store owners is that it's just a completely different perspective, right?
Mark Denkler: Totally, yeah.
Dane Cohen: And the way that you're approaching, now that you work with, you know, dozens, if not hundreds, I would assume hundreds of retailers.
Mark Denkler: 2,800 stores are under the NSRA label.
Dane Cohen: Okay, wow, so that's a tremendous chunk, and you're coming from the perspective of being in there, pun intended, in their shoes.
Mark Denkler: in their shoes.
Dane Cohen: Right, and I think that's so important that we're not just talking about this theoretically, but you know the experience of, hey, my sales are down, I may not be able to make payroll this week, I gotta dip into my own, and I gotta pass on a paycheck this week.
Mark Denkler: Yeah, luckily, I was one, because I had money… I mean, I was… my wife and I were able to buy at my store. We didn't pay ourselves for a year and a half, because we'd made a lot of money, her as a buyer, me as a banker beforehand, that we're able to always have the working capital. And what's your best friend? Money. Your vendors want to get paid. you know, I remember we had discussions, amongst people during COVID, oh, don't pay your vendors, cash is king, keep it, but then one of my friends who's a vendor says, Mark, I have two containers. on the ocean right now. I've already paid for the shoes. If you don't pay me, then I'm going bankrupt. So it is… that's why I kind of said during COVID, it was a partnership between the retailer, the vendor, and the landlord. You had to work something out amongst the three that works best for everybody, because you can't just screw one guy. It's a partnership, and even now, that's why I say, your vendors are partners, you know. we kind of touch on D2C, is like, yeah, they found an opportunity… we kind of left them in COVID, oh, we're not going to order… we don't want those shoes. Well, we're closed. So what they do, they built their websites, and they became more D2C. They saw the profits there. And so that's where, okay, they're… some of them are shareholders, own companies, and hey, we need to… to grow, and that's one way for them to grow margin and grow sales. But… you just want the people that have MAP, that have a good strategy to D2C, that we don't want the, oh, 40% off on Thanksgiving, Black Friday weekend, you know, then you're stuck. But then you work with them, hey, if I match your price, will you give me 40% off my fill-ins? You know, it does work, and that's where It's important to be friendly and know all of your, your brands and vendors that you work with.
Dane Cohen: Yeah, and this is where I see the footwear industry really… it probably has the most… to me, the most visible, trends sometimes. You know, you look at the… when, like, UGGs exploded, right? And you could sell an UGG all day long, people were rushing into the stores, and then that crashes a little bit.
Mark Denkler: Yeah.
Dane Cohen: you know, not saying that UGGs are no longer a relevant brand, but they don't have that same fever. you know, trends really hit hard in the footwear industry, and if you're… you should ride those trends out, but you also can't put all your eggs in that one basket. And so let's look… let's look right now, you know, we're seeing a slowdown in Birkenstock sales. you know, especially with the Arizona that was just flying off every shelf. And now you're seeing that slowdown in overall sales in Birkenstock. Not saying it's not going to be a relevant brand, and you need it in your product mix, and of course, there's still a tremendous customer base, but it's not that fire that it was. So… How do retailers get in front of that? I mean, has there been anything that's replaced that Birkenstock right now, or can you read the tea leaves a little bit?
Mark Denkler: No, I mean, I really… I heard it from one of your podcast webinars that you did with… I think you and Mark were talking, that's the first time I heard about a slowdown. I asked a few people, I mean, with… Some people, it's still on fire. Other people, yeah, it's slowed down a little bit, but okay, then once again, that goes to your buying. Okay, maybe I need to do 80% core, 20% fashion, versus 60% core, and trying to get the fringe colors of the Arizona are your best seller in your area. But no, Birkenstock's gonna be there. They're a great brand, they're a great partner. David Kahn, who's their U.S. president, I mean, he… he's one of the most vocal people for independence, and we'll… will tell you, this is what you need to do, and… So that's why I said there are partners. It might be slowing down, but it's still… The number one brand for… Tons of… a lot of our retailers. So, yeah, maybe it's slowed, but somewhere else they did it.
Dane Cohen: What a great perspective, though, of… looking at your actual product mix with them. How much am I going into core? How much am I going into fashion styles? What that looks like? Am I… am I bringing in the, oh, is it the Boston or the Arizona? I may… we may have to.
Mark Denkler: Arizona's the two-strap. Yes.
Dane Cohen: And then the Boston, I'm sorry, the Boston exploded. The Arizona is the classic of all classics, right? The Boston exploded into the stratosphere, and now that's what we're seeing come down. Good fact correction. Okay. But looking into that product mix, right, maybe you can't do those fringe colors, maybe you go deeper into core, and really understand. I mean, I think it all comes back to really understanding, you're a data guy, you know this, but… you can anticipate the business and the trends by what you're seeing in your own numbers. So… Exactly. Okay, let's talk about some other trends, though, and you put me onto some of these. We're seeing a comfort comeback.
Mark Denkler: Yeah, I mean, well, everything ebbs and flows, like you said with Uggs. Okay, it was the top thing, you couldn't keep them in stock, and… You're trying to get them from your friends to sell to your best customer, and they didn't have it. So it went up, but then it went down, went up again, and then maybe last year, everybody overbought because, oh my god, it exploded again, but then they overbought. oh yeah, they sold the same amount last year, but they were expecting a 20% increase. It was only a 10%, so they were stuck with 10% more product they want, and that's the hard part, is trying to figure out the trends, but knowing that Yeah, like, on running. I mean, they're… they're somewhat struggling a little bit, and they were kicking out… I mean, the store that I… one of my stores I sold, they were selling 4,200 pair of On runnings a year in 19… or 2023, and they dropped them. And what do you do to… to get that? So then that's where, okay, I recommended, okay, get Brooks, Hoka, they couldn't get HOCA, they got Brooks, but, you know, you have to replace those things. And so, yeah, things will go up and down, but have… managing your open to buy. Okay, if you see your turnover slowing down, then that's gonna affect your open to buy. That's where Management One is so great with… with helping people, because you have the data from your… yourselves, but all the other… okay, the dress industry, the apparel is doing this. Okay, colleges, bookstores, this is where they are, this is where retail is doing, and so you… you get… you guys have the industry data. I mean, we do an indi… business performance report every 3 years, and you guys helped us. It was with an independent company, but Mark… I talked to Mark about lots of things, and so… so yeah, we… you gotta use that data to figure out where you are. But once again, your store is different, you gotta figure out where you are. Okay, I didn't take stock after February 15th, as I said earlier, because I wouldn't have the season to do it. So, if a vendor really wanted me to get it, okay, you gotta give me a discount, or you gotta give me dating or something, because that's gonna stay on my shelves longer.
Dane Cohen: And that's the best example of why we plan at the category level. Right.
Mark Denkler: Category, yeah.
Dane Cohen: Brands do come and go. Yeah. Right? And if you keep… and if you keep investing in a brand that's just not producing for you, you're buying back into something that's actually gonna hurt your business. So, we love to see that category driven. Another trend that is really infiltrating, I think. Footwear and beyond is this explosion of outdoor lifestyle merging into everyday and fashion goods. Are you seeing that right now?
Mark Denkler: Oh, totally, and I never really answered your question about casual, but it's been kind of with the slowdown of athletic. And, okay, for 5 years, we've kind of been, okay, I wear my suit with that… with a casual, and guess what? You know, I maybe want to wear a nice dress shoe, or a casual shoe. And… and outdoor has become commonplace. Casual has become… you can wear a casual shoe now that you would have never worn with a suit or slacks before, because that is the style. We… we've… COVID made us, okay, you're stuck at home, so you want to wear something comfortable. I'll use the Dolly Parton example.
Dane Cohen: rhinestones are…
Mark Denkler: life, and she goes, well, nope, when I die, I want to be buried in cotton, because I finally want to be comfortable. Well, I think people, okay, I've been on this running trend, but you know what? I want to get back to looking like I did in 2018 or 2019, and wear a suit now versus just… maybe not with the tie. You know, I don't think we're there yet, but okay, I'm going to wear that, but, you know, I want to have a casual shoe that looks good, or… you know, as I said, you know, I think the five fingers look is coming back. I mean, I don't have any data on that, but I see a lot more brands, so it makes me think, when I'm at the show and I see a few people offering more of that type footwear, then maybe it's coming back. But that's where I said shows are so important, because you gotta find out what the trends are. My wife and I went to Miami twice. We went to Atlanta, we went to Vegas. So, you know, we went to 4 shows, and I get amazed when people they go to one show, and that's it. I'm like, this is where you find out where the trends. Walk around the show. If you go to one show, and then you go to the… another show, you're gonna go, man, I've seen this one shoe from a lot of people, so I gotta pick that shoe up, because I don't have it, that silhouette. that I need, and then you just gotta go, okay, what's the best brand for me? What's the best price point for me? I mean, we had that once, we had a silhouette we wanted, but it was from a… a beautifully. It was a $400 shoe, and we're like, well, our average price point's $145, let's get this. Clark's made a great one, but their… theirs was $90. I didn't want… I get more volume at the $145 versus Monroe had it for, like, $190 or so. You know, so you have to pick, and this is where you're… looking at your data, knowing your customer, maybe using AI to help… help figure out what that is, but that's why I always say, you've got to go to shows to find out what the trends are.
Dane Cohen: Yeah, and listen, that's what makes a great merchant, you know, your ability to be at a show and feel these things, really, like, feel it in your bones, and it…
Mark Denkler: It's all… it's feeling it, but it's also talk, and this is where the NSRA comes in. We try to get places where you can network, and you can talk to other people and find out, oh, what's where… oh, you did well with that? Oh, your Boston slowed down? Oh, ours didn't slow down. But, you know, it's kind of your example, okay, you said Birkenstock was down. No, it was… one shoe was down. But if you didn't have that analyzed properly, you'd like, oh my gosh, sales have slowed. No, it slowed on one shoe. I'm still blowing out on another one. And that's where I think in 2008, I kind of mentioned, my wife goes, you know, we need to do more subcategories, because I need to do more analysis. We got fat and lazy, and we could just take, you know, their sales just grew 20, 25% every year, but no, then we had to really work at it. And the way to work at it is go down in your data, and you're like, oh, like, we were a narrow store. And then I found out, oh, when I first started in 94, it was 35% of my business. In 2018, it was only 8%. I didn't realize that. I was like, oh, we're a narrow store. Well, because vendors were making stores that… or shoes that you can get the strap, tighten it up a little bit. Okay, you know, this has a Velcro strap versus the old days you had to have the, what, you know, the buckle, you know, and I didn't have an extra hole, so you could make it tighter on that really thin foot, or even the fatter foot, or wider foot, you know, so that's where you have to, once again. I hope people are on the floor to realize, because when you're putting on shoes, you really understand your customer. Or, you know, if you're an apparel store, same thing.
Dane Cohen: Great point. I mean, being on the floor as an owner, as the buyer, you can't disconnect that far from the floor.
Mark Denkler: Oh, gosh, no, no. Yeah. I was on vacation with my uncle in Maine in, I don't know, 1990 or whatever, and my wife, while we're on vacation, went from scarves, belts, and accessories to, designer dresses. And my uncle's like… and so he's like, oh, you're not going home, you're… you need to… well, she had to go home to Houston, because she had no clothes, we're on vacation, and then she flew right back to New York, because she had to go to New York twice a, a month. But he's like, how do you… how do you start buying a whole different thing? It's like, but if you've been trained to be a buyer, you understand how to buy. And you can translate, yes, okay, I know shoes, but guess what? We want to get into apparel. Well, you can talk to people what apparel's hot, then you get some… you can expand… if you know how to buy, you know how to buy.
Dane Cohen: And then what does that look like? So, there's a lot… and I think this happens in many types of stores, but, you know, you just mentioned a footwear retailer maybe looking to branch out into new categories, apparel, accessories. What is that… look like, because I think a lot of people sometimes go. Into the wrong categories, you know, new categories, or new departments. What's that looking like for footwear retailers today?
Mark Denkler: Well, you look at… apparel has higher margins, accessories have higher margins, so once again, okay, if I need to expand my… my base, I'm gonna get some apparel, or I'm gonna expand my store, because the store next door went out, so I can do more shoes, and let me do some apparel. let me do some belts, let me do scarves, so you can move into it. But then you have the same thing. Boutiques are… more boutiques are running, and you probably see this, are getting shoes, too. They're like, oh, wow, this is an easy sale. I mean, I kind of noticed with our… Shops downtown in my town. they buy for the dress, what will accompany the dress. I'm like, oh, that's no good, but then you talk to them, like, oh yeah, we sold, 9 out of the 12 purple shoes that you're like, I thought that you're gonna die with it, but it matched the color of the year, whatever. So, once again, they know their customer, they're buying to accessorize a dress, we're just buying for add-ons. You know, in athletic, I mean, if you have an athletic store, you're… 20% of your store is apparel. Minimum, probably. Yeah, so you are… you are doing that.
Dane Cohen: And I'm seeing big growth, you know, in the… anecdotally, in clients that I'm talking to and working with, I'm seeing a lot of growth in the apparel section of that business, and feeding that growth and continuing to really be able to analyze it and give it some air. So, we do have some questions, by the way, if you're watching live, please jump in with questions. We love to answer them right here. I have a feeling I know your answer to this, Mark, but Ed asks, do you believe in measuring for a fit, or just take the word of the customer?
Mark Denkler: Personally, I took the word of the customer. I know a lot of stores, the very first thing they do, they want to show that they're an authority, we're going to measure you. It is part of their mantra. Every person gets measured. Now, it is right, because sometimes I'd have a lady, she'd buy a shoe, and then she'd go up north and go, oh my god, this shoe is… is too tight. I'm like, well, you came in and bought it when it was 50 degrees on a cold Florida morning, and you're back up in Connecticut, and it's 85 degrees. Your foot is swollen. Well, there is… but your feet do change. If you gain weight, they're gonna get wider. If you lose weight, they're gonna do it. So, there's two rules of that, or there's two thoughts, there's no rule. Some people measure every customer every time they come in, but if somebody measured me, I'm like, I know what I am. I'm between a 13 and 14, but this is where knowing your stock. Okay, on a Nike, I'm a 13. On a Brooks. or an On, I'm a 14, or a Hoka, I'm a 14. So, you know, you gotta know your brands. You know, I saw somebody posting oh, on their website, it was a new store, and they said, oh, a 36 is a 6, a 37 is a 7, you know, is a… I'm like, not necessarily. Sometimes you go down, a 37 is a 6, a 38 is a 7. It's not always corresponding, just drop the first number. So… you can measure, but realistically, if I know a lady, she's like, oh, I'm a 9.5, well, if it's a full size, if it's a sandal, I can bring out a a 9, but if it's a closed shoe, I might have to bring the 10 out. So you're still gonna be just… and I… I was never one to get trapped in, and this is my personal opinion. Okay, I tell them, oh, you're a size 10. Then they think all they want is a 10, and then you go, well, this brand always goes… a little… they're not as… as long, you know, they're a little short, so this is… so I… I'm not one for that, but I know probably 50% of our stores, that's the very first thing they do is measure. But you'll eventually get it on there when you… I mean, in my store, even though it's a little more fashion, you… you bring out what they said, you check it, and you're like. okay, this looks a little tight, I don't think this is right. And one of my salesmen was always good, like, you look at their feet, when you're putting it on, they're like, then you're just like, oh, you know what, that seems a little too tight for me. Maybe I should go back and get the bigger size.
Dane Cohen: Yeah, and…
Mark Denkler: There's no rule on that.
Dane Cohen: You said this to me, you know, the sales staff, they are consultants, and so when they're interacting with clients, they have to… I love that example, they have to know how each brand fits, even how each style may fit differently. You know, one thing that independents will always have, and this is maybe… I'm generalizing a little bit, but if you walk into a Dick's Sporting Goods. they're handing you a shoe, and they are not talking to you. Whereas, I want that high level of service, where someone is going to tell me, this runs a little narrow, this brand runs wide, you know, we've been seeing customers who you know, the fit of this is not so great on the ankle, it's a little wobbly. That's the type of information that I want from the salesperson that I'm working with.
Mark Denkler: And that… and if you are a store that specializes in sit and fit, you're gonna be fine. I mean, think of it. I think direct-to-consumer, Nike found out, wait, we're returning a lot more shoes than what we thought we were, that, you know, we're spending 10 bucks to go out, 10 bucks to come back in, because We thought, you know, that ate up all their extra margin of having, you know, not selling wholesale, and they realized that was not a winning formula, but it's… yeah, you're still getting returns of, what, 35, 40% online? So, you… I know in-store, I mean, somebody… there was a poll recently on a shoe dog shoe, which is kind of a shoe person's Facebook site to talk, and I recommend everybody do it, because certain issues do get brought up, and somebody's like, what's your return rate? And I was amazed at one of our really good retailers, he was one of our retailers here. He said it was 10% was his returns. I'm like, you gotta be kidding me. My store is probably 4%. So, my people… are my people doing a better job, or we weren't on commission, so maybe they weren't pushing them into a shoe that really didn't fit? You know, I don't know, but I thought that was a high number, but then there's a few others that perked up, and I'm like, wow, these are excellent stores, but they're still doing it, you know, $10 million in their store, so that's… they're doing fine. So it's like, okay, if you're doing 10… because what was it? It was, Zappos? You know, at one point, they said, oh, we're a $5 million company. I'm like, no, you're a $9 million a $9 billion company. You're just having $4 billion in returns come back.
Dane Cohen: Wow, that's… that's a great way of looking at it. Barbara, I see you have your hand up. And if you want to put a question in the chat, just feel free to type it right in the chat. I'm gonna look, maybe there is something in the Q&A as well. Nope, so Barbara, just right there. in the chat, ask a question to Mark, myself, and we will get that answered for you. I see you have your hand raised. Okay, so we have a few minutes left here. This has been such a great discussion. Anything else on your mind? What's… what's hot right now? What's your outlook on the industry? I know that we didn't get to talk that much about AI, but if you have any thoughts on how that's impacting the… you know, the shoe dogs out there, or how it's impacting the industry at large, would love to hear your take.
Mark Denkler: Well, that was going to be my take, that if you're not… we've now, over the last 3 years, done 4 education things on education seminars on… at our annual conference that we have in various cities, April 28th, 29th in Austin, a little… But it's… and we did the AI, and we had two buyers, Adam, and then we had a vendor on the side. And if you're not on AI, it's time to get into it. I mean, I was using it this morning, I was kind of analyzing our… our Facebook post, and I'm like, okay, so I got the stats from Meta, okay, this is what it is, and then ask AI, can you look at my National Shoe Retailers Association, Facebook thing versus the data of all the visits and this and that, and it just gave me, okay, you need to do more organic. I mean, the ones that were the most popular, the ones I'm doing at a show, or were with pictures of people at events. That's what people wanted to see. Versus sometimes it's like, oh, here's the educational thing, or okay, there's a Management One seminar next Thursday, join it. Okay, you get a little activity down there. So it did give me, okay, you need to do more of this. I'm not gonna get into everything, but, you know, as a buyer, it's the same thing. The buyers at the show, they were getting the line sheets. From people, putting it at AI. Here's my 50-page line sheet, it'll take a few minutes to analyze. AI is not that fast. then this is my results, and what it would do would grab, okay, on this product, you should not buy it, because you had it in a similar, and it didn't sell, or you have this one, so you don't need this one, or you have this one, but your sales were great, you sold out, you need to get another one of these. So, you can use line sheets. Adam was kind of talking about how to help with open to buy, your retail orbit. You know, it's like, once again, hey, you're getting all this industry information to compare yourself against. So, why do it alone? And that's where we are. We're trying to help people, not be alone. You know, giving you those networking opportunities, giving these seminars. But yeah, AI, if you're not there, you really gotta get into it. You can do it for buying. You're open to buy, analyzing your data once you get there. Marketing, I can kind of now tell when somebody does an advertisement on Facebook or Instagram that, okay, that was AI generated, because they kind of are starting to look the same. So… but you need to go, okay, we need to figure something out. I… one of our panelists He gets 300 emails a day. He is an AI organizer, that'll tell you. These are the ones you need to respond to. These are the top 30 that you need to respond to when you get your chance. these… these have deadlines. Okay, this is a two… you know, this is two weeks away, you can hold off on your response or something. So he was using a… his Google scheduler or something. Like, it would go through and go, this is what you need to do. You can do marketing. Somebody did a thing where they took pictures of their store and all their sections. gave that to AI, and then they'd take pictures that morning. Their manager would come in, take the pictures, and go, oh, these are the 10 shoes you're missing from the wall. Because you always go to the wall, and like, God, what shoe is that that I'm missing? And you have no idea, but AI was saying, oh, you're missing this black Hoka that you had there yesterday, but they sold the display. And then… for HR, I mean, we've had people build all of their… now, you have to watch out, because AI is not perfect, but yeah, it does the, their employee manuals, it does, okay, I have a problem, I had a… Somebody had a problem with, okay, this… this… how do I tell this person they need to brush their teeth or use a mint? You know, it's one of their employees. You know, it's… so how can I talk to them about hygiene? You know, they're not using deodorant. You know, I gotta tell them, hey, this is gonna be bad, but I don't want to go against certain laws or whatever, so you can use AI as a guide, then go back and look at, okay, this is a state law, so you do that. So there's So many ways to do it. Your data… people are always afraid my data's open source, and people get it. No, use AI. properly, you have to… in part of our seminars, you have to learn how to prompt. You know, this… you… so they had one guy tell this guy, okay, go to this person. Oh, there's two blue suits, who do I go to? Well, that's why you need to be more specific in your question. So, you got to get on the AI bandwagon, and I just was looking at all of our evaluation sheets and recommendations for next time. Guess what it all was? Four pieces of AI.
Dane Cohen: But as we say, be careful, because, you know, any decisions, you know, especially monetary, we want to be careful. All right, Mark, it was…
Mark Denkler: It's a time saver.
Dane Cohen: It is a time saver. Save some time. Mark, it was great chatting. Where can people find the NSRA you? What show are you gonna be at next? Give our listeners some heads up on how they can get in contact with you.
Mark Denkler: You can always find us at NSRA.org. You can go to info at NSRA.org. It goes to somebody on my staff, my membership director, but if it's a specific question, she sends it to me. I'm talking to retailers every week. Helping them with problems. We just got somebody, oh, I'm opening up a new store, and I want to, you know, ship out on your UPS program. Like, no, the most important thing is… is to get the shipping inbound from your vendors, because that's where, okay, if you're getting an 18-pair pack, or you're getting 10 boxes, that's the volume, not the one box you're sending out. But it's little things like that that I try to help people with.
Dane Cohen: Alright, great. Well, Mark, it is always a pleasure. We are excited about our continued partnership, and you'll be seeing a lot more of Mark in the community, and hopefully we'll be seeing a lot more of the NSRA folks, and we have a deep love and affection for the shoe dogs out there, so thank you for joining us, Mark, and thank you for listening to Indie Insights Live. We'll see you next Thursday with our very… a great guest. We're excited for this one. It's gonna be, Max Retail is gonna be joining us. Fantastic.
Mark Denkler: Will it be Melody at Max Redemption?
Dane Cohen: We have Melody from Max Retail joining us. So, we will see you next week, and Mark, thank you again.
Mark Denkler: And I'll be on next week. Melody's, has a lot to offer. One of our partners. Partners in both organizations.
Dane Cohen: Yes, yes, it's a small, independent world. All right, signing off, thanks everyone.
Mark Denkler: Okay, thanks, everybody.