BackInTheJox
Distinguished Member
- Joined
- Dec 6, 2011
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Good morning gentlemen. Non-AE today. Grant Stone makes a beautiful plain toe Blucher, and seems to fit my foot nearly perfectly. Have a great Tuesday.
STYLE. COMMUNITY. GREAT CLOTHING.
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So, by request of @wurger, here’s that chapter on the Dominican Republic (DR). We’ve already covered in previous posts a lot of what I’m about to lay out, so I’ll try to make this as succinct as possible. But here, in a very large nutshell is about as much as I know on why AE went to the DR, first dipping their big toe into it, and then eventually wading in further up to their neck. Apologies in advance for the enormous length of this.
First a little pre-DR background, specifically on the handsewn product, when it used to be made in their no longer existent Maine factory. This info might come in handy depending on where this conversation leads. The factory in Lewiston, Maine, wholly owned by AE was originally purchased from Mike Rancourt back in the day. Mr. Rancourt sold his factory to AE and then stayed on as an employee, overseeing the factory and also playing the role of VP of Product Development (for both welts and handsewns, and anything else that coincided with his tenure). AE, pre-2006, was producing all their handsewns in the Lewiston factory, and they were also doing some handsewn contract (private label) work for other brands, mainly Polo Ralph Lauren.
Anyhow, not long after AE was purchased for the first time (by Goldner Hawn) they (Paul Grangaard) decided they’d like to be more competitive in the boat shoe market, and in the molded/cemented rubber-bottom market in general. They had the Eastport boat shoe, as well as their best selling Boulder, both at $175 retail. But other brands were selling boat shoes back then for $100 or less - I think the premium boat shoe of the day, Sperry’s Gold Cup with deerskin lining, was $110. The biggest Boulder competitor was Cole Haan’s Tucker Venetian, which was maybe $115 back then. The AE handsewn/moccasin shoes were far superior but there was a consumer mentality that they should only have to pay so much for this category of product. Remember this isn't indestructible 360º welted product - it was a moccasin sewn in Maine with cemented (sometimes also stitched) rubber soles that were not re-solable. Beautifully handsewn moccasin shoes, but hey, the customer wants a cheap boat shoe, so AE aimed to give it to them to the best of their ability.
So, to that end, they tested some handsewn product in DR, liked the results, and opened a factory. They ultimately moved all rubber-bottomed handsewn styles to the DR (and when I say “all”, we’re really only talking about a handful of styles at this point [2007?] - a couple boat shoes, a couple Boulders, and a couple drivers). The rationale was this category of product was a good $100 below the $275 retail of their leather-soled dressier handsewns, so probably the consumer isn’t going to care that much about what the labeled country of origin is. They were pretty much correct. It never actually got them lower on price for this group of shoes, but it bought them many years before they had to raise the price on this category (remember from an earlier post, AE is scared to death to raise their retail price - which will continue to drive future decisions in this story).
So, now this strategy is in place: welted shoes made in Port Washington, rubber-bottomed handsewns made in the DR, leather-bottomed, dressier handsewns (Maxfield, Walden, etc) continued to be made in Maine.
They get a little bit of pushback from a few customers about DR shoes, but not enough to matter, and this norm sets in - all is good - saving a few dollars and staying competitive. And now that they realize no one is holding their feet to the fire about DR production, they start to come up with a bunch of other handsewn product that might be sellable. The Big Sky slippers were one of the more fantastic items (I wish I could replace my dying pair). Those super poor quality “baseball shoes” (boat shoes in team colors and logos) were one of the more horrible ideas. This was also the beginning of a decision to really get competitive where they could, so (using the baseball shoes as an example), they began to create handsewn items that they could retail at a very low price, which they did by making them “retail only”, meaning they would only sell these online and in their own company stores, so no need to build in any extra wholesale margin, allowing them to keep the retail price as low as possible.
Let’s recap where we are at this point… From the other day we’ve learned there’s an Uppers Program saving some efficiencies/dollars in Port Washington (FYI, the uppers program also moved to the Maine factory), and while that’s causing some of the aesthetics and fits to be a little wonky no one has really caught on to it. And now there’s this DR contingent that is also a good money saving category. All seems good for now, until BOOM!!!… The 2008 Recession.
Oh man, not a good time at AE. In what seemed like overnight, AE went from a $100M company to a $70M company, and while hard to believe, it was enough of a hemorrhage that they were close to folding. All sorts of cuts happening - reductions in salaries, eliminate unnecessary personnel, etc etc etc. One thing was abundantly clear: they were not going to be selling more shoes in the foreseeable future… so they best figure out how to squeeze more dollars from the shoes they would be selling. And also, it would be in their best interest to find some new (read VERY LARGE) retailers who could produce significant volume and help stem the flow. “We need some elephants” was the phrase that was used. They would eventually find some larger customers for welts (Brooks Bros, Men’s Wearhouse, private label Jos A Bank and Ralph Lauren), which would help, but they desperately needed to find a way to squeeze more dollars out of their shoes.
Rubber-bottomed handsewns in the DR had proven to be a good formula. So the natural next step was to move all handsewn production to the DR. However, while it was proven that most consumers could stomach $175 rubber bottom footwear labeled “Made in DR”, no one was ready to place the same bet on $275 leather-soled Maxfields. And this is where the muddy watered “deception” began. Leather-soled dress handsewns would now be cut and sewn and handsewn in the DR, and then they’d be shipped to Wisconsin to have a leather sole stitched on = Made in USA. And now there’s no need for a factory in Maine. They would close it, and thankfully in a lengthy process Mr. Rancourt and AE were able to come to an agreement where Rancourt would purchase the factory back from AE and continue what they used to do, which was contract/private label handsewns for other brands. Rancourt would share factory space with AE while AE wound down operations, and before AE shuttered that plant entirely Rancourt had moved across town to their current facility. They continued (and still do) with private label and would eventually launch their Rancourt brand (adding blake welts in addition to handsewns).
At this point in the story AE has welt production in PW and handsewn production (except leather-bottomed soling) in the DR. But it’s not enough to stop the bleeding. You can see where this is going… next is welted uppers to the DR (2010-ish). Cut and sew some welted styles in the DR to produce the uppers and then ship them to PW to be welted and soled. That wave would just tsunami to where we are today. I’m still waiting to hear back on whether AE is producing Independence and Shell collections 100% in Wisconsin (I’m hopeful they are, but you could make a case either way, so wouldn’t be surprised if they are or aren’t), and will let you know if and when I do. But outside of those collections, they’ve been manufacturing as much of every shoe that they possibly can in DR, and from info I’ve already provided it looks like they will be producing just about everything there in the near future, except maybe Indy/Shell/Recrafts.
One last thing to add (I’m not sure if I mentioned it already), regarding the FD product that makes it into the market as FQ… With each new acquisition of AE, you see the purchase price climb, and the only way for the buyer to get their investment back is to make and sell more shoes. Well, they can’t make more shoes faster and keep the same quality level. And you can’t FD as many shoes in 2018 as you did in 2010 as you did in 2006 if the goal is to ship/sell more shoes at full price, which is why you are seeing more problems today than you did 12-18 years ago. My guess moving forward, as Caleres imparts their global manufacturing knowledge onto AE is that the shoes will in fact look more perfect down the road, but the quality of the materials and construction will be lowered (like J&M and Cole Haan).
That’s all I’ve got on this subject. If I discover any additional news on Indy/Shell I’ll keep you apprised. Thanks for indulging this requested post and kudos to you if you read it all. Let me know if you’ve got any questions. Cheers.
Let me guess, 333 last? ;DPSA: Any of you 13 D guys might want to take a hard look at these badass Soho shoes from many years ago. If these were 8 D, they would be mine.
https://www.ebay.com/itm/NEW-Allen-...:H94AAOSwxAxa47oM:sc:USPSPriority!91770!US!-1
Lower quality means moving towards corrected grain that looks more uniform. Less variability in the look and texture of the leather will make the shoes look more "perfect". Means fewer seconds caused by color issues and loose grain.How does the use of less quality materials and more perfect looking come into play? Is it easier to make shoes looking great and uniform if the quality decreases?
I have been picking off Shoe Bank older seconds for the last few years but have purchased firsts during big sales and have been much happier with older seconds. I am amazed at how a an older shoe just magically appears on the site.At full retail?... 5 years ago.
This is one of the iron laws of free market economics. Small companies with abundant goodwill get bought out, and buyouts are paid for by burning goodwill. Leaving loyal customers looking for new objects of their loyalty.With each new acquisition of AE, you see the purchase price climb, and the only way for the buyer to get their investment back is to make and sell more shoes.
Superb! Have you enhanced the burnishing on these babies, or just polished them up?Happy taco Tuesday!
Bourbon Park Avenues with a mirror finish for your viewing pleasure.
View attachment 966512
Enjoy and have a terrific Tuesday!!
Is there a guide of some kind that helps identify ages of styles/model numbers?I have been picking off Shoe Bank older seconds for the last few years but have purchased firsts during big sales and have been much happier with older seconds. I am amazed at how a an older shoe just magically appears on the site.
I wish this need to add to the post count for posting's sake would die. It was a game at the very end of last year. The game is over now.we're on pace to vastly eclipse last year's goal of 4000 pages.
if we pick it up a tad we might hit 5k.
i'm headed to either a Smithsonian museum next week, or the zoo, so i'll be happy to help that page count as much as possible.
I wish this need to add to the post count for posting's sake would die. It was a game at the very end of last year. The game is over now.
Post some quality shoe pics though.