Being quick on your feet is an attribute small businesses have over their bigger competitors. And when your small, innovative shoe company is suddenly challenged by more dominate players in the industry, that idea takes on a whole new meaning.
Ask sisters Sarah and Jenifer Caplan. They became part-time business partners in 2009 when they created a niche product that they themselves wanted: inexpensive, durable, flat shoes that could be rolled up and stashed in their purses, providing quick relief when they had enough of their spike heels. Unlike indoor slippers, the Caplans’ flats would be tough and stylish enough to wear on city streets or on a nightclub dance floor. Customers would be fashionable, fun-loving, budget-conscious women like themselves. They designed whimsical packaging and gave the product a name that connotes comfort and fun: Footzyrolls. It was recessionary fashion candy.
“At trade shows we introduced our shoes to boutiques as a fashion accessory that would sell for about $25. Our wholesale price was $10,” says Sarah, 28, who continued to hold down her day job as an executive at J.P. Morgan Chase in New York until last year. At an October 2009 trade show Sarah tracked down an editor of Oprah Winfrey’s O magazine and got the shoes mentioned in the publication’s holiday gift guide. Orders rolled in.
So it should be no surprise that reps for Dr. Scholl’s saw the sisters’ product and sore feet pitch. Several months later the big brand prototyped a similar product with similar packaging and a lower price. Dr. Scholl’s Fast Flats went for only $10 retail at mass-market outlets such as Walmartand Rite-Aid.
Though Footzyrolls sales seemed solid, when the sisters saw the Dr. Scholl’s prototype, “We freaked out,” recalls Sarah. “Then we decided to regroup,” adds Jenifer, 34, a former auditor and mortgage broker who lives in Miami. “It seemed like we needed to have a variety of price points and product lines, not just one, in order to compete.”
The women took three steps. First, they lowered the retail price of their original product from $25 down to $20. Second, they added a high-quality line for major department stores, Footzyrolls Luxe, which retails for about $30. Third, they created a basic, less expensive line for the mass market, dubbed Footzyrollups, to retail at $10 to $13.
"We knew we'd have to eventually broaden our line, but the competition speeded things up."
“We knew we’d have to eventually broaden our line, but the competition speeded things up,” says Jenifer. “Very quickly we went from thinking of ourselves as selling an accessory, to selling a shoe brand that had to change with seasons and styles.”
Ironically, rival Dr. Scholl’s helped spread the word. The brand’s wide distribution and marketing served to educate young women about the concept of carrying roll-up shoes in their handbags.
It worked. In 2010 sales totaled about $1 million; projected sales for 2011 are in the $1.5 million to $2 million range. In addition to selling to boutiques, the new Footzyrolls Luxe line has attracted purchase orders from Bloomingdale’s, Fred Segal, DSW and others. The less expensive line is being sold at Sally Beauty Supply, a national retail chain. Last year the women also unveiled its web site, to directly sell the original and Luxe lines. The site now accounts for about a third of sales volume.
In Oct. 2011 the women introduced a fourth line, foldable designer shoes that retail for about $35. In what might be the ultimate compliment from a rival, Naturalizer, a sister company to Dr. Scholl’s, placed a big order for the new designer line. Overall, the sisters project total 2012 sales of $3 million to $5 million.
The Caplan sisters continue to operate on a shoestring, so to speak. They didn’t leave their outside jobs to concentrate on their startup until late 2010 and they have only two employees, as well as several contractors and freelancers.
What’s their edge? “Being nimble,” they answer energetically and in unison, a frequent habit. “Small businesses don’t realize what a significant competitive advantage they have in this economy. They can move quickly and get things done faster,” says Sarah. When a major distributor was interested in placing an order that needed to be filled in a week, “We stayed up 24 hours to get it done and got that order,” Sarah says.
They advise other startups to use their flexibility and speed to adapt and take advantage of surprises. That way, like the Caplans, it's easier to turn a challenge from a competitor into a marketing advantage, and gain new customers in the process.