The Swartz brothers combined old-time quality, a new sales strategy, and a lot of luck to move their boots from Army-Navy stores to Saks in just two years.
The Swartz brothers combined old-time quality, a new sales strategy, and a lot of luck to move their boots from Army-Navy stores to Saks in just two years.
It's easy enough, when you know a few tricks, to change a frog into a handsome prince. And it's not so amazing, when you know the right words, to turn an ugly duckling into a swan. But how do you transform an Abington Shoe Co. into a Timberland? How do you pull a brand name out of a hat, or, in this case, out of a boot?
It happened once in Newmarket, N.H., but even today, Herman and Sidney Swartz, the two brothers who own the Timberland Co., are slightly surprised that they brought it off. "Sure, we used a little brains," Herman says, "but you wouldn't believe that luck we've run into."
At one time, the Swartz brothers toiled thanklessly in private-label obscurity. Now their company is recognized nationwide for high-quality outdoor footwear. Once they advertised only in hunting and outdoor magazines. Now they tout their wares in the New Yorker. Once their products were displayed in the fluorescent hangars of the big discount chains. Now they're in the boutiques of Saks and Bloomingdale's. And once Herman and Sidney rode to work together in an aging, compact Plymouth. Now they make the trip in a grey Mercedes-Benz 300 SD.
Theirs is a real-life fairy tale that turns on a boot. That's right, a big, leather, waterproof, insulated boot with about a mile or so of thong to lace it up over the ankle. The brothers convinced folks that if they wore this knobby, rubber-soled boot they would be -- and this is hard to say without a chuckle -- fashionable.
"Once Saks used our boots in a window display right there on Fifth Avenue," 45-year-old Sidney say, "I guess we sent down an army of people to look at it and take pictures. I couldn't get over it."
A similar sense of wonder characterizes much of the Timberland story. Perhaps that's because, with what was an almost cosmic sense of timing, certain critical decisions coincided with certain critical events to transform the Abington Shoe Co. into the Timberland Co. The story can easily make you realize that business success is often powered as much by a kind of magical coincidence as by rational planning.
In 1918, when he was 21, Nathan Swartz, Herman's and Sidney's father, emigrated to the United States from Russia and got a job as an apprentice stitcher in some forgotten shoe company in Boston. As the years went by, he sampled a variety of responsibilities in the shoe business, including selling, managing, and manufacturing. "Throughout the thirties and forties," Herman says, "my father had a lot of ups and downs. The shoe industry was not as kind to him as it might have been."
But in 1951, Nathan found a niche for himself when he bought a half interest in the Abington Shoe Co., an existing business housed in a former paino warehouse in South Boston. In 1955, when his partner died, he bought the other half; that year, his two sons joined him. For the next 15 years, father and sons struggled with the punishing economics and cutthroat competition of high-volume, private-label shoe manufacturing. They made a glossy oxford, a moccasin-toe workboot, and a functional, if not handsome, workshoe.
The principal attraction of Abington's products was price; they sold for roughly $4.95 a pair even in the middle 1960s, which made them very popular with discount stores."We were just a commodity," says 54-year-old Herman. "We tried to make a nickel or dime on each pair. During those years we were just trying to keep our heads above water."
But low margins weren't the worst part of the experience. "There were no real roots set down," Sidney says. "You didn't know where your business was going. A buyer's loyalty lasted only as long as the last order he had written. It was always feast or famine."
The mid-1960s were particularly bitter: Too many competitors chased too little business. At the end of a typical day, as Sidney wanted through the shoe departments of nearby stores, he saw rack after rack filled with competitors' shoes. "They were literally giving them away, losing 75 cents or a dollar a pair, just to get into the chains. They were desperate for business. We didn't eat very well for a while."
For Abington, though, the hard times were a blessing in disguise. By 1968 many weaker shoe manufacturers had gone out of business as the persistent price war took its toll. That cleared the way for a business boom between 1969 and 1973. The tough competition also inspired the Swartz brothers to introduce a manufacturing innovation, and convinced them that they had to break free of the boom-and-bust cycle.
For the first time, the story gets dusted with magical coincidence. Herman and Sidney were thinking economy, not brand-name marketing, when they decided in 1968 to buy equipment for injection molding. This process forms a thick rubber sole onto any leather upper without stitching, thus eliminating needle holes that leak. More important at the time, the process also eliminated the costly, hard-to-find hand-stitchers themselves. "Injection molding," Herman says, "had the reputation of being used only on the cheapest shoes. But we decided that there was no reason we couldn't make a quality shoe by combining high-grade leather with injection molding. The labor savings were enormous."
But the brothers didn't have the $16,000 they needed to buy the molds. "Now here's one for you," Herman says, recalling the minor miracle. "Sidney and I had bought some stock in a small company at $4 a share and just when we needed the money for the equipment that stock went to $16 a share. Can you believe it?"
Labor was still a problem, even with the new machines. The old neighborhood just wasn't the same. Skilled help was scarce and often unreliable. When a few employees were mugged on the way to work, the brothers decided it was time to relocate. In 1969, they moved out of the old piano warehouse and into an old mill in Newmarket, N.H., about an hour and a half north of Boston. Newmarket was a nice enough New England town. It was a little frayed around the edges, but it offered one major advantage: skilled labor, left over from the heyday of New England's shoemaking industry.
Once again coincidence worked to Abington's advantage. The company got the people and equipment it needed just as many of the big retail chains started major expansion programs. "Between 1969 and 1973," Herman says, "our sales almost doubled every year. The chains were opening new stores right and left. They had to have products, and there were a lot fewer suppliers, so we got all the business we could handle."
The drought was over, business was booming, but instead of whooping for joy, the brothers were gnawing their fingernails. "We knew," Sidney says, "that behind this fabulous feast was a door that could slam shut at any time. I mean we had lived through it more than once, and we were simply paranoid about it happening again."
They knew also that the only lasting way to escape the fickle swings of the private-label market was to develop their own brand name. Herman tells a story about how he and Sidney used to cool their heels with a gang of other salesmen all waiting to make a pitch to an important buyer. Then, Mort Meyerberg, the sales manager for Joseph M. Herman Shoe Co., would come into the crowded waiting room. "Mort never had to wait," Herman says. "That's the power of a brand name. You control your own destiny."
For years, all the brothers could do was wait. Then, in the early seventies they glimpsed an opportunity moving in the background of their business. "Stores were telling us," Herman says, "that our leather construction boots were selling very well. When we visited the stores, we saw that a lot of young people, college students, were buying them. You don't have to be a genius to know that something's going on."
Although they didn't realize its full importance, Herman and Sidney had spotted the first flickers of what was to become a fashion bonfire called the "outdoor" or "survival" look.The corduroy pants, flannel shirts, down parkas, and rugged boots normally worn around backwoods campfires were soon to appear as any-day dress in the big city. And in a celebration of function, comfort, and durability, the survival look would even become fashion chic. The commercial significance of this new fashion trend would be equally startling. Nearly every company that fanned the flame did extremely well. For example, L.L. Bean of Freeport, Maine, perhaps the look's best-known booster, grew in sales from $9 million in 1970 to nearly $122 million in 1980. And the sales of a small shoe company in Newmarket, N.H., would increase tenfold in only eight years.
Reports started trickling in to the brothers from their friends in the hinterlands that a competitor's boot was selling especially well. It was a leather, insulated, waterproof boot distributed by Dunham's, a century-old company based in Brattleboro, Vt. "We started putting two and two together," Sidney says. "Dunham's had the market to itself, we had always made boots, and we had the injection-molding equipment already in place to make a waterproof boot. Dunham's became the focal point of our attack."
Magic was about to come to Newmarket. Herman and Sidney coaxed their father out of semi-retirement to design their entry into the survival-market sweepstakes. They felt they had the right boot, but then they started to worly that they had the wrong name. "Neither of us is a marketer," Sidney says. "We're manufacturers. But at least we know what we don't know and we're willing to ask for advice."
So Herman asked his next-door neighbor, who owned a small advertising agency in Boston, what name would give the boot an "outdoorsy" image. After sifting through a dozen candidates including Cherokee and Sioux, they settled on Timberland. The neighbor also came up with the circle with a multibranched tree in it that has served as Timberland's logo ever since.
Now that the brothers had their brand-name product, they couldn't decide when to cut it loose. Herman wanted to wait until the backlog of business already on the books was cleared up. Sidney wanted to start production immediately. "Sidney talked me into it," Herman says. "He always leads the charge."
Actually, the decision process was considerably more involved, because when either Sidney or Herman says they resolve differences by "talking" he has in mind something far removed from polite conversation. They have talked constantly for the past 25 years. This continuous dialogue picks up where it left off when the brothers meet in a parking lot in Danvers, Mass., at 6:00 every morning. They both get in one car and proceed to jabber about business until, an hour later, they reach Newmarket.
Then they go to their office where their desks are lined up side-by-side and jabber about business some more, moving the day along by overhearing each other's telephone calls in an absentminded way and then amplifying the results with additional facts or considerations.
At first, this management style is slightly disconcerting, because the brothers know each other so well that either one can, and will, complete the other's unfinished sentence. But they are by no means interchangeable personalities. Herman is mellow, where Sidney is jumpy. Herman will sit and talk after dinner, while Sidney will be off trying to get everybody into the pool. "We trust each other implicitly," Sidney says. "That's what makes it work. I led the charge then, but I was just a little more paranoid."
Sidney leans forward in his chair at this point and confesses, almost conspiratorially, that although he didn't know it in 1973, their high-volume shoe business had hit its peak. In the years that followed, he says, a flood of imports that were coming from the Far East would decimate the market. "We talk about coincidence," he says, "but if we hadn't introduced a new product exactly at that time, things could've been very difficult for us."
In 1973, the brothers set up a subsidiary and produced 2,500 pairs of Timberland boots, compared to 490,000 pairs in the Abington line. "We intentionally started small," Herman says, "but we thought we should have done better. We began to realize that we had a product we didn't know what to do with."
Most of the brothers' initial problems with Timberland stemmed from their unfamiliarity with marketing. They were trying to reach a totally new market with the same methods of distribution and advertising they had used in the high-volume business. Most early sales were made in Army-Navy stores, and these sales were encouraged by occasional ads in hunting and outdoor magazines. Even the discount mentality was at work; they priced their boots at $25 a pair, slightly below Dunham's boots. "We thought we had to," Herman says."After all, we were the new kid on the block."
Herman went back to his neighbor. But this time the neighbor said he had dropped out of the business, because he wasn't feeling well. He said the man Herman needed now was Len Kanzer, president of the Marvin and Leonard Advertising Co. in Boston.
Kanzer recalls that when Herman and Sidney first walked through his door, their basic pitch to the retailer was simply that they made a better product that was priced below the industry leader. This was true," Kanzer says, "but it certainly wasn't enough. You could never have picked them out of a crowd. We had to tell them they were doing everything wrong in marketing."
According to Kanzer, Herman and Sidney were shocked when they heard his recommendations. And no wonder. Kanzer said the Timberland boot -- heavy leather, mile of thong, thick rubber sole, and all -- should be marketed as a fashion item. It had the outdoor look, he said, and the look was in. So take the boot to the "upscale" buyer, that growing crowd of well-heeled and well-educated urban backpackers that wanted the "look" and didn't care what it cost.Put it in Saks, he said, right up there with those sleek, imported slip-ons from England and Italy. Advertise it in, of all places, the New Yorker. And finally, he told them to increase their price by five dollars a pair so they could put the difference in advertising. "Herman and Sidney reminded me," Kanzer says, "that it was their company I was fooling around with and what was I trying to do anyhow -- ruin them?"
In effect, Kanzer had asked the brothers to abandon 20 years' worth of business practices. "I can tell you," Sidney says, "that decision used up a lot of rides to Newmarket. We agonized over it. Even raising the price was hard to accept. I mean, we were used to raising prices by nickels, not by five dollars."
Neither Herman nor Sidney knows exactly why they agreed to try Kanzer's marketing strategy. It certainly had something to do with intuition which, in turn, is arguably close to magic. Herman liked the approach, and Sidney thought it was taking the company in the right direction which, for him, is forward, with vigor. "Let's face it," Herman says, "to a great extent we committed our profits from the volume shoe business to a flyer. It was all up-front money. We couldn't be assured of anything."
On a spring day in 1975, Herman and Sidney were in their office trying to reassure their national sales manager that what they were about to do was best for the company. Sidney ended the futile conversation by telephoning Kanzer in Boston and telling him to go ahead with the plan. "We literally had to pick our sales manager off the floor," Sidney says. "He kept telling us that we had just ruined the company."
A few months later, the first Timberland ads began appearing in the New Yorker. They were masterpieces of creative advertising and eventually won more than 50 industry awards. They featured a colorful cast of straight-talking backwoods characters who clearly knew a good boot when they saw one. There was a family of moonshiners that included a mother whose face, even in wire-rimmed granny glasses, looked like a pick-ax, and her three boys sporting shotguns, suspenders, and outrageous high-water pants. They all thought Timberland boots were just fine.
And there was an old man testifying for Timberland from the seat of a log hauler. Not only was he satisfied with his own boots, but he also said he asked the Timberland salesman for "a pair of 13-wides for cousin Luther, double-wide on the left foot where the tractor run it over." Every ad closed with the refrain: "A whole line of fine leather boots that cost plenty, and should."
The ads had just the right touch of down-home sincerity to attract the "upscale" buyers -- when they could find the boots. Unfortunately, the company hadn't yet signed up any of the big-name upscale stores where the upscale buyers are supposed to go. "Obviously," Kanzer says, "we wanted to include department store names in the ads, but we didn't have any."
Most of the company's salesmen didn't know how to sell to upscale department stores. "They were used to the Army-Navy-store relationship," Herman says. "They didn't have the self-confidence to sell the department stores, except for a few of the younger salesmen who simply were too inexperienced to get scared. But it took Stanley to put the program over the top."
Stanley Kravetz, Timberland's 48-year-old executive vice-president, originally introduced himself to Herman and Sidney with the idea that they might use him as a consultant. He had 20 years of experience in the footwear and sporting-goods industries, including positions in sales and management. He was, according to one industry observer, a "fearless salesman who would knock on anybody's door." "At the time," Kravetz says, "working for a small, family-owned business was the furthest thing from my mind. I thought I was going to find a sleepy New England shoe manufacturer, and then I saw what they were trying to do."
Kravetz was hired early in the summer of 1976. By July, he was tramping up and down Fifth Avenue in New York with a green plaid suitcase stuffed with samples. One day he marched into the shoe department at Bergdorf Goodman and found the manager in his office sipping tea. The manager looked on incredulously as Kravetz unpacked his bag. "Here I am buying women's shoes," the manager exclaimed, "and you want me to buy boots?" Kravetz sold him eight pairs of women's boots and, with that sale, he uncorked a gusher.In the next two years, Kravetz and his remodeled sales team signed up 2,000 new accounts, including a crowd of fancy department stores and an assortment of smaller, upscale retailers.
By 1979, company sales had reached $16 million. Out of a total production that year of 600,000 pairs of footwear, 500,000 bore the Timberland trademark, a complete reversal of the business mix only two years earlier. "With numbers like that," Herman says with a smile, "you don't have to be told that you've got a brand name that sticks."
Even the competition was properly amazed. Says Rick Sherwin, vice-president at Dunham's, "I was very impressed with their marketing approach. It's the kind of thing where you ask yourself, 'Now why didn't we think of something like that? Why didn't we do more?' They simply did a fantastic job, helped the whole outdoor look, and created a tremendous market."
In 1979, as recognition that the subsidiary was now running the parent, the Abington Shoe Co. formally changed its name to the Timberland Co. For all their success and notoriety, Herman and Sidney Swartz seem remarkably unaffected. Maybe it's the memory of all those lean years that keeps them humble, or maybe it's simply hard to believe that you've lived a real-life fairy tale where every dream comes true.
CORRECTION-DATE: May, 1982
In "Sole Success" (February), the Abington Shoe Co. was mistakenly identified as being located in "a former piano warehouse in South Boston." The building was in Boston's South End -- a different part of town.