Shoe manufacturer must differentiate its offerings from cheaper imitators through marketing and advertising.
It took 20 years for Margot Fraser to turn Birkenstock sandals from hippie affectations into industry leaders. Now she's discovered, as every niche exploiter eventually does, that nothing breeds competition like success. Can her company survive the attack?
In the beginning Birkenstock shoes were the brogan kin to the ugly duckling -- paddle-shaped Jesus sandals perceived as so pathetically homely that their main market was health-food-store owners. They'd wear them behind makeshift counters, feet propped up on bulk bins of wheat bran and organically grown nuts. The sandals were plain, but they were comfortable, and there was nothing else like them on the market.
Margot Fraser of Santa Cruz, Calif., had chanced upon Birkenstocks in 1966 while visiting her native Germany. The sandals were a new product of Birkenstock Orthopadie GmbH, in Bad Honnef. Then 30-year-old Karl Birkenstock had taken over his family's 192-year-old business and was introducing sandals that incorporated the same orthopedic elements that Birkenstock used in its insoles. Fraser, then 36, bought a pair, wore them back to the States, swore that their sand-print-shaped footbed worked wonders on her cramped toes, and ended up buying sandals for her skeptical but interested friends.
Soon she was ordering 6 and 12 pairs at a time, loading up her suitcase with sandals and flattened boxes, and trekking to the health fairs that were sprouting up with the genesis of the whole-earth movement. "Those shows," she says, "were the way I got going." Health-food stores and hole-in-the-wall retailers began carrying the sandals, and eventually she had enough of a business to become, on a handshake, the exclusive U.S. distributor of Birkenstocks. She and a friend, Mary Jones, kept cash flowing by offering 5% discounts to retailers who paid their bills within 10 days.
The sandals created their own puny niche as the rejects of the shoe industry: not athletic shoes, not fashion sandals, and certainly not office attire, they were, for the most part, ignored. Birkenstocks' debut in the national press wasn't until 1976, when a women's magazine named the sandals a "fashion don't." But for enclaves of newly germinating flower children on college campuses, ex-hippies living in rural seclusion, and practical-minded folk hopelessly unattuned to the fashion world, the leather-strapped, molded-corkbed-base concoctions looked fine, felt fine, and were the casual shoe of impassioned choice.
"No one," says Fawn Evenson, president of Footwear Industries of America, "expected that Birkenstock and Teva [a rubber-soled sports sandal] were going to eat the lunch of Nike and Reebok. But they certainly have." After creeping along for two decades, Birkenstock's sales, stature, and authority in the shoe industry burgeoned. It took all of the 1970s and most of the 1980s to reach sales of $9 million. Then between 1989 and 1992, Birkenstock expanded nearly 500%, to $50 million. "We grew by pure, unadulterated intuition," says Jones, now vice-president of administration.
Serendipitous fashion flings that adopted retro skirts, gauzy fabric, and your mama's geeky sandals helped, as did the move away from the '80s power suits in favor of a casual look promoted by companies like the Gap and Timberland. The increase in demand wasn't pure luck, though. Birkenstock had launched an active effort to reposition the shoe as an item for more than just the alternative nation and had marketed it with vigor. In 1989 the company hired its first full-time sales representatives and added department-store accounts. Its catalog began featuring upscale weekenders lounging in bistros with toned (and shaved) legs. The expanding product selection of Fraser's distributorship comprises 28 styles including the classic two-strap Arizona sandal in 25 combinations of color and texture.
Like the ugly duckling, Birkenstock was growing up. Sassy magazine first featured the sandals in a 1989 spread, and teenage grungers and preppies alike claimed them as their own. Designer Marc Jacobs had a pair of bejeweled satin Birkenstocks made especially for his 1993 fashion show. Chic publications, including Details, GQ, and Vogue, wrote breathy copy to accompany their pouty models wearing next to nothing above the $76 to $138 sandals.
What this emerging swan was not altogether prepared for, however, was the awkwardness of adolescence. Like other unique products, Birkenstock sandals and their popularity have not gone unnoticed. Creditable alternatives and superficially indistinguishable rivals that sell for a small fraction of Birkenstocks' hefty prices are thrusting the company onto an unfamiliar battleground. Knockoffs, dueling retailers, and a nebulously broadening customer base beg for attention from Fraser and Jones, who still lead the business. While still the undisputed leader of its "comfort shoe" category, the company with the gentle soul is struggling to conform to a threatening new world.
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Novato, Calif., is one of the prettiest parcels of rolling land on all of God's earth and a completely likely place for Birkenstock Footprint Sandals Inc.'s headquarters. About 45 minutes north of San Francisco in preciously groovy Marin County, Novato is the kind of place where it seems perfectly logical that Birkenstock's public-relations chief, Lisa Geil, has planned an outing to a Japanese-style spa named Osmosis for my first evening in town. After tea in a dimly lit room adjacent to a rock garden, we recline in pits of Kitty Litter-sized, enzyme-impregnated wood chips that draw impurities from our pores.
