In the Customer's Shoes

Profile of a CEO who rebuilt his men's shoe store by listening to his customers.

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Before the slowdown, Larry's Shoes president Elliot Goodwin thought he knew just what people wanted from stores like his. Then he asked his prospective customers, and the race to remake his business was on

Welcome to America's largest shoe store for men. You're in north Dallas, at a shopping center called Prestonwood Court East. And here is Larry's Shoes, one of a 10-store chain, and impressive even by Texas standards.

Picture 10,000 square feet of sales terrain, nearly a fourth the size of a football field. With dress, casual, and athletic shoes -- we're talking one-stop shopping for a guy's footwear needs. The selection is huge -- some 2,000 styles from 60 manufacturers, everything from river sandals to Swiss-made Ballys. The stockroom is packed with 30,000 pairs, an inventory worth more than $1 million, about 10 times what an average shoe store carries.

There's a lot to see here -- the celebrity-shoe museum, for starters, which displays around the store footwear of the famous: Golf shoes worn by Gerald Ford. John F. Kennedy's wing tips. The shoes of Cher, Clark Gable, and many more -- even the telephone shoe used by Don Adams, the goofball spy on the old Get Smart show. "They only made one, and we got it," says the president of Larry's, Elliot Goodwin, who picks up these curios at auctions. The most valuable exhibit, suede pumps worn by Marilyn Monroe, cost him $6,300.

Then there are the vendor shops -- stores within a store. Larry's has seven of them here, showcasing its top brands. Recessed into one corner is the Timberland shop, decorated with old snowshoes and backpacks to play up the brand's claims of ruggedness. Sebago's shop sports a maritime motif; nautical charts cover the walls. All that shopping making you thirsty? Visit the cappuccino bar, done up in red and yellow tile. It's got a big espresso machine and blenders for frozen coffee concoctions and fruit juices. No charge, mind you. While sipping cappuccino, you can catch sports action on the five big-screen TVs around the store, or enjoy a free foot rub from a massage therapist. ("I stole that idea from an old hippie grocery store in Austin," Goodwin admits. "They had somebody giving back rubs.")

Flashback to the same store site, circa 1989. Nobody could bemoan the selection; there were 1,500 styles in stock, so no one could mistake it for an old-time men's shoe store. The company, headquartered in Fort Worth and making its money on high-volume business at 10% to 15% off full retail prices (shoe retailers typically add 50% to the wholesale price), was closing in on $22.2 million in annual sales from eight stores in Texas; there's no question Larry's had critical mass.

But Elliot Goodwin was not a happy man. He was looking at a set of horizontal sales numbers and a bottom line that was yielding to gravity, and he was wondering what was going wrong. One thing seemed clear: doing it bigger didn't mean doing it better.

Plenty of entrepreneurs have been in Goodwin's shoes -- enjoying surging demand, cutting the ribbon on new units, operating on instinct instead of systematic customer feedback, and then hitting the wall, not knowing why it's there. As Goodwin discovered, they have two choices: they can do nothing, in the hope that the wall is only temporary, or they can look for tools to start pulling the wall down. Goodwin wanted Larry's to grow. He chose the latter course. And in the process, he was forced to relearn something he should never have forgotten: that he had to communicate with his customers. That meant discovering who they were, asking what they wanted, listening to their answers -- and believing them enough to start doing something about it.

"We always thought people lived to buy shoes," recalls Goodwin, a bit disappointed. "I had no idea it was a pain in the ass."

Larry Goodwin, Elliot's dad, went into business in 1949, running a pawnshop in Fort Worth. When a local haberdashery folded in 1955, he snapped up its shoes -- some 5,000 pairs. A fifth of them were huge sizes, like 18s. Larry played up that niche, and in time he built a following among the hard-to-fit crowd. The Dallas Cowboys, for example, became regulars. By 1964 Larry's had annual sales of $485,000. The elder Goodwin grew his company on a few core principles: offer a big selection of quality shoes, with an extensive range of sizes; sell them off-price, at about 10% below the full retail price; and provide superb customer service. "When he started out, a good men's store would roll out the red carpet," Elliot says. "He trained his salespeople to pamper customers. We try to do the same."

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