Sanük Founder Jeff Kelley On Hanging Footwear & Growth

Walking the floor of Agenda this week it was hard not to notice the surge of new hanging, closed-toe footwear. The category has been exploding at retail as it allows shops to transition sandal displays to shoes and move them as impulse items without taking employees off the shop floor to grab sizes.

While this is a new trend for many brands, Sanük has been in the hanging footwear market since the launch of its Sidewalk Surfers. We caught up with founder Jeff Kelley to learn about the genesis of one of the footwear industry’s hottest trends, and how his company is setting its sites on some of the industry’s biggest players.

How did you get the idea for the Sidewalk Surfer, and what went into building the first one?

I was running the stairs in front of my office in the morning in my New Balance running shoes. Later on that day I ended up going for a surf, and ran back up the stairs barefoot after getting out of the water. The range of motion running up barefoot was completely different than I had experienced earlier in the day in my running shoes. I could actually feel myself using my toes and muscles in the ball of the foot to project myself up.

When that happened a little light went off in my head.

With the running shoes on I was using all leg to go from stair to stair, but when I was barefoot it was so much easier and efficient and I knew that sandals were constructed without stitch-down board. I knew that if I were to make a shoe upper on a sandal footbed, then I would get closer to that motion of being barefoot.

By chance, I was on the way to visit my factory about a week later. I took one of my best selling sandals, which is the Lazy Boy, and I just cut a bunch of slots in the top layer before I put it together around the perimeter. I stitched up a deconstructed upper out of canvas that I had laying around the sample room, and just made tabs and pulled the tabs through the slots just like making a sandal and put the things together.

On the way out, I cruised around and walked Hong Kong for about five hours, and I knew right then I was onto something huge. My back felt better then it had ever felt and my feet felt better. Everything about the way I was walking in those shoes was better.

What’s your background and how did you wind up focusing on footwear?
In 1985 I started Track Top out of my garage. I helped construct that company by getting all my Traction [sales] reps to sell their sandals for them, because they didn’t really know anybody.

When I sold Track Top, Fernando and Santiago [Aguirre] offered me an equity position to move to San Diego and run Reef for them. So when I came down here, the first thing I did was look at the way their product was being merchandised. I knew that if I could differentiate us from the rest of the shoes and get our stuff out of the baskets on the floor and get them up where people could see them that would work.

I came across this greeting card holder that had pockets. I called the manufacturer and asked them to modify the pockets. We put the sandals in the pockets and boom they are up off the floor.

What advantages does this have for retailers?
Sixty percent of sandals sales are on impulse. When they see this merchandise rack, or wall of sandals, it entices them to try stuff on.

When I was working for Reef I created what we called ‘the money tree’ that changed everything. So it was a natural for me when I created the first Sidewalk Surfer to merchandise it the same way so the customers could try it on themselves.

You take a person off the floor to try and find a size or style, and then they aren’t out there to help somebody else. This eliminates that and makes it much easier and much more efficient for everyone.

It seems like a lot of people are catching onto this trend.
There are a lot of people out there that are making hanging shoes, but for me it was a natural. They are hanging shoes on hangars, and we’re still hanging sandals on hangars. Because the construction that I have is a patented construction, it’s not like a shoe. So from a marketing standpoint, they are trying to copy a look that we have created, but they will never be able to copy the feel.
 

Originally, was it tough to get retailers to buy into the model?
No, it wasn’t. Everything in a surf shop looked the same and retailers were crying for something new. In the past you’d show them something new and they wouldn’t embrace it out of fear, because they didn’t have to. They’d just give Quiksilver five more feet of wall space or Billabong five more feet of wall space. They wanted something new but weren’t willing to take the chance, but it got to a point where they were forced into having to do it.

I think we did an incredible job in packaging the whole story, letting your foot move naturally, and the timing was right. In the last five years, people have become much more health conscious and gotten away from the more tech stuff.

You mentioned you got the idea while running, do you see yourself targeting that market going forward?
I think at some point we would, but at this time I don’t have the infrastructure. I need an entire new sales force, because my guys would never go into the running market efficiently and make it happen.

There is still so much opportunity for Sanük to grow within the markets we are in right now, it would be kind dumb for me to take my eye off the ball.

People are always asking me too, when am I going to do clothing? When are you doing shirts? I’m not doing it. This is what we do good. Let’s stay focused and let’s keep this thing going.

As the market continues to consolidate, do you ever foresee yourself selling to a larger company?
I think that could probably happen, but I have no plans on getting out. Even if that were to happen I would not cash out. I would keep money in the deal and keep the deal going, because I really, truly believe Sanük is positioned to become the Vans of the market place.

Every generation wants to define itself with something new, and Vans has been great for a long time but there are a lot of kids out there that want to wear something different. We have the broad mass appeal to be able to do that.

I think that’s why we have been able to be so successful in the stores. At the end of the day, maybe five percent of the guys walking into the surf shop buying a Sanük or a Reef have been exposed to one of our ads in a surf publication. If we are going to be big like a Vans or Converse we are going to need to reach beyond the borders of surf shops to get there, and we have already done that in a really solid way without having to reach out to a Crocs customer to do that.

What areas are growing for you guys these days as far of distribution?
Everything. (laughs) One-hundred percent of every category is growing.

Surf is always going to be the base of the company. Sanük is more like a Vans or Converse than it would be a Reef. Reef is very much focused on just surf and they are the kings at it. Internally our core structure of people are all into different things. We have a much more broader brand and we support the markets that we are in, like climbing, the same way we support the surf market, through sponsoring athletes and ads in magazines, the whole thing.

What are the next steps for growing in other markets?
To really step up the advertising, get more involved in the music side of things, and to really try to capitalize in all of these other markets outside of surf.

Not that we can’t do a lot more in surf. We can.

As far as that broader appeal, are you looking more at other types of closed-toe footwear? Or are you just staying with what you know?
I won’t build any other closed-toe footwear unless it has the ability to bend and flex and allow the foot to do what it’s supposed to do naturally. That’s the one constant that will always be part of my line.

I’m toying right now with doing some stuff in the golfing business. Not that I’m going to try to go blow it out, I’m just making a few prototypes. I have some ideas from a marketing standpoint that would definitely rock the boat on green-grass pro shops, if we ever did decide to go forward with it.

Can you give me an idea of the growth you have been experiencing?
We doubled our business last year. It’s been organic growth too, it’s not that we have gone out and opened a bunch of huge doors. It’s the guys who have trusted us from the beginning and given us more and more space.

From a retail standpoint, do you have any facts or figures on the amount of dollars per-square-foot retailers can get out of one of your trees?
I’m pretty confident that on a square-foot basis Sanük is one of the most profitable brands in everybody’s stores that carry us.

Story By Transworlds Mike Lewis