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Aldo Bensadoun, founder and CEO of Aldo Group Inc., at the Montreal head office (Christinne Muschi/Christinne Muschi for The Globe and Mail)
Aldo Bensadoun, founder and CEO of Aldo Group Inc., at the Montreal head office (Christinne Muschi/Christinne Muschi for The Globe and Mail)

Business

Aldo's global footprint Add to ...

That was the year Mr. Bensadoun’s footwear career was truly launched, when he noticed hippies in Europe wearing wooden-soled clogs. He sensed that the footwear could become a hot trend in Canada, and he was right. Crafted in Italy and shipped to Le Château, the clunky footwear became a hit, with 500,000 pairs sold.

“I’m a strong believer that fashion starts on the street with political and economic events happening in the world,” Mr. Bensadoun said. His team, for example, recently introduced combat-style boots using distressed leather in reaction to what they were seeing on the evening news. “You have so many wars going on in the world.”

The success of the clog also taught him another important lesson: He needed to produce something different and run fast with new styles before others caught up to him. “If we were the same as every other retailer, then we never would have succeeded.”

He started his Aldo chain in 1980, rushing to find the next new fashion at an affordable cost – in effect, practising fast fashion before the industry coined the term.

In an era when retailers depended on domestic middlemen to source products from European manufacturers, he went directly to the source. After taking lessons in Italian, he travelled to plants in Italy, putting in his own orders and modifying a heel, sole or buckle as he saw fit.

His practices didn’t make him popular with the Canadian middlemen he was replacing, but it helped bolster profit. “He just broke the rules,” said David Bensadoun, 40, heir apparent and the elder of two sons who are on Aldo’s executive team today. “The reward was that his prices were sharper and his margins were a bit better.”

Today, Aldo Group sources about 60 per cent of its products in China. It also has shoes made in other Asian centres as well as in Brazil, Eastern Europe and Italy. Being able to switch quickly to a factory with the capability to produce, for example, wooden-based clogs – as the company did last year – is an advantage in an industry where success depends upon getting the latest fashions on the shelf within weeks.

Mr. Bensadoun insists on staying nimble in other ways as well. For instance, he runs multiple retail chains, each of which caters to different customers. His constantly shifting mix of banners and brands allows him to test new looks and adjust quickly to trends. “They are far better at understanding, interpreting and leading fashion trends than any other retailer I’ve seen,” Mr. McGuire said.

Aldo remains the company’s flagship banner, geared to serve 18- to 30-year-olds with a bit of disposable income. To draw a younger customer with less money, Mr. Bensadoun started Transit (now called Spring). “He defines segments of his business and he very astutely targets his stores to serve those different segments,” Mr. Hartman observed.

If a chain isn’t working, Mr. Bensadoun doesn’t hesitate to change it. “The worst thing is to run a concept that has gone stale,” his son said.

Case in point: FeetFirst, which the company launched in the early 1990s to appeal to baby boomers who wanted comfortable shoes. Today, boomers want fashion first rather than “granny shoe” comfort, David said. “So we figured out we just needed to make fashionable shoes that are secretly comfortable.” Starting late last month[august]/note>, Aldo Group began to convert its FeetFirst stores to a new higher-end chain – called Locale – which the company sees as its next global brand.

BEYOND CANADA

Aldo Group’s bumpiest ride came in the mid-1990s, when it struggled to break into the cutthroat U.S. market. Snatching prominent store locations was tough because landlords were unfamiliar with its name. The company’s handful of U.S. stores gave it no bargaining power.

That’s when Mr. Bensadoun took the unusual step of spending about $1-million to hire McKinsey to advise his tiny firm on its transformation into an international player. The high-power global consultancy rarely works with small private companies.

What did McKinsey see in Aldo? “Even when Aldo was only in Canada, its fashion footwear business was better than anyone in that segment in the world,” Mr. McGuire said.

McKinsey’s advice to Aldo Group was simple: Go big in the U.S. or go home. The retailer moved rapidly to open U.S. stores. With a minimal marketing budget, it managed to make a splash by buying up billboard space at just one conspicuous spot in each big city it entered.

In New York City, for instance, it invested in a “killer billboard” at the edge of the trend-setting Soho district, David recalled. “A lot of people said, ‘Wow, they must be a big player because they’re on this amazing billboard.’ But we didn’t have any other billboards anywhere. We just put all our money into that one.”

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