Pinching pennies on advertising helped to preserve one of Aldo Group’s key advantages: lower prices. By selling its products through its own stores, it could undercut competitors such as Nine West and Steve Madden, which sold much of their merchandise through department stores.
While offering low prices, Aldo Group was also careful to invest in well-designed stores, removing any perception that it was merely a discounter. “People want style and they want it at a good price, but they don’t want it to be perceived as cheap,” said Tony Grossi, a New York retail real estate consultant.
Today, Aldo Group operates 475 stores in the U.S. and another 471 in Canada. It is also a force in the U.K., Mexico and much of the Persian Gulf. In its core English-language markets, stores are company-owned; outside of those markets, Aldo Group teams up with seasoned local retailers as franchisees.
Those local retailers provide head office with a window on local preferences that can tilt footwear selection. In its Persian Gulf markets, for instance, Aldo Group stocks more men’s loafers and open-toed sandals than it does in North America, because Muslim men like footwear that can be easily slipped on and off for prayers five times a day.
Back in North America, though, sales growth is slowing. Aldo Group’s burgeoning competition includes discount titans such as Payless and Wal-Mart, as well as the fast-fashion trendsetters like H&M and Zara. It is also up against a sluggish economy, especially in the U.S.
To find new avenues for growth, it is trying to sharpen its fast-fashion advantage in what it internally calls Project Sunshine. “It’s actually not that hard when you’re growing at two stores a week to hide your mistakes,” David said. “Now that we’re not growing as much, we need to be a lot sharper with how we do our buying and inventory management.”
Head office now gets hourly – rather than weekly – sales data, allowing it to make faster decisions about restocking top sellers or ditching losers. The speedy updates shave the time it takes to get shoes on the shelf by as much as 30 per cent.
Mr. Bensadoun wants to expand in North America without the huge spending needed to open new stores. The solution: Wholesale products to other retailers. His company recently struck deals to supply products to department stores Kohl’s and J.C. Penney and online retail giant Zappos.com. And starting next spring, Aldo Group will ship its revived Pegabo line to the Bay department stores.
In yet another evolution, Aldo Group is using its retailing savvy to help other companies such as Italy-based Miss Sixty run their shops in foreign markets. “We said, ‘There’s got to be other ways to make money than just keeping on opening stores,’ ” David said.
Aldo Group itself is eyeing new markets, including China, Japan, Brazil, Italy, Germany and France. It believes it can double annual sales to $3-billion within five years. “It’s a playing field that’s in constant evolution and we’re always trying to change our recipe to fit into it,” he said.
HIT AND MISS
Aldo is not the only Canadian retailer to enter the U.S. market. But it’s one of the few to succeed.
The Vancouver-based yoga wear chain expanded rapidly in the U.S. after it went public in 2007, and now operates 75 of its 130 stores south of the border.
Montreal-based Le Château entered the U.S. market in 1985, but has struggled since. This spring it closed one of the four U.S. stores it had left and will shut the remaining three when their leases expire.
In 2005, the Toronto-based leather chain closed three struggling U.S. stores after four years in the market.
In 2005, the then Montreal-based lingerie retailer was forced to shut its five U.S. stores after about two years in the market. Almost two years later it was taken over by the U.S. parent of rival Victoria’s Secret.
Mark’s Work Wearhouse
The Calgary-based work and casual wear chain entered the U.S. market in 1981 and peaked at nine stores before the U.S. operation filed for bankruptcy six years later.
Toronto-based Canadian Tire wasn’t able to turn around a U.S. chain it scooped up in 1982; it failed again in the early 1990s in its second attempt at the U.S. market.