David Markowitz,president and chief executive officer of Markio Designs, parent company of Davids and Capezio shoe store chains
David Markowitz says he was born with a shoehorn in his mouth, instead of a silver spoon.
His namesake luxury footwear store, Davids, was founded 60 years ago in Toronto by his parents, Louis and Julia Markowitz, in the same year he was born.
Now, as president and chief executive officer of Markio Designs Inc., the parent company of three Davids locations and the seven-outlet Capezio shoestore chain, which he co-founded in Canada with his brothers, he heads up the family's multi-generational business.
The family still rules, often wearing multiple hats. Mr. Markowitz personally does the buying along with his wife Faye, son Richard, and brother Alan, regularly travelling to Italy, New York and Las Vegas.
All were conveniently blessed with sample-sized feet – a seven for women and a nine for men – that are tailor-made for trying out shoes right on the factory floor.
Mr. Markowitz's career nearly took a different direction. As a young man, he chose to study theatre, but his entrepreneurial roots won out..
In a strong rebound from the 2008-2009 downturn, the company did more than $20-million in sales last year, experiencing double-digit growth, Mr. Markowitz says.
The next step for the Markowitz family: a December launch of new websites incorporating a full e-commerce platform.
Q: Why shoes?
A: The origins go back to the Kensington Market area [in Toronto] when my grandmother bought 100 pairs of shoes from a wholesaler for 50 cents each. When my father, who was 16 then, came home from school, there were 100 pairs of shoes in the living room.
So my grandmother said to him, "Go around and see if you can sell some of these for 75 cents or a dollar…whatever you can get." After three days, he sold all 100 pairs and had fallen in love with the shoe business.
Q: Did you want to go into the family business?
A: It was inbred. Since high school, I spent my weekends breaking up boxes and had an understanding of business and fashion from my parents.
But I was a bit counterculture. I had graduated in performance at York University and wanted to travel the world. It was a very creative period but I liked the idea of bringing Capezio here because of the shoe company's connection to dance and theatre and their move to take the shoe from onstage to offstage. My brothers and I also wanted to do something on our own.
Some 36 years ago, we got the licence to carry the Capezio name and trademark in Toronto and a loan from the Royal Bank of Canada for $250,000. Everything we did from that point was independent. We're very proud of that. It was important for me and my brothers to work independently and for my father to let us learn our own lessons. Then, about 20 years ago, we merged the two companies.
To me, the shoe business is a lot like show business. I see each season as a new show with a fresh start.
Q: There have been a lot of turndowns over 60 years. What do you do when people stop spending?
A: It's very difficult. You have to play the chess game. We work a year in advance and anticipate trends. When we feel a recession is coming, we scale back. We've done it four times where we've scaled back our buying by 25 per cent to make sure our inventory isn't bloated.
We'll also react to the seasons much quicker and won't place all our orders in advance. By buying closer to the season, your money isn't tied up with inventory. Don't overspend; don't overbuy; don't over-inventory. Watch your overheads.
We know the exact numbers of our rent, performance per square foot, staff overhead, margins and markdowns. There's an encyclopedia of knowledge in the back office that we follow very carefully. That understanding and analysis has helped us weather the storm.
We also do a factory breakdown. Each factory gets a report card. The secret of Davids and Capezio is that we're multi-branded. We carry 30 of the best lines in the category that we want to represent. If we have an underperforming line that doesn't make the grade, we'll pass on it and pick up a new one.
We're very mobile, very agile. We don't depend on just one brand for our success, but have a mixture. If Ugg boots are strong, we'll bring them in. If we see they're trending down, we'll go to Sorel. If Hugo Boss is trending great, we'll include more.
We constantly, on a monthly and seasonal basis, take our analytics very seriously. Regardless of the recession, people still need to replace shoes. You just have to have what they want.
Q: How do you know what they want?
A: The analysis, factory report cards and statistics from the previous season give us a base of what would work in the next season. We keep our ear close to the street, travel the world, go to shows, follow the trends and look at our successes and failures from the previous year so we get a good barometer for excellent editing.
In fact, that's really the difference. A department store might throw a young buyer out of kitchenwares into the shoe business, and now they have to go into a factory, look at 300 styles and choose what they want. Unlike us, they could be swayed by the salesperson or the glitz.
When we go into a showroom, we know exactly what we want and cherry-pick the top-selling styles. We might take 5 per cent from each collection – maybe 15 styles. Then, we'll switch it around to get exclusivity. We'll change heel heights and the types of leather they produce to put our own package together. We have an excellent ability to edit the winners from the less desirable ones.
Q; How do you make decisions?
A: We delegate but the family makes all the key decisions. I've acquired my father's knowledge of the business and am passing that on to my son. We pride ourselves on the democratic process – we don't do anything unless the majority agrees. We'll work through any disagreement or we might pass and leave it for now.
One reason we've been successful is that we're not power- or money-hungry. We haven't been excessive with our expansion plans or taken too many risks. If one person wanted to go forward but we had some hesitation, we've held it back. It's also partly why we've not grown across Canada or become a multi-national brand. We don't like to leverage ourselves or extend too much loan so we've done everything at a very gradual process. It's a conservative approach, but solid.
Q: How much of buying is instinct?
A: A lot is a personal connection with what you're seeing. We won't buy something we don't like even if the salesperson or designer says we've got to have it. We'll stick to our strategic position. If a shoe doesn't fit, it's very uncomfortable, so we take how it's made very much into consideration.
A: Do you try on every pair?
Yes. My wife is not only a fantastic buyer, she's sample size. We all are. It's very important because a shoe looks different on the foot. Sometimes we'll get samples sent to us and do trial fittings.
We're also not impulse buyers. After coming back from Europe or New York, we don't commit to the orders until we've analyzed it all. We'll gather all our purchase orders and match them up to make sure they're complimentary so that we have the right amount of high heels or black versus a colour. Even though we're multi-branded, there's a continuity to what we have.
Q: How do you stay close to your customer?
A: We're on the floor just about every Saturday participating in the selling, so we'll hear what customers say. That way, we know the specific needs of each particular district or store. Interaction with the customer is key. You can't run a business in fashion from an ivory tower.
Q: Why did you jump into e-commerce?
A: It's the way of the world. Internet buying is becoming more accepted. For years, we felt you had to try on footwear but customers are increasingly educated about the product. It will also give us more exposure across Canada. They say that your Web sales can replace a bricks and mortar store.
Q: How do you keep clients?
A: At Davids, we have a loyalty program called Club Preferenza, and, at Capezio, we have Sole Advantage, where we give back 5 per cent. We also keep a record of the customers' needs and information so we can contact them through an e-mail blast or a personal call when certain products come in.
Q: How will the American chains like J. Crew and Target moving into Canada affect you?
A: In the luxury market, it's worked to our advantage. We've had Gucci, Prada, Louis Vuitton and Tiffany's enter the Canadian market, bringing an awareness and acceptance to the Canadian consumer that there's a higher price tag for the very best. J. Crew and Target affects Capezio, but fortunately, they bring their trends with them and a lot of our products match the trends. Their products will go with our products.
Q: Where does discounting fit in?
A: Sales are a necessary evil. There's an expiration date to products. We'll fall in love with a product but we won't love it so much that we won't mark it down. We've developed a system called our markdown wizard that helps generate an appropriate price based on the percentage sold and how many weeks left in stock. If something hasn't sold, it will be 50 per cent off or greater but if it sold well, it might be 10 per cent.
Q; What's your retail advice for the next season?
A: Purchase your inventory cautiously, buy closer to the season, be agile. Track sales and prepare monthly profit and loss. Watch your gross margins and make sure you turn your inventory because stale inventory leads to too many markdowns.
Regardless of whether your sales are down or up, there's a mathematics to the retail business and bottom-line profit. Make sure the math works.
Special to The Globe and Mail