Browns Shoe Shops Inc. is stepping into a new era, mapping out growth strategies through more flagships and boutiques within fashion retailers, as the family business prepares for the loss of its Holt Renfrew & Co. account.
Browns, with 47 locations, now runs shoe departments at nine Holt's stores. But by early 2007, it will have to walk away from that business following Holt's surprise decision earlier this year to operate its own shoe shops.
As a result, Browns and Holt's -- partners for the past 14 years -- will become direct competitors, vying for the same style-conscious customer hankering after a Manolo Blahnik, Prada or other high-end designer label.
"At the designer level, we're going to be in competition with Holt's," acknowledged Michael Brownstein, 55, president of Browns and a third-generation family executive. "It will be good for the consumer, I guess."
Will it be good for Browns? The privately held chain, which rings in more than $90-million of annual sales, is set to tackle its latest challenge by launching as many as 10 stores in the next few years, while enlarging existing outlets, Mr. Brownstein said. It aims to boost sales at least 10 per cent in that period.
It will be expanding in a tight Canadian footwear market, which is estimated at $5-billion and experiencing virtually no gains as cheap imports shrink shoe prices, according to David Howell, a consultant at market researcher NPD Canada.
Still, Browns is on a strong footing, he said. It has seen other high-priced shoe chains fold, leaving it with little head-on competition, and is a well recognized and trusted name in this country, he said.
Ironically, Browns had "tutored" Holt's in shoes so well that the carriage-trade retailer is now seasoned enough to launch its own shoe departments, he said.
Mr. Brownstein may not enjoy the irony, but he seems ready to take on Holt's, and replace that business.
And he seems to understand fashion. Today, he's clad in a navy Prada suit, apple-green shirt open at the neck and $500 Cesare Paciotti calfskin pointy-toed shoes.
He and his buyers keep a constant lookout for the latest trends, travelling in Europe and other hot spots, visiting nightclubs and watching celebrities. In airports, he carries a camera and takes snapshots of passersby's footwear, his eyes down, checking out shoes.
His plans for Browns include rolling out three to five stores in each of the next several years, including outlets under its funkier B2 banner, and three flagships in Montreal, Toronto and Vancouver. They are expected to be located close to Holt Renfrew stores.
He is in talks with other fashion retailers about setting up shoe boutiques in their stores, he said. (Quebec-based Simons and Ailes de la Mode may be among them, Mr. Howell suggested.)
And Browns, whose shops are in seven Bay department stores, may move into even more of that chain's outlets, Mr. Brownstein said.
A Bay spokeswoman said it plans "a few more" Browns boutiques in 2005. "This is a successful relationship with the potential for further expansion," said Hillary Stauth of parent Hudson's Bay Co.
At Holt's, Browns helped raise, almost fivefold, annual shoe sales since 1992, Mr. Brownstein said.
He said Holt's and Browns disagreed over the proportion of designer shoes the retailer should carry. Holt's wanted even more, while Browns wanted to keep a healthy proportion of its more reasonably priced private labels (representing about 50 per cent of sales.)
Browns found it difficult to sell all the designer merchandise at full price, resulting in too many of them having to be cleared at significant markdowns, which squeezed profit margins, he said.
Observers point out that Holt's has been trying to assert itself in its shoe business, having removed the Browns name from its footwear departments in the past few years.
And Holt's has been moving to even pricier, and edgier, luxury merchandise, they say.
Caryn Lerner, who took over as Holt's president last September, said the retailer wants to put its own stamp on its shoe department.
It's not the first time Browns has faced major challenges. In the nineties, it opened four stores in Chicago with the goal of running a U.S.-wide shoe chain -- only to beat a retreat by the end of the decade.
The Browns name was relatively unknown in the United States, and to build the banner would have meant a huge investment, Mr. Brownstein said. His focus, instead, is on Canada.
The buzz on Browns shoes
Michael Brownstein, president of Browns Shoe Stores, will see his company step into a new era as it expands and prepares to go head to head with Holt Renfrew.
Annual sales: more than $90-million
Total stores and in-store shops: 47
Stores: 18 Browns stores, 5 B2 stores, with funkier styles.
At the Bay: Eight boutiques in seven stores; three women's-only, one men's only and four men's and women's.
At Holt Renfrew: 15 boutiques in nine stores; eight separate ladies' boutiques, six separate men's boutiques, one men's and women's boutique; plus a boutique in Holt Renfrew's Last Call clearance outlet in Toronto.
Beginnings: Started in 1938 with one store on Ste-Catherine Street in Montreal.
Three generations of Brownstein chiefs: Benjamin (founder), Morton, 77 (chairman), Michael, 55 (current president).