Spotlight: SGFootwear/SGI Apparel

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Established in 1896 by Sam Goldberg, New Jersey-based SGFootwear (S. Goldberg & Co., Inc.) now ranks among the top five marketers of footwear, bolstered in large part by licenses such as Bratz, Curious George, Pokémon, Sesame Street, Family Guy, The Simpsons, and South Park, to name a few. The privately held company's range of children's and adult footwear products includes athletics, sandals, flip-flops, hikers, boots, and slippers. Additionally, SGFootwear is the licensee for brand names such as Dockers, Fisher-Price, Gerber, Gold Toe, Panama Jack, and Jockey.

In January, SGFootwear stepped up its efforts to further expand the business with the launch of a clothing manufacturing arm, SGI Apparel Group, which aims to capitalize on the synergy between slippers and sleepwear. Former Allison Manufacturing executive Michael Diablo was named president and COO of the new company, which boasts a separate staff, with the exception of Vice President of Licensing and Marketing Elisa Gangl, who now oversees the department for both the sleepwear and footwear businesses. Both Diablo and Gangl were brought on board in 2005, thanks to longtime friend and current SGFootwear President and CEO Bernard Leifer.

Q: Describe your organizational structure.

Elisa Gangl: It's important to note that SGI Apparel is not an add-on business for SGFootwear; rather the two are separate entities. However, both companies retain headquarters, sales offices, and a permanent showroom in Hackensack, NJ, as well as a permanent showroom in New York City. In fact, we recently expanded our corporate offices and moved into a new 25,000-square-foot headquarters. In addition, both groups benefit from a merchandising and support staff based in Hong Kong. My team—which consists of a director, coordinator, and administrative assistant—and I are responsible for licensing and marketing on both the footwear and apparel sides.

Michael Diablo: To re-emphasize Elisa's point, SGI Apparel is a separate, stand-alone company. We hired Vice President of Sales Jeff Hurewitz and Vice President of Merchandise Marlene Triolo, as well as a Chicago-based sales representative to handle the Midwest territory and a sales associate/administrator to oversee all other parts of the business.

Q: Detail the initial business model and corporate mission. How has this model changed over the years?

Gangl: Our business model is to leverage all licensing opportunities while also maintaining a healthy private-label business. In recent years, as a result of decreased shelf space and an increase in licenses offered, we have significantly built up our private-label programs. Our corporate mission is to develop the highest quality on-trend product offered at competitive price points while meeting and exceeding retailer needs and expectations.

Q: What was the thought process behind the recently launched clothing arm? What initial (and future) lines do you plan to offer?

Diablo: With retail consolidation and smaller vendor matrixes, we wanted to expand our product offering to retailers, but it had to be synergistic with product on the footwear side. We initially will offer boys' and girls' sleepwear, including fire-resistant and cotton pajamas, robes, and blanket sleepers, in sizes toddler 2T to 14 for girls and 16 for boys. Going forward, we'd like to expand our offerings to include adult sizes, as well as new apparel categories and popular brand and character licenses.

Q: How is the apparel arm positioned to work in conjunction with the footwear group?

Diablo: We make it a point to work closely with the footwear sales departments to align the sleepwear group with many of the same retailers we've partnered with in footwear. As far as product is concerned, we're developing value-added merchandise programs such as adding slippers and flip-flops to pajama sets.

Q: How does licensing fit into SGFootwear's current business model? Will it play a large role in SGI Apparel's business?

Gangl: With a percentage breakdown of 60 percent licensed and 40 percent private label, licensing always will be a significant part of our business. As a major licensee, we always need to be in a buying position and aware of what the licensing community is offering. In the past, we were fortunate enough to have Pokémon (which continues to be a program), Power Rangers, and Teletubbies. Most recently, Bratz has been successful in the girls' marketplace, and Panama Jack also has become important. Additionally, Dockers in our Messer Division has seen tremendous growth.

Diablo: Licensing absolutely will play a large role in the new business venture, adding credibility to product offerings. In April, we signed Pokémon, Sky Dancers, and Ice Age: The Meltdown for children's sleepwear. We have additional proposals coming off Licensing International Show, which we will announce in the coming months.

Q: Detail core strategies implemented to support your retail presence.

Gangl: We have been successful with end-cap displays, pallet programs—some of which are cooperative efforts with other licensees—and signage programs. We also offer value-added programs such as GWPs (gifts with purchase), which have proven successful. Our products currently are sold in all distribution channels, from mass market and department stores to regional retailers and specialty stores. We also expanded our retail base to include food and drug chains, which is an area often overlooked by our competitors. As a result of expanding our private-label business, we have increased our product offering in casual fashion footwear.

Q: What are the essential steps between signing a licensing agreement and actual product reaching retail shelves?

Gangl: We first evaluate the license to make sure it is appropriate for our product category and needs and then begin contract negotiations. Our product distribution is determined by the licensor's launch strategy, and our lead time is approximately nine to 12 months from concept development to on-shelf product.

Q: How has licensing enhanced your business at retail?

Gangl: Licensed footwear plays an important role in our business. Whether the license is in children's or adult, it greatly enhances our business, most notably if the license already is placed in other departments at retail.

Q: How has your footwear performed in the domestic market as compared to international territories?

Gangl: It really depends on the license. Some licenses are very successful internationally and don't work in the U.S. Conversely, properties that are successful in the U.S. usually perform internationally. Penetration and awareness of the license also play an important role.

Q: What are your plans in terms of securing new licenses and building retail relationships?

Gangl: Being on the pulse of the licensing community allows us to review licenses early on so we can secure the rights, assuming the property fits our product category needs. We will continue to work with our retail partners and allow them to challenge us in offering new, innovative product, displays, and other marketing tools.

Diablo: On the licensing side, we want to align with partners that understand the needs of both the retailers and the licensees. It's important that our partners have a clear understanding of how to market their property and product to consumers. As far as we're concerned, forging relationships with these types of partners brings credibility to the license and the type of business model we have created. We aren't necessarily looking to have a laundry list of licenses; rather we are paying special attention to evergreens or new intellectual properties with long-term prospects.

Q: What are some of the immediate and long-term growth areas for your business? What can retailers and brand holders do to help?

Gangl: As retail shelf space continues to shrink, our goals are to expand our distribution channels. Since the licensing landscape is highly competitive, licenses should be offered on multiple platforms to gain consumer interest and recognition. Additionally, it's important to allow a license to gain appropriate awareness and exposure before launching licensed products.

Diablo: Under the current retail business climate, I think many retailers are constantly evaluating the amount of floor space they dedicate to licensed entertainment properties and brands. As a result, brand holders need to manage their expectations in terms of their properties and the amount of floor space that's capable of being received at retail.

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