On a Roll

On the heels of adding Heelys to the BBC Int’l. portfolio, Tracey McLeod, president of worldwide sales and marketing,
discusses the conglomerate’s global brand strategy in kids’.

By Greg Dutter

To say BBC Int’l. has just about cornered the kids’ footwear business would not be so far off. A one-stop kids’ resource that features a portfolio of leading licenses (including Ralph Lauren, Guess, DKNY, Born, Sam Edelman, Disney, Airwalk, Marvel and now Heelys), the conglomerate also runs an extensive private label program and consults for numerous brands in need of expertise from a company that knows kids’ footwear like the back of its hand. BBC, launched 35 years ago by Bob Campbell (one of its original licenses was The Smurfs), is that company. And Tracey McLeod has been an integral part in helping turn BBC into a kids’ powerhouse, having joined the company more than 20 years ago, originally as a package designer turned shoe designer and now executive overseeing its extensive portfolio of brands.

Over the past two decades if it’s happened in kids’ footwear chances are BBC and McLeod have had a hand in creating and then introducing it to the marketplace. The company was the first to introduce lighted technology in the late ’80s; it developed radio frequency technology that tracks the speed of movement; and it introduced sound technology that features the voices of licensed characters on shoes. BBC also developed Black Light LED technology that allows kids to draw on their shoes and the drawings light up in the dark when the shoes are in motion. Put simply, BBC makes kids’ shoes the way a kid might dream of making them, complete with lights, bells and whistles that literally become toys for their feet. The fact is kids’ footwear is a specialized business that goes far beyond just shrinking down adult styles. Matters of fit, unique materials, construction specifics and design nuances combine to make the kids’ market a much bigger challenge despite the smaller sizes.

“Kids’ is often the area that gets the least attention and companies often have the least experience working in,” McLeod offers. “A lot of people come to us for our market, product and design knowledge because we bring a lot of information to the table.”

When asked point blank if BBC has in fact cornered the kids’ market, McLeod is modest, deferring for others to be the judge. However, she quips that Campbell, her industry mentor and BBC CEO, would respond, “Absolutely.” McLeod believes success is not necessarily determined by the quantity of brands in its portfolio, rather how they all complement one another without cannibalizing each other’s sales. “We choose brands that round out the portfolio as opposed to just adding another label,” she says. “There’s a lot of opportunities that come to us and we’re fortunate to be able to choose where we can layer in a new brand.”

McLeod describes, for example, that the Born girl is different than the Guess girl, and both are different than the Ralph Lauren girl. And while the differences can be subtle, she assures that BBC’s team of designers knows the differences so each brand owns a distinct presence at retail. Take the recently launched Sam Edelman brand. “It’s a hot brand and Sam was looking to get into kids, and we loved the idea,” McLeod offers, “but we first had to address how it would separate from our other brands.” McLeod describes the Sam Edelman girl as more on-trend than its other target girl customers. “The styles can feature a mixture of stone and stud embellishments, or it can be leopard print or trendy colors,” she says. “Whereas Ralph Lauren is very classic with a big Americana heritage—lots of riding boots. And Guess is for that girl who is a little sassier—she’s going to be a little bit more glam and wants metallic. And Born is all about great quality leathers and that girl’s fashion sensibility is more natural.”

Unlike a lot of companies heavily involved in licensing, the harmony McLeod describes from a design perspective extends to the relationships it has with its license partners. Often such marriages can be rocky, short-lived and end badly, whereas BBC has a reputation of being a loyal partner and agreements last for years, not a few seasons. In fact, BBC’s partnership with Ralph Lauren is going on 13 this year. “Eighty-five percent of licensing partners we’ve done business with over the years have been phenomenal,” McLeod affirms.

What’s the secret to such licensing bliss and longevity? McLeod says that in addition to a track record of success, it’s about being upfront and realistic with its partners. “It’s really about managing expectations,” she offers. “Instead of claiming right off the bat that we can make it a $50 million business, our process is much more strategic. We present the U.S. market’s opportunities first and we can break it out over international markets, if they’re interested. It’s all very specific and, subsequently, they feel that we’re going to do what’s right for their brand.” McLeod adds, “At the end of the day, it’s truly appreciated.”

McLeod speaks with the perspective and confidence of an industry veteran. Twenty-plus years have earned her the experience and she exhibits no need to sell herself—her resumé itself is enough. But like many who have built successful careers in footwear, she had no intention of ever entering this business in the first place. A graduate of the Fashion Institute of
Technology, McLeod initially had aspirations of becoming an advertising executive. But her dual degrees of industrial design and advertising were quickly put to use after she landed a job at BBC in packaging and POP design. Back then the company didn’t have footwear designers in-house but when the product developers learned McLeod could draw shoes they started coming to her regularly for such designs. After a year drawing, McLeod asked management if she could learn more about the overall design process. Campbell, ever the entrepreneur, agreed and asked McLeod to hire someone for her position so she could go overseas for six weeks to learn. Her design career was off and running but, she notes, it’s never been just a design job. “BBC is very entrepreneurial; you don’t just design—you build the product, you price it and you sell it,” she says. “We’ll often go to the customer’s offices and work directly with them. Not everybody does it that way.”

The way McLeod sees it, BBC is more like a kids’ ad agency for footwear companies. (Maybe she became an ad executive after all.) “Companies say, ‘Hey, we really want to build this business…’ Or, ‘It’s an opportunity we’re missing, can you help us out?’ We work more like consultants for multiple companies.” It’s always fast paced, involves a broad range of brands and requires a ton of creativity—all aspects of the job McLeod loves. “It constantly changes and challenges you, especially creatively,” she says. “Whether it’s working with a new brand or working on a new technology or a new creative aspect, there’s multiple ways to keep immersed in many different design aesthetics. It’s made my job constantly fresh.”
McLeod loves BBC’s entrepreneurial spirit, which she credits Campbell for creating and having a strong influence on her managerial style. “It’s one of the best aspects of the company,” she says. “There’s not a lot of boundaries to what you can learn and do here. Bob’s kind of great like that.” And McLeod is living proof.

What do you look for when taking on a new brand?
The ability to be a global brand is the most important aspect that we look for when looking at potential new licenses now. With the kids’ market being relatively small, it’s important that we have the opportunity to sell the brand in stores around the world to maximize its overall potential. Unlike in the apparel business where there’s less overhead, in footwear you have to be able to justify all those costs. A brand with a following and position like Ralph Lauren, for example, makes that investment worth it. Today you really need the global brand aspect to make it worth the effort and the global brand awareness of Ralph Lauren is enormous. We’re in Asia and throughout Europe—in stores like Harrod’s and Selfridges as well as all the best independent booteries. It’s also strong across multiple product categories. And he’s just a genius at marketing the brand. The brand’s whole Americana aspect is revered throughout Europe and increasingly throughout Asia. It’s just a great brand and that enables us to maximize sales worldwide.

What is it about Ralph Lauren that connects so well specifically to kids’ footwear?
Moms, obviously, see value in the brand. She’s often already a customer and knows of the brand’s quality. She looks at it the same way with respect to the children’s product. With boys, in particular, we’ve become a go-to lifestyle brand, be it classic boat shoes, boots and oxfords. Moms are comfortable dressing their boy head to toe in Ralph Lauren.

It’s after the initial boom, so what is it about Heelys that interests BBC?
BBC has always been a product innovator and we understand technology as well as the play factor with kids. So we plan to revive Heelys’ play aspect with a new product mix. We believe our capabilities in these regards bode well for the brand. A new line will launch for Holiday 2013.

Does Heelys have global appeal?
Definitely. But it’s been an untapped market in a lot of countries around the world. While it sold in Europe very strong, it had only just begun selling in Australia. The room to grow is quite big, and with our distribution network already in place, we will be able to tap into a lot of those opportunities.

Might Heelys have the staying power in kids’ like lighted shoes has had?
I think you hit it on the head with the comparison to lighted footwear. When we first introduced lighted footwear, soon after it peaked at a couple hundred million dollars annually in sales but, years later, there’s still a significant volume business that we do. And we’ve been doing it for more than 20 years now. As Bob often says, there are new kids growing into the category every day and lighted shoes are just as new and cool to them as they were to their predecessors. A 3-year-old will often instantly say, “Mommy, I want that!”

It never gets old.
It doesn’t. And I think the same thing will apply to Heelys, because it’s looked at more like a toy. A lot of consumers are going to buy that shoe as a gift item—something kids will have fun playing with. It’s really more of an add-on sale with respect to kids’ shoe purchases. It’s not in replace of shoes that will also be bought.

Moving on in the portfolio, what makes Sam Edelman run?
First off, Sam Edelman has been a ton of fun to launch. It’s been a limited distribution in Nordstrom and select independents and it’s having amazing sell-through. We plan to introduce it globally in Spring ’14. It’s just trend right and the line is able to play differently than some of our other brands and be more fashion forward.

He’s not worried about having to be too cutesy or traditional, right?
To an extent, yes. It’s unique among a lot of brands in the market. The way the product is styled and the way the brand is merchandised, Sam’s found a very sweet spot. It’s very product, product, product. And Sam is very good at that. I also think he’s pure with his distribution, which is great. He really honors his brand and keeps it protected.

How involved are you with Sam in the design process? Is there a lot of back and forth?
Moreso now because we’ve reached a point—now that we’re 18 months into the relationship—where we can bring ideas to the table. Often it takes six months to really assess a brand and learn what’s working and what’s not and see how it all might apply to kids’. In particular to Sam Edelman, he’s known for a lot of sexy shoes so we know those are not going to work, but the colors are great and a few silhouettes can definitely work. We just ask ourselves, “How can we put a more kid-friendly spin on it?” Or realize a girl will never wear a ballet flat without a strap—just things that are more kid appropriate. We just assess it all to create a collection that works best for both parties.

Are you looking to add to the portfolio in the near future?
We are always open to offers and we are always looking. It just has to make sense. Does the brand have presence in adult footwear? Or do they have a strong presence in apparel and are looking to cross into footwear? Or do they have a strong potential globally?

Is there a limit to how many brands BBC might get involved with?
It’s hard to say. If it feels right, it’s a great brand and our teams have synergy then it can be one more or it can be five. We’ll fit them in if they are a good fit.

Do you ever envision launching your own brand from scratch?
It’s a possibility. Like I said, we’re always looking. And because it’s something we’ve never done, I think a pure launch would be fun. Bob and I have talked about it quite a few times. In the meantime, however, we’ve got plenty on our plate and Heelys, in particular, looks to be the big launch this year. We’re also doing a lot of things with our Marvel license, which has been amazing of late. And we are real excited about our exclusive partnership with Kohl’s and our Tony Hawk skate brand. We are also working exclusively with Journeys and our Osirus brand. We’re covering all levels of distribution, which is one of the unique aspects about the company.

What’s your take on the adult takedown trend sweeping kids of late?
Sometimes it’s at the direction of the brand, where internally you’ll hear they just want to make brand statements. That happens often in the athletic tier. But even in regard to Sam Edelman, he’s driving the vision for his brand and often moms like what they see and they want a close iteration of that style. She doesn’t want to buy something else—she wants the exact brand. Having said that, you don’t want to stray too far from kids’ styles. And the pendulum does swing back and forth between adult takedowns and kids’-friendly style phases. All of a sudden something cool or creative gets in the market and it drives kids’-friendly styles, like Skechers recently did with its Twinkle Toes. That was only for kids. So you get fads and now there’s definitely a fad in high-fashion women’s and in athletic style takedowns.

Is that harder to design kids’ shoes realizing you are trying to please a 5-year-old and a 30-year-old at the same time?
It makes for an interesting challenge. The process involves multi-categories, multi-constructions and different genders, and then you’re also covering the gamut of sizes where, for example, a 5 year old’s wants and needs are quite different from a 10 year old.

Do you ever feel at times like you have too many voices you must answer in your head?
Why, do I sound crazy to you? (laughs) The fact is you have to build the shoes to appeal to both children and parents. Often for girls, it’s got to be glitter, it’s got to be pink and it’s got to sparkle. And in building it for mom, it’s got to have good function, feature quality materials and be comfortable.

There’s been a lot of talk about the eclectic nature of fashion of late and how there’s not one dominant brand or silhouette. Is that trickling down into kids’ fashion?
To an extent it is, which I like because from a design perspective it can get a little boring when one look is dominant. I understand retailers like a big-ticket item that has been a cash cow, but I love to see the market move. It’s way more fun this way. And when it starts to move, new ideas come into play. What will be that next big thing? With respect to my teenage daughter, the uniform of the past two years may have been Ugg boots, and the uniform next year might be Chucks or Toms, but they’ll all still be wearing jeans and they’ll all have a Jansport backpack. It’s just very interesting to watch. But I’ll admit being in fashion I’m constantly trying to push that envelope a little bit or show her something new. Of late she resisted and has said, “No I’m good with my black Ugg [boots].” And I’m thinking, really? But I also think kids like certain comfort zones and girls, in particular, like that comfort and the easy-on, easy-off nature of those boots. I suspect that the vulcanized construction with a tapered, a-line look like Toms will continue to also trend strong through this spring.

What’s your take on the independent tier for kids’ going forward?
It remains a valuable and important tier of distribution. Their expertise in fit and sizing is something that is difficult to replicate and is a service that many parents demand. Let’s face it—kids are always growing and while you may not do it every single time you take your child to get fitted, every once in a while you need to get their feet measured by a professional. So I think that service is still looked upon as a must.

Nevertheless, parents are increasingly shopping online.
Yes. And I believe that the online experience is going to keep growing. [For] moms, in particular, the Internet is just such a common resource for her to be able to browse and compare. It doesn’t matter if it’s home goods or clothing for herself or for her child.

How do you think parents have changed most since the recession?
Parents are changing most by how they shop and purchase online—which sites they visit and how they are competitive shopping in that they are always looking for value. Compare the younger mom of a 2 year old today to a mom of a 2 year old 15 years ago, who most likely would always bring their kids into a store and get all of their feet measured. Today a lot of those resources can be found online—you can print out the figurative size chart, you can order two sizes and ship back the one that doesn’t fit at no charge… It’s easy, right? They don’t have to trudge their 2 year old out to the store in the cold or rain.

The mom I live with does exactly what you just described. Little bags of clothing have been arriving—crammed into our apartment mailbox—on a regular basis for our 10-year-old daughter. They’re from a myriad of catalog companies where my daughter browses through them and then the purchases are made online. How do brick-and-mortar stores making all the investment in physical overhead costs compete?

How does everybody else compete? I think it’s going to evolve and that tier will become more consolidated. But I don’t think it will ever go away completely. First of all, women like to shop—they like to touch, feel and see the merchandise. It’s like men preferring to go to the actual game as opposed to watching it on TV. They’ll say, “I really just want to see it.” But that rule doesn’t apply for every little outfit you’re going to buy. There are some things where, with the click of a button, it’s here in two days and that’s wonderful.

Is BBC having any issues with sourcing?
It’s getting more challenging every year—pricing in China, restrictive substance standards and meeting compliance needs for all our customers. It’s becoming stricter and stricter so that affects price as well. So we’re always looking for potential new sourcing partners. Bob, in particular, is always seeking out new areas to make kids’ shoes, but China is still the mainstay for us at the moment. We just moved four hours north about six months ago. This is our second move now within China. [We were] in an area that’s finally got some good hotels, some decent restaurants and a Starbucks; then we move four hours north and there’s nothing. What can you do.

What is the biggest challenge for BBC right now?
The biggest challenge is sourcing and meeting compliance. On the flipside, there are tremendous growth opportunities in emerging markets around the globe. Look at the China, India and Russia markets—those are huge. And they’re growing at such a fast rate and they are building better-grade malls. The opportunity for BBC to expand internationally is tremendous.

What do you love about your job?
I love the challenge. Everyday there’s always a new challenge and there’s always an opportunity to be creative. I also love that it’s fast-paced and there’s a lot of good energy. I also love working with people—all of these aspects drive me.

What is it about working with Bob Campbell, in particular, that you enjoy most?
First, he’s an industry icon. He’s so passionate about the business, his company and his employees, and his commitment to it all is endless. I always tell people who are going to work with Bob that you need to be prepared for it being extremely fast-paced and you need to be super flexible. You need to be able to move on a dime with him. Today we could be talking about sourcing in China and tomorrow it’s about how he found a new brand and we’re diving into that. You never know what might happen next. It’s really just this tremendous entrepreneurial spirit he has.

What’s the best career lesson he has taught you?
Bob treats everyone in the company like they are a part of his own family and he’s just a super-compassionate human being. He also treats every employee with great respect and like they are peers. It’s how I learned to manage people. It’s a wonderful trait where it doesn’t matter where you stand in the company, he’s always willing to sit down and listen to your ideas.