November 30, 2022

Cl Youth Theatre

Fashion, The needs of women

leading ‘a fashion store that sells shoes’

Colin Temple was working as a merchandiser at now-defunct pick ‘n’ mix-to-power tools retailer Woolworths in 1988, when he spotted a job advert in Drapers magazine for a “gents’ merchandiser” at a “little shoe shop called Schuh”. Founded in 1981 with just one store, it comprised 15 stores at the time, in locations including Glasgow and Edinburgh.

After securing the job, in the 10 years that followed Temple worked his way up the career ladder at Schuh to managing director in 2002 (see full CV below), and remains in the same role today.

That “little” shoe retailer is  a “million light years away” from Schuh, as it boasts on its website. It now has 123 stores across the UK and Ireland, and sells via its direct-to-consumer website, which launched in 2002. It has 4,014 staff, 559 of whom are based across its 106,813 sq ft joint headquarters and distribution centre in Livingston, Scotland, and press office and design studio in London.

Fashion first

Despite its name meaning “shoe” in German, Schuh is not a shoe retailer, Temple proudly tells Drapers: it is a fashion store that sells shoes.

The trend-led Schuh concept came about when its founder, Sandy Alexander, noticed a lack of fashionable footwear retailers outside London, and chose Edinburgh to open the first store in 1981. He sold the busi­ness in 2004 to Temple and three other Schuh directors, and remained on as a non-executive director until 2011, when the company was bought by US specialty footwear and accessories retail group Genesco for £125m, and he went on to pursure other interests.

Colin Temple’s career history

1985 Woolworths – management trainee

1987 Woolworths – merchandiser controller

1988 Schuh – merchandiser

1998 Schuh – merchandise director

2002 Schuh – managing director

“I’m not a fashionista,” 59-year-old Temple confesses. “I always describe my sense of [style] as the middle-aged man’s cry for help – getting very close to being an old-aged man’s cry for help,” he jokes. Middlesbrough-born Temple often makes quick-witted quips at his own expense.

“My job is to employ the right skillsets to drive up this business,” says Temple, who started his career as a butcher’s boy at the age of 12. “We do that by having a very fashion-forward buying team that is able to identify trends that are suitable for our core demographic [young adults in the 16-to-24-year age group]. There are so many options for consumers online, and we’d like to think that, over the years, we have made a curation of footwear that people feel confident has fashion credentials.”

The director of one footwear multiple agrees: “Schuh’s USP is its breadth of product offer and the curation of its retail offer, which helps to make it a destination retailer.”

Schuh Oxford Street flagship

The retailer sells more than 80 brands, including Under Armour, Converse, Vans, Ugg, Nike, Adidas, as well as its own Schuh brand, which is stocked on its own website, and on Next and Asos.

Bestselling footwear brands include Converse and Nike. Retail prices range from under £50 for a pair of Nike trainers all the way up to £189 for a pair of Dr Martens.

Branded labels make up 90% of its offering, while the remainder is private own label.

This has not always been the case, though, as Temple, who lives in Dunfermline with his wife, explains: “We were much more private label at the start, but the private-label market became very, very competitive with the likes of New Look and Primark entering the marketplace, so we shifted to a more branded business in over the last 10 years in particular.”

The competition is getting even stiffer, especially as big brands, such as Nike and Adidas, move towards direct-to-consumer strategies, which they announced in 2019.

However, the father of three believes Schuh has several advantages against its “rivals”, which include Office and JD Sports: “Our business is ‘affordable escapism’, whereby our average ticket price is around £50 or £60. It’s a lot of money, but it’s not a crazy amount of money – and so people can afford it.

“Another big thing for us is that we kind of employ our customers, so they’re working with the shoes they want to buy. We’ve got a very young workforce – the average age is 23, and in stores it’s 21. I jokingly say, though, that if I were there excluded, that would probably drop to 16 and 12.”

Temple appreciates that it is natural for brands to “chop and change”: “Converse is probably one of the brands that is the steadiest. Dr Martens, which we’ve dealt with for decades is up and down, but its currently on a very strong trend. And then there are some brands that come and go. It’s a sad day when we lose a brand, and it’s a nice day when we when we get a new brand.”

Paolo Porta, CEO of Hunter, says Schuh has always been “a successful retail partner” for the wellington boot brand, largely thanks to its ability “to speak directly to younger, fashion-conscious consumers who seek a digitally led experience”.

Lorenzo Moretti, president EMEA at Dr Martens, agrees: “Colin puts long-term, partnership thinking at the forefront of all our decision-making and that makes Schuh not only a key partner for us, but also a pleasure to work with. We also share the same views on an ever-changing customer and marketplace, so whilst we respect heritage, we also align on innovation and new ways to showcase product, which makes for an exciting commercial partnership.”

Schuh Oxford Street flagship

Temple is not worried many more brands will go direct to consumer, as “very few have actually got the infrastructure to do it in a meaningful way”: “We, as a retailer, can bring something to the customer that the brands in [digital] isolation can’t. There is a combination of digital/physical that the customer wants to engage with, but not all brands have got a capital base to open stores in the big cities.

“And if you’ve already got a strong infrastructure, omnichannel capabilities and a great relationship with brands, then there’s actually quite a bright future for our type of retailing.”

Schuh has been investing in its omnichannel capabilities, removing cash desks from 70 sites over the past three years to offer customers an “easier and faster” way of shopping, by allowing them to pay while seated after trying on without having to queue. Schuh plans to convert a further 33 stores over the next few years.

The Schuh boss says this will result in more floor space, which will allow it to offer a wider range of branded and private-label products.

“It will allow us to make some more space for footwear, or maybe put a little kids’ department in there, because that’s currently a bit of a growth business for us,” Temple notes. “We had great success this year with back-to-school shoes and so we want to continue that momentum.”

The retailer launched Schuh Kids, which offers children’s shoes between the crib/baby and ten-years-old, in 2012. It now has dedicated kid’s sections in 61 stores, and has 16 standalone Schuh Kids stores.

Adults footwear makes up the majority share of sales at Schuh, but the kids’ business is “still significant and is accelerating”. Schuh declines to give a percentage breakdown between men’s, women’s and kids’ sales.

The business also started trialling third-party clothing brands, including Napapijri, Vans, and Under Armour, in stores and online last year and will continue on into 2022.

“It’s only a very small mix of our business currently, but we’ve seen a very positive response so far from customers both in store and online,” Temple says.

Tough trading

General trading at Schuh has not reached pre-pandemic levels again yet, in line with much of the industry.

Net sales at Schuh decreased by 19.5% to $311.2m (£234.0m) in the year to 30 January 2021, primarily as a result of store closures in response to the Covid-19 pandemic and lower store comparable sales, partially offset by increased digital comparable growth. Store sales make up 40% of turnover, while ecommerce is 60%, although online was boosted during the lockdowns.

Schuh made an operating loss of $11.6m (£8.7m) in the period, compared with an operating profit of $4.7m (£3.5m) the year before, which it said reflects higher shipping and warehouse expenses from higher ecommerce sales and increased promotional activity.

“We have some odd exceptions where some locations [including out-of-town shopping centres] have seen improvements, but in the main the story is one of decline customer numbers that are still lower than pre-pandemic,” Temple says.

As a result, the retailer has been consolidating its store portfolio in the UK.

“We worked proactively with the majority of our landlords through the pandemic, which meant we didn’t have to downsize significantly,” Temple says. “We closed stores that that weren’t viable for us and had come to the end of their leases.” Genesco’s latest annual report shows Schuh closed six stores throughout the pandemic.”

He admits there may be a few more closures in the pipeline: “We’ve got a few stores whereby we just know it’s a good store, it makes money, the landlord makes money and it’s fine. But we’ve got a big raft of stores where we need to regear the rent to come down a little bit to make it economic for us.

“If the landlord is prepared to do that, we will keep those stores, and if the landlord isn’t, we will probably walk away. We don’t really have this kind of destiny of how that will look exactly, but we’re confident that on 90% of the stores that are coming to the end of the lease or a break clause, we will come to an agreement with the landlord.”

Schuh closed all three of its stores in Germany on 22 June 2019, to focus efforts on its UK, Irish and Channel Island business. It first launched in the region in 2015.

“We did foray into Germany organically with three stores, but we needed to withdraw to refocus our energy and resource on the UK,” Temple says.

Schuh Kids in Bristol

The retailer now only trades physically in the UK and Ireland, but online in other overseas territories via their European and German website platforms. Schuh declined to give a UK versus international sales breakdown.

Temple adds: “Once we’ve opened our new 49,000 sq ft distribution centre in the Republic of Ireland [in 2022], that will enable us to reengage with our German and French digital consumers once again [Schuh initially exited France digitally to refocus its efforts on the UK market]. That’s a great foundation for us moving forward internationally.”

Schuh is opening an Irish distribution centre to maintain deliveries to its Irish stores following Brexit. Its 10 Irish stores are currently supplied from distribution centres in the UK.

Further uncertainty

When Drapers interviews Temple on 29 November 2021, the government has just re-introduced mandatory mask wearing in “non-essential” shops and offices in England from 30 November, following the emergence of new South African Omicron Covid variant. Inflationary pressures, limited shipping container availability, delays at ports and a smaller workforce of HGV truck drivers continue to plague the industry.

Temple, like many other retailers, is understandably feeling nervous about the situation: 21 months earlier, the UK was forced into lockdown, damaging peak trading at a time when many businesses were relying on it, and for it to happen again would be devastating for retailers.

“People like certainty, but the reality is we’re in an uncertain world at the moment,” he says. “If we were to get locked down again, I don’t think the government is in a position to help us with regards to relaunching the furlough scheme and all the grants again, so we’d have take a different view in terms of our cashflow. But I don’t think we’re going to ever get universal shutdowns again.” We both cross our fingers.

Schuh Anastasia, £50

Schuh’s coronavirus survival strategy included furloughing its staff, discounting to generate cash, and using its store network as mini-distribution centres for online orders.

Temple “is pretty confident” that Schuh can “ride a few more bumps”, though, as it “doesn’t have a lot of pressure or indebtedness”, thanks to the support of its parent company.

Genesco, a US publicly owned specialty retailer of branded footwear and accessories bought Schuh in 2011 for £125m. Before that it was owned by Temple and three other Schuh directors at the time, who bought the business in a management buyout in 1990, after its owner, Scottish department store group Goldbergs, collapsed into administration.

Despite the nervousness in the air, Schuh’s ownership, infrastructure and business strategy mean it will continue to thrive on the high street, believes Paul Savrimoothoo, UK commercial director at Pentland Brands, which owns Kickers and Red or Dead: “Schuh’s nationwide footprint, fantastic stores, eclectic brand offering and superb online platforms make it a great environment for brands.

“Its store staff have an unrivalled enthusiasm and passion for excellent customer service, which generates loyalty among its consumers.”

Temple is also confident about Schuh’s future, concluding: “We’re a little bit sceptical as to what might happen after the January Sales, but there’s a kind of sense of optimism in our business that things are going to get better.”

Schuh has experimented with its offering over the years and discovered what works, and what doesn’t for the business. Over-expansion has been an issue many ailing retailers have cited, either from entering too many markets or branching into too many product categories. Following its exit from the German market, the footwear retailer recognises that its customers are predominantly in the UK and Ireland, and is now rightly focused on making sure that its in-store and digital offerings are up to scratch to stay ahead of the competition.