Shop Eat Surf speaks with Steve about how he ended up back at VF Corp., the changes he is making to The North Face’s strategy and how the brand is looking to rejuvenate the Americas business. They also asked Steve, a footwear industry veteran, about his big plans for North Face in that category.
Our old industry friend Steve Murray, who served as President of Vans for many years, is now the Global Brand President of The North Face.
We spoke with Steve about how he ended up back at VF Corp. after several years working at other companies, the changes he is making to The North Face’s strategy and how the brand is looking to rejuvenate the Americas business.
We also asked Steve, a footwear industry veteran, about his big plans for North Face in that category.
Steve was at Vans when the company was acquired by VF Corp. in 2004 and led Vans until 2009 when he was promoted to President of VF’s action sports business. He then worked as President of the Urban Outfitters chain, President of EMEA for Deckers Brands, and CEO of UK-based Airwair International, the company that owns the Dr Martens brand.
A UK citizen, Steve is now based in Denver at VF’s new headquarters in the city.
Steve Murray: When I left Airwair, Steve Rendle (VF CEO) was the first one that called. I had this whole plan where I was going to go on a couple of boards, I was going to do some philanthropic work, I was actually going to be an operating partner for a couple of private equity institutions. And I told Steve all that. He flew across to London, we had dinner, and he basically said, “What the hell would you want to do that for? You could do the same thing for us.”
So Rendle persuaded me to come in and be an internal consultant for VF. That was the original agreement.
How did you end up as President of The North Face?
Steve Murray: There were three or four different projects that I was asked to get involved in – with Altra, and Timberland and The North Face.
The thing that pulled me into The North Face was actually footwear. The North Face had been in the footwear business for about 20 years but had never got above $150 million or $200 million. It was never more than about 5% to 8% of the overall business. Interestingly, they’ve never really had somebody from footwear drive it. At least not from a big footwear brand.
So I came in and got to know Arne, who I’m sure you’ll meet in his new capacity over at Quiksilver and Billabong – great guy, by the way. He and I worked together for a while in footwear to get that up and running.
And then, I toggled between that and then on an interim basis, I agreed to run the America’s region for VF. And then I got my U.S. visa and Rendle said, “Would you and Lorraine consider moving out here?” And I said, “I’ll come and do it, but you know the structure doesn’t make any sense, right?”
So, almost from day one, Steve, myself, and a few others were working on the structure to try to remove that layer because the Americas isn’t a region; it’s not like Europe or Asia, where we actually have one office where all the brands are, and they have finance, supply chain, and HR departments that service all the brands.
In the U.S., it’s totally different. Timberland’s in New Hampshire, North Face is in Denver, Vans is in Southern California, Dickies is in Texas and they’ve all got their own management teams. So, the VF head of the Americas position was really strategic management and people management, but you weren’t running an entity because the entities are in Texas, and New Hampshire, and California.
We are at this stage now where the big brands really deserve a seat at the big table. I was the Vans President when we got bought by VF in 2004, and we were $300 million in sales. Vans is now $4 billion. The North Face was $100 million in 2000, it’s now nearly $3 billion. So, VF looks very, very different to what it looked like then. So, having those big brand Presidents go through an Americas regional head just made no sense.
So, we reorganized in the fall last year. And that’s really what led to me stepping into the Global Brand President role because now the three big brands report directly in to the VF CEO. There’s no Americas president; it’s just the three big brands. And then, Kevin Bailey came back from Asia, and he’s heading up everything else (the smaller brands in the portfolio). So, it all makes perfect sense and it’s working a lot better than it ever did before.
STRATEGY TO IMPROVE AMERICAS BUSINESS
My impression, listening to all the VF calls, in the last year or two is that The North Face had some stumbles, especially in the Americas. Would you say that’s accurate?
Steve Murray: Interesting you picked that up. The North Face is actually doing pretty well. The last earnings call, you probably heard that North Face alongside Dickies have outperformed our other bigger brands.
But it’s a very mixed bag. So the brand has been doing double-digit growth for the last couple of years in both of its international regions. Over here, it’s been a little more spotty. There was recognition maybe about four or five years ago before I came back that North Face had lost some of its momentum at the very top of the pyramid, its real expedition-proven credentials, the real tastemakers in the outdoor world. And when I came back into the fold, that was already being addressed.
You might have seen Futurelight, which is our proprietary technology. It’s really reestablished The North Face at the top of the mountain through athlete-tested, expedition-proven apparel, but it’s really geared towards the elite. It went pretty well.
What didn’t happen is it wasn’t cascading down. This is me as a merchandiser talking now. What didn’t appear to happen in the U.S. during that endeavor was the cascade from the top of the mountain – the $1,000-item product – to the $200-$250 affordable, approachable product for the mainstream consumer.
So to your question about stumbling, I think that’s where we stubbed our toe. In addition, there was quite a debate about what we referred to as on-mountain and off-mountain. The North Face was also struggling a little bit in terms of how to balance the outdoor-specific activities and credentials that North Face stands for, with some of the more lifestyle, or fashion, or what we call off-mountain. The product that gets adopted by the consumer that isn’t necessarily going to climb K2 but is quite happy to wear a functional jacket that protects them from the elements when they’re walking in New York City.
I’ve done this a few times at various companies. You get the old pyramid out, and you talk about your consumer segments, and you try to align your product categories with your distribution channels, and eventually, it all falls into place.
So, we’ve been doing that, and we’re making a lot of progress, actually, and we’re getting some pretty good green shoots in the U.S. in terms of the reaction to our line now that it’s segmented and targeted to a consumer. But it would be accurate to say that the U.S. has been lagging the other two regions.
Before we talked today, I went back and read the North Face presentation at VF Investor’s Day in 2019, this was before you were in charge of the brand. There was a lot of talk about segmenting the business into mountain sports, mountain lifestyle, and urban exploration. Are you still using that?
Steve Murray: No, I threw that away.
We’re actually back to talking English and using terminology that people understand. I tend to talk a lot now about Top Nav. So, when you first go on to our landing page and you figure out, how do I actually access a product, it really needs to be communicated to you in a manner that makes sense.
The first time I stood up in front of our 500 employees here in the U.S., back in October at our monthly town hall as the new guy I said, “I’m going to make some commitments. My commitments are simplify, clarify, prioritize, and to be transparent.” What happened here is not much different than what happened at Vans back in 2003. We got over our skis a little bit, and we really needed to come back to very simple concepts that people understood with product at the heart of it.
That’s what we’re doing here now. And people have reacted well to it.
So with Top Nav– how do you talk about the different stuff now?
Steve Murray: It’s really simple. When you go onto our site now, you can make the choice as to whether you shop by what I call product class, so, an insulated jacket, or a shell, or a T-shirt, or a short.
On the on-mountain side, we organize ourselves around activities. So, we have category managers. In the same way that Vans has their category manager for core skate and the category manager for surf, at The North Face, we’ve gone back to having a category management structure where somebody’s in charge of climbing and alpinism, and somebody’s in charge of snow sports, and somebody’s in charge of hiking, and somebody’s in charge of trail-running. It’s not rocket science.
And the other thing they talked about during that investor day is sportswear. Is that still something that’s on your radar?
Steve Murray: It absolutely is. The question that we find ourselves asking a lot now is what is sportswear? So, we tend to lump it in with what we call logo wear, which has been a huge growth area for us, not surprisingly because there’s been this big athletic trend, and dressing down, and everybody’s going casual. So, sweatshirts, jog pants, T-shirts, hoodies – they have become very, very important and an increasing part of people’s wardrobe.
But for us, that was happening even before the pandemic. And it’s only multiplied several times since.
A bit of a change that I’ve introduced, is not so much sportswear, but more 365-day relevance. It’s a subtle difference. Sportswear itself is not the endgame. The endgame is not to be so reliant on cold weather. You’ve got to have a robust-enough business model to have product that is meaningful to consume all year-round. So, for us, it’s not just sportswear, it’s logo wear as well, and it’s also equipment, it’s also footwear.
THE BIG FOOTWEAR PLAN
What is changing with footwear now that you are in charge of the business? What’s the vision?
Steve Murray: I would like it to be a 20%-ish part of business. It depends on how much we grow the overall company. But I would like the footwear business be a $500 million-business. I don’t see why it shouldn’t be. And that would require us to double it, at least, or triple it depending on what base you look at, whether you look at a COVID year or a non-COVID year.
How could that happen?
Steve Murray: Until very recently, we were hugely dependent on product that had been designed 15-20 years ago. So, back in the day, when you looked at the really big styles in the hiking market, the Hedgehog from the North Face was one of maybe two or three that were the standard bearers for the overall industry.
But that was 20 years ago. And up until last year, that was still the biggest franchise that North Face had at REI, and places like Bass Pro and Cabela’s. There’s something wrong with that picture.
There really wasn’t any legitimacy in what I would call fast hiking, which is the much more progressive type product that the likes of Salomon has done well in, or trail-running. North Face has always been in trail-running, and actually has a number of athletes on its roster that are top-of-the-game trail runners. But we’ve not necessarily had the product that goes with it.
Same thing with climbing. The very first picture that I was shown when I came back into VF was a picture of our athlete team getting on the plane to go to an expedition. But they’re all wearing La Sportiva boots.
So now the vision is – and it’s not rocket science – is what apparel categories do we play in where we are highly respected, and why are we not respected in footwear? Well, the reason is we don’t have the product. So, let’s go fix that.
OUTDOOR SALES SURGE NOT UNIVERSAL
Let me ask you about this season. What I hear from different kinds of retailers is that inventory was an issue for people. Many couldn’t get enough because demand came in way more than people thought, and so many brands had cut their production orders. What have you seen?
Steve Murray: It depends on the channel and it depends on the category. My view is that the industry needs to be a bit careful about this.
Most of the way through the pandemic, people were talking about how the outdoor industry was benefitting from the lockdown. When people were going outside, they were going on camping trips, they were hiking. All of that was true. It actually did benefit certain categories. So, tents, and technical backpacks, and traditional hiking shoes did really well. All of that was true.
But there weren’t many people wearing insulated or rainwear jackets. For whatever reason, they were making do with whatever was in their closets. So, NPD data showed those categories for most of the year to be significantly down. I forget what the figures were, but it was in the 45% range. So, there were certain categories that benefitted, there were certain categories that didn’t.
Bikes, and kayaks and tennis rackets and golf and weights – they all benefitted. But sportswear was a down trending category. Rainwear was a down trending category. Technical snow and insulated was a down trending category because the snow resorts were shut, or they’re operating at 50%.
So it was a very mixed bag by channel and by category. So, we’ve got to be a little bit careful.
STEVE’S TAKE ON SURF INDUSTRY
You’ve been inside the action sports industry, outside of it, and around the edges, too. What are your observations of the action sports industry these days?
Steve Murray: Perplexing, to be honest with you. When you think about the days when you and I first met each other, how big those surf companies were, even relative to Vans.
I can distinctly remember sitting in SIMA meetings as the junior partner watching these big companies flex their muscle in the dialogue. And all of that has changed. I didn’t know why, to be honest with you. Those big surf brands got up to a billion dollars and more, and then, just seemed to hit a wall. And they haven’t bounced back yet. I hope they do. I hope they do come back at some point because, fundamentally, surfing is still cool right? I would hope that they do come back.
But I find it a bit perplexing. I can only assume that there was a moment when surf really broke through to the mainstream in a major way, that maybe it became over-distributed, maybe it got a bit complacent and didn’t move with the times.
It pains me a little to be honest with you. I lived in Huntington Beach for 10 years and experienced first-hand that culture, and how important it is to the community. I’d like to see them come back and be stronger than they are. So, I don’t know. I don’t have an answer for it. I just hope it doesn’t happen to the outdoor world.
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