At VF Corp.’s Investor Day, Kevin Bailey, Vans’ global brand president, said the skate brand is “far from done in our growth potential” while detailing a series of missteps that recently slowed the brand’s growth. Bailey said, “Most of the recent challenges of the brand are executional and at the brand.”
Bailey joined Vans in 2002, two years before VF acquired the company. He was Vans’ president from 2009 to 2016 and returned in March 2022 to lead its sales revival.
“We, at the brand, failed to adequately monitor and swiftly and effectively adapt to the changes we had to make and the changes that were going on in our environment,” said Bailey. “That’s unacceptable for a youth culture brand. We missed some market and consumer signals. And with our significant growth, we became complacent to the changes we needed to make.”
From a product standpoint, he said Vans became over-reliant on its core canvas Classics styles and did not innovate enough. Vans also did not evolve and missed bigger consumer opportunities. Said Bailey, “That affected our product. That affected our marketing. That affected our brand heat. And ultimately led to impacting the traffic in our own brick-and-mortar DTC fleet.”
Operationally, as Vans surged to over $4 billion in annual sales, including doubling from $2 billion to $4 billion between 2017 and 2019, the growth “stretched the model beyond its limits.”
Bailey focused on the turnaround efforts Vans is undergoing in four key areas: consumer, product, marketplace, and operating model.
Evolving Consumer
Bailey said research shows that consumers have changed in the last several years and are focused on individuality, community and purposeful approach around environmental and social issues.
“COVID has created these true digital nomads,” said Bailey. “They have a Sprinter van, a surfboard on the side, a gravel bike on the back. They have a work-from-anywhere attitude, and they are ever more digital. This is an opportunity for us across product, marketing, and experiences to meet them wherever they are.”
Bailey said recent consumer research shows Vans saw a decline in brand heat from January to June, but the brand is ahead of its major competitors in the 13-to-24 age range and 13-to-39 age range in many key attributes, including brand perception, advocacy and awareness.
The research shows that Vans is viewed as “rooted in youth and skateboarding” that packs advantages but also some challenges as the brand seeks to “grow and expand beyond those perceptions,” he said.
Bailey said Vans will seek to take advantage of its skateboarding heritage by investing more in grassroots events as pandemic-related restrictions created challenges in holding public events over the last two years. Bailey said of the events, “We believe it helps us build brand heat.”
Vans also expects to benefit from the rise in skateboarding in China as well as skate, surf and snow all becoming Olympic sports.
Bailey added that Vans will lean into its authenticity in many of these sports to tap into ancillary opportunities for growth. For instance, skate tends to be influential in the expanding streetwear category. Bailey noted that Vans has found traction in the streetwear space in the past with its Vault and Syndicate lines and expects a new Pinnacle premium line to tap the streetwear space.
Among other sports, surf provides Vans “access to a broader, healthy and active lifestyle consumer” while snow provides an opportunity to reach a space Bailey entitled “light outdoor.” He said Vans makes some of the most-reputable snow boots in the industry to offer Vans a bigger opportunity around technical-weatherized product.
Said Bailey, “Our consumers informed us that we have opportunities with them. They want to talk to us about versatility, versatility to extend with them beyond their teen years, versatility to extend with them into seasonal wear, and versatility in terms of our opportunities around Progression.”
Comfort And Versatile Product
On product, Bailey said Vans’ reliance on core canvas Classic styles led the brand to miss opportunities to evolve the product range.
“Consumers choose Classics for specific reasons – because they’re casual, they’re stylistically versatile and trendy,” said Bailey. “That’s really important to what this consumer wants, but they have gaps. The gaps are around comfort and functional versatility. Also, Classics tend to age younger. We haven’t done enough in product creation and communication about what Classics can mean in your life.”
A second issue with recent Classics growth was Vans’ icon management strategy became “too restrictive” and Bailey believes “too Americas led.” If a style was trending in America, Vans would try to make that styles trend globally. Under the new approach, regions will have more freedom to drive trends within their local consumer base.
Finally on Classics, the brand will be more adventurous from a design standpoint to extend a trend. As an example, he noted if Vans Old School style is trending, Vans will be more open to offering the item in a platform bottom; a Velcro, zipper or other non-lace option; or driving more buzz with a collaboration. Said Bailey, “The goal is to allow the regions to optimize the trend and grow that style as effectively as possible, and then provide offshoots to that trend that become relevant and understood by the consumer in terms of the design cues to give them options to be stylistically versatile, which is what they’ve asked for.”
Outside of the massive Classics category, Progression footwear, which is all of Vans’ non-Classic footwear, and apparel grew in fiscal 2022 by over 30 percent and nearly 40 percent, respectively. Said Bailey, “That says we have a bigger opportunity and we haven’t been articulating to the consumer how we’re going to do that.”
Bailey said Vans sees bigger potential for Progression footwear in comfort with its reputation for cushioning from its skate models. Its successful snow boots collection supports a broader reach around weather protection to support more of a four-season sales focus.
Van is also developing a Pinnacle range aimed at top-tier distribution with a focus on exclusivity and higher price points. The Pinnacle range is expected to fully launch in the second half of 2023. Said Bailey, “Pinnacle will elevate product through design and focus on experiences to increase brand heat globally. This will also allow us to reach an older consumer and extend beyond that teen consumer because when we did this well in the past, it helped elevate the aspiration for the brand with an older, more influential consumer.”
Digital-Led Marketplace
From a marketplace perspective, digital will lead the direct-to-consumer approach. Said Bailey, ”This is really critical that we engage with them across social, across experiential, across gaming, and across commerce. We have to stay very close to our heavily digital consumer.”
As part that that digital approach, Vans launched a recent Stranger Things collaboration first via digital and recently launched mobile commerce on the Vans Family loyalty app.
On its brick-and-mortar fleet, in-store merchandising changes and store design changes are underway. The pandemic reduced the ability of the brand to engage consumers at the store level and Bailey said Vans’ extensive store base still represents “our best opportunity in terms of presentation and experience for our brand to connect with our consumers.”
On wholesale distribution, Vans has exited nearly 1,500 doors since the pandemic in North America as the brand has refocused on “really sharpening our marketplace opportunities to think about that where we can best serve the consumers in the places they choose to shop.”
In other markets, Europe is Vans’ top-performing market but the brand is underpenetrated relative to competitors and its sister brands within VF, such as The North Face and Timberland.
In China, Vans is working with Dewu, the number one platform for sneakers and streetwear, and Douyin, the leading social commerce platform. Said Bailey, “These two both serve to reduce our reliance on Tmall and we’re seeing rapid growth here at this point.” In both Europe and across Asia, localization will be the focus.
Consumer-Led Operating Model
Bailey shared that VF was doing only $300 million in sales when VF acquired the business in 2004 and has since grown at an average compound annual growth rate (CAGR) of 15 percent since then to reach $4.2 billion in its fiscal year ended March 31, 2022. Vans has become VF’s largest and most profitable brand.
However, Bailey noted with the fast growth, Vans’ operating model “has been stretched beyond its ability to both serve the brand today and meet our potential for the future.”
To update the model, leadership roles are being realigned what a focus on the consumer.
A new role, chief product and merchandising officer, has been created to unite footwear and apparel design and development under one leader. Previously, the head of footwear and the head of apparel reported separately to Bailey. Bailey said, “The goal here is to focus on how do we better serve the head-to-toe needs and the consumer types, and think more specifically about the merchandising of the marketplace. So that’s a very critical change.”
Vans is also creating “strategic consumer category teams” and overhauling its go-to-market model to align the focus around the consumer versus the past “a very fragmented approach” that saw footwear, apparel, and marketing teams operating separately.
The consumer-led approach was targeted initially with the Pinnacle range and will soon be deployed to the action sports and lifestyle sides of the business. Said Baily, “These changes will serve a couple of purposes. First, they will sharpen and align our focus. Second, they will improve our cross-functional collaboration and ultimately improve accountability as we address the consumer. We will deliver from this a stronger consumer right product and more impactful marketing stories.”
Vans is aiming to grow at a mid-single-digit annual pace over the next five years.
Baily concluded his presentation, “This is a strong brand with a deep and authentic history and a tremendous track record of delivering results. We’ll do four key things to restore Vans’ growth story. First will be consumer-led. We will monitor and evolve with the consumer to remain always relevant. Second, we’ll obsess over product to meet the consumer’s needs from both a trend style and a performance style and in a head-to-toe fashion to make sure that we’re also driving aspiration to our Pinnacle at the same time. Third, we will reshape the marketplace to be DTC-led, digital-first and specifically sharpened assortments for each of our wholesale accounts. And then finally, we’ll evolve the operating model to be fit for future and better meet the needs of the ever-evolving consumer and marketplace. The Vans brand is committed to the work ahead to restore our growth trajectory.”
Photo courtesy Vans
