Paul Grangaard recalls a conversation he had with his father not long after graduating from college. Admittedly naive about the working world, he’d just returned from a sweeping job search at financial institutions around the country, which included an interview with JP Morgan in New York City. “They all wear the same shoes,” Grangaard commented to his dad, a commercial banking executive in Minneapolis, “and I don’t have those shoes.”
His dad responded honestly. “Then I’m not sure you’d fit in there.”
Looking back, Grangaard admits his father was right. “It was insightful,” said Grangaard, the featured speaker at the next Icons in Business breakfast on Sept. 11 at the Madison Concourse Hotel. “I wasn’t ready at that point in my life for the sharper elbows of the New York finance business, and it was a good move not to go to New York out of college.”
It was the late 1970s/early 1980s after all, a time when Grangaard was hardly interested in dressing up for much. “I shudder to think what I wore in my first interviews,” he laughed, remembering that polyester was all the rage.
“The only thing I’d like to have back from those days is my blond hair,” he joked.
Grangaard said he’s always had an interest in how people present themselves to the world, consciously or subconsciously. Now, the 54-year-old president and CEO of Allen Edmonds Corp. is doing his part to help improve those first impressions – and in his mind, it all starts with the shoes.
Solid footing
As a young student, Grangaard followed in his father’s financial footsteps, graduating from Stanford University and studying for a time in Florence, Italy, where he became engrossed in “everything Italian,” including leather artisanship. “I’ve always noticed shoes, which is how I got to know an Allen Edmonds from the rest of the competitors very early on in my career.”
He earned an MBA at the University of Chicago, then entered the financial world as a trainee for First National Bank of Chicago and was assigned to work in Frankfort, Germany, for a while. Upon his return to the states, he joined Piper Jaffray in 1986 and headed investment banking there from 1995 through 2001 before being entrusted with the company’s retail brokerage business for four years.
In 2005, he joined a private equity firm, and in 2006, that firm bought Allen Edmonds. Grangaard sat on the Allen Edmonds board for two years until he was asked to serve as interim CEO after the previous Allen-Edmonds CEO left to pursue another venture. After being named to the permanent position, he never looked back.
“It was like coming home,” Grangaard said.
There were skeptics, he said – particularly fashionistas who couldn’t understand how someone without a history in the fashion industry could run a high-end shoe company, but he forged ahead. “Having been in the service industry for so many years, I could connect with customers and nurture relationships. Manufacturing companies are also service companies,” he said.
“When I got here, I knew what was popular. I knew what men would wear to work, what they’d wear on the weekends. I also was very aware of the competitive set, which was candidly a weakness of ours as a company at that point. We weren’t nearly focused enough on our market positioning and our competitor analysis in those days.
“I didn’t know a thing about what a Goodyear welt was, or how shoes were actually made, and the different types of construction. But I did know what it looked like in these different constructions, and I knew who would wear what.”
He also knew plenty needed to change. “Our customer base was declining because we were known as the shoe you wear with a suit and tie. Wingtips.” Since then, the company has refocused on its core customers and developed shoe designs more relevant to their needs.
A well-heeled strategy
Grangaard said the typical Allen Edmonds customer runs the gamut from college age men to retirees. “They are aspirational and successful men in all walks of life, people who understand the value of high-quality products, and those with some degree of patriotism so they care that our shoes are mostly made in the USA.
“Most Allen Edmonds guys don’t want to look like they’re trying too hard, and they don’t want to look like they’re pushing the edge, but they are more interested in making a good impression today in apparel and dress, including shoes, than they were before the crisis in 2008.”
To adjust to a more casual trend, Allen Edmonds began designing shoes that would work with jeans, could be worn sockless, or were appropriate in a business-casual environment. “We’ve increased our style count by 90% over the last two years,” Grangaard said, and it’s worked. “By the end of this year, our business will have doubled since the crisis in 2008.”
The company’s most popular shoe is a 30-year-old classic named the Park Avenue. “It is the shoe of presidents,” Grangaard said, explaining that former U.S. presidents Reagan, Clinton, and the two Bushes sported the Park Avenue on their inauguration days. “Obama wasn’t wearing them, but I saw him on the Leno show recently and noticed he was wearing a different style of our shoes. That’s terrific!”
A golf aficionado, Grangaard also was instrumental in bringing back a line of golf shoes, and the company is currently working with golfer Jack Nicklaus to develop a new, modern line. “We updated the classic golf shoe and brought them back out. It’s already a part of us doubling our income and is a seven-figure business for us now.”
Grangaard now leads a 90-year-old shoe empire based in Port Washington, Wis., where one plant manufactures shoes and another plant recrafts used shoes, which extends the life of a pair of shoes. Allen Edmonds recrafts about 60,000 pairs of shoes each year – a service Grangaard said is provided more for customer service than profit.
Allen Edmonds Corp. employs about 800 workers. It also runs a plant in the Dominican Republic under a sub-brand, ae by Allen Edmonds. In that country, preliminary leather cutting costs less, allowing for lower costs in the U.S. The plant also allows the company to compete in the biggest part of the men’s shoe market – shoes with cemented-on rubber bottoms.
This November, just after Thanksgiving, Allen Edmonds will introduce its product line to an entirely new market when it opens its first store in Shanghai, China. “We’re excited to be exporting made-in-the-USA shoes to China,” Grangaard commented. “How fun!”
Exporting its product is just another way the company plans to buck the sluggish U.S. economy. “Strategic improvements the company made have overcome the fact that the economy is as bad as it is,” Grangaard noted. “We were strategically uncertain in 2008, which made 2008 and 2009 really tough. Now, we’re more certain of what we’re doing, where we’re going, and we’ve expanded our product line and services to our customers.”
Allen Edmonds achieved record revenues of $102 million in 2011, an increase of 25% over 2010, and is on pace to grow another 20% in 2012. Over the next three to four years, the company is focused on doubling 2011’s numbers. “We want to be a major lifestyle brand and want people to get to know us when they buy their first pair of serious shoes,” Grangaard said.
Not bad for a kid who once worked in the basket room at a Medina, Minn., municipal swimming pool storing swimmers’ possessions in baskets, then cleaning the toilets and collecting discarded gum from the pool’s floor at the end of his shift.
“I always wanted to be an executive of some type,” he said. “I admired people who made a difference in the world and had an impact.”
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