shoemakers

What Allen Edmonds learned selling high-end shoes in China

February 25, 2013: 10:01 AM ET

What do Chinese consumers want? American fashion, says the CEO of shoemaker Allen Edmonds.

By Anne VanderMey and Brian Dumaine

Businessmen getting their shoes shined by shoe shiner in Lan Kwai Fong.FORTUNE -- For almost a century, Allen Edmonds has been making high-end men's dress shoes. Every President from Reagan to Obama has worn the brand. Now the $122 million-a-year company, which is headquartered in Port Washington, Wis., is turning East in search of new markets. The company, whose dress shoes (think Mad Men) sell for $175 to $695, opened its first store recently in Shanghai. We caught up with Allen Edmonds' CEO Paul Grangaard who described what it was like to parachute into a foreign land. Here are three lessons he learned.

Don't overestimate the differences

On entering China, Allen Edmonds discovered that consumers might want to eat like Europeans, but they dress like Americans. The company's best-selling shoes in its Shanghai store are same as in its U.S. stores: "Even if they haven't traveled much," says Grangaard, "the new generation of Chinese are cultured and very worldly. What we learned is that they really like America."

Flaunt your authenticity

"The Chinese," says Grangaard, "spend a lot less on food and housing than Americans do, but they spend more on clothing." The company learned that it's very important for consumers to be seen with a shopping bag with an imported brand on it. To differentiate itself in the China market, Allen Edmonds decided to stress its long heritage as a high-quality American shoemaker. At its store opening, it created a display on Allen Edmonds shoemaking techniques throughout the ages. In a market rife with knock-offs, Grangaard believes that stressing the authenticity of a product is an opportunity for American clothiers who want to sell in China. "Chinese consumers want the real thing; they want products that have stories behind them," he says.

Don't get stuck on the fourth floor

When Allen Edmonds was looking for retail space in Shanghai, the Chinese landlords kept trying to lease the shoe company space on the upper floors of malls. It's hard for a small, lesser-known brand like Allen Edmonds to secure primo retail space in China. Its Chinese franchise partner warned them that only undesirable brands get relegated to the higher levels. Allen Edmonds had to interview numerous landlords before finding one willing to lease them prime space on the second floor near the escalator. Grangaard says that the space he leased is more expensive per square foot than Rockefeller Center, but the gambit looks like it will pay off -- the store was mobbed for its grand opening. The company plans to open two more stores in Shanghai and one in Beijing, and more than five stores per year thereafter.

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