This article was written by Harriet Brown for Drapers. Read the original piece here.
The cavernous 300,000 sq ft offices of footwear giant Aldo Group's headquarters in Montreal, Canada, are brimming with history. An olive tree, planted by the founding Bensadoun family when the building was built in 2004, sits in prime position in the centre of the atrium as a tribute to eponymous founder Aldo Bensadoun's Moroccan heritage.
The original striped sign from the first-ever Aldo store, which opened in the 1970s, is hung with pride in the corridors. Even the wood panelling of the floors is the same as the sole of Aldo's first shoe design: a chunky clog. Despite its international reach – 3,000 global points of sale in 102 countries – Aldo Group is a business that celebrates and embraces its heritage, having grown from a single store in Laval, Montreal, in 1978 to the global empire that it is today.
Leading this footwear family is David Bensadoun, the son of founder Aldo (still affectionately known as Mr B to employees). Having worked in the business since 1996, he took over as CEO from Patrik Frisk – now president and CEO of US sportswear brand retailer Under Armour – in April 2017.
"The biggest thing I focused on when I took over as CEO was making a big company feel small," he tells Drapers when we meet at the Montreal offices. "Over the years, our company has grown more complex. For me, it was really important to get back to basics and to keep things simple. My focus initially was to bring that spirit and make sure people were really challenging each other."
As a privately owned, family-run business, Aldo Group refuses to disclose profits, but is quietly confident in its current performance and future strength.
The group operates at a vast scale. Including the 1,200 employees working at the Montreal head office, Aldo Group has 20,000 staff in more than 100 countries. It has 17 Aldo stores in the UK – among them London's Oxford Street, Watford, Leicester and Brighton – plus 24 concessions in department stores including Selfridges, Debenhams and House of Fraser.
Core styles from the autumn 18 collection include slouchy suede boots (£110). Women's styles retail from £35 for an open-toe sandal to £160 for knee-high boots, and men's from £55 for a nubuck trainer to £180 for a leather brogue. Aldo also sells bags and accessories. It does not reveal wholesale prices.
Although it is best known for the Aldo brand, the group operates across five different channels: retail, franchise, ecommerce, branded wholesale and private label. Alongside the flagship Aldo fascia, it runs young fashion brand Call It Spring, which has 465 points of sale in 29 countries globally and is stocked by Debenhams in the UK, and the value chain Globo, which has 39 stores across Canada.
Currently, bricks-and-mortar retail sales make up of 53% of the Aldo Group's revenues.
Above: David Bensadoun
Change ot tack
CEO Bensadoun began his Aldo career working briefly in project management, before taking what he describes as a "demotion" to the role of assistant buyer to gain a full understanding of the business.
"I still believe that those years were the years that I learned the most and I connected the most with the essence of our company, which is fashion footwear," he explains. "The buying or merchant path is really the heart of our business. At the end of the day, if we don't buy the right goods, we simply won't be in business."
He took control of Aldo's Call it Spring in 2001 as general manager – and went on to treble its profits in three years. Directly before taking the role of group CEO, he was president of the Aldo's North American business unit. In person, Bensadoun is softly spoken, warm and welcoming. He is fiercely passionate about the business, and determined to fuel growth and expansion.
"Throughout my journey I have tried to be an innovator within the company," he says. He flags three key developments as particular points of pride: increasing direct sourcing to comprise 80% of all pieces created; the launch of the private-label arm; and an ever-growing focus on omnichannel.
Bensadoun launched the group's private-label business, Aldo Product Services (APS), in 2010. Within 18 months, it was "a $100m (£77m) business", and in 2017, Aldo's private label customers sold shoes to the value of more than $1bn (£770m).
"The thought with APS was: 'Here we are with all this talent and all this infrastructure – why don't we quietly make shoes for other brands?'" he grins. "It's a nice way to add revenue and leverage the investments that we've made."
APS works with businesses that do not compete directly with Aldo Group. It keeps the names of its clients closely guarded, but they are said to include numerous high-profile businesses around the world – among them one of the largest clothing retailers in the UK.
Bensadoun is also proud of the group's swift adoption of digital and its omnichannel progress. Having launched its first transactional website in 2005, he describes the business as an "early adopter".
Every year for the past 10 years, Aldo has recorded a 10% year-on-year increase in its ecommerce sales. It invests between $7m and $10m (£5.4m and £7.7m) each year to iron out friction in customer experience and operations, and ensure it stays ahead of its competitors.
Today, 15% of sales come from ecommerce, and a further 12% from orders placed in store and delivered to customers' homes.
"We're making investments on the supply chain side of things because, of course, Amazon," he says. "We're ahead of the pack, but the customers' expectations are being set by Amazon, so we have to keep fighting to improve." He highlights increased video content and encouraging more customers to leave product reviews as current projects, but much of the focus is on growing and strengthening the omnichannel link.
"The most important movement in our company is truly the omnichannel movement," he says. "I don't believe at all that it is about a choice between ecommerce and retail – it's about fusing the two together. Omnichannel is about making sure the store is totally complementary to the ecommerce offer, and ecommerce is totally complementary to the store. We've been spending a lot of time smashing down the obstacles that would prevent those channels working in harmony."
"A lot of customers are coming into the stores and realising it's inefficient," adds Bensadoun. "Why do they have to stand there, why are they waiting? At home they can filter on price and filter on colour, instantly – it's unbelievably efficient. We need to bring those tools into the physical world."
Bensadoun proudly notes that Aldo has removed any negative impact that in-store returns from online orders would have on an individual shop's sales or calculations of performance-related bonuses. Most ecommerce sales – 85%– are fulfilled from store stock, and Aldo gives stores payroll credit for time they spend fulfilling online orders.
Aldo has introduced store tools that enable customers to order products from the store, as well as an app that allows staff to look up stock. It can also provide alternative or co-ordinating style suggestions for the customer, so the sales team can spend more time on the shop floor.
As the retail landscape continues to shift, Bensadoun describes retail as being in a period of "real estate optimisation". He jokes that, when it comes to property, retail is facing a "reckoning", and says it is due a huge adjustment in the approach to bricks-and-mortar stores.
"It doesn't necessarily mean closing the stores, it could mean downsizing," he explains. "If you opened your store in the early 2000s and it was 50,000 sq ft, maybe in 2018 you're happy with 3,000 sq ft, but you're still happy to be on that high street or in that mall."
The stockroom can take up as much as half of a footwear store. Bensadoun says Aldo is developing remote stockrooms, where product will be housed in a location with lower rents and rates, so stores can be quickly replenished as needed.
Although stores are still core to the Aldo business, it works with franchise partners to run operations in most of its markets, which include India, South Africa and China. The exceptions are North America, France and the UK. Bensadoun notes that the UK's international fashion prestige is a key reason Aldo retains direct control over its stores here.
"As far as our brand is concerned, London is the fashion capital of the world," he explains. "It's a wonderful place to shop, and there's a big focus on young fashion, which is important to us. It comes down to execution. We really want those flagship stores to be in very good shape and operated to the highest standard as an example to the rest of the world."
Nonetheless, Aldo signed a deal in August for fellow footwear retailer Kurt Geiger to run Aldo's department store concessions from 1 September.
"We've always been close with Kurt Geiger and have had a great relationship with them," says Bensadoun. "They are so strong and fantastic operators. We felt that if want to be successful in the UK we need to partner with the best, and they are certainly the best."
Commenting at the time, Kurt Geiger chief executive Neil Clifford said: "We have always admired the Aldo brand, and believe the styling and value will resonate with our customers and will complement our offer. We have an ambitious five-year plan to strategically drive long-term growth and brand presence for Aldo and our store partners."
The aim is to open at least 50 concessions in department stores within three years.
Beyond business ambitions, Bensadoun has been focusing on building a community feeling throughout the business. This all begins at the head office in Montreal, which has a growing appeal and reputation as a destination for fashion and retail professionals, drawing talent from across the world.
"Montreal is not only Quebec's fashion capital, but it's also one of North America's largest fashion hubs," explains Marie-Hélène Sultan, international trade adviser for the government of Quebec. "The distinctive talents of our creators and designers makes Montreal a top-class leader in the global fashion industry."
The 300,000 sq ft campus building is intended to nurture its creative workforce. Combining modern functionality with personal touches – including a huge array of art from the Bensadoun collection – the offices also feature gardens, sports pitches, gyms and an enormous, deliciously well-stocked canteen. Everything is geared to create a fulfilling work environment.
The theme of caring is carried through in Aldo's sustainability work, and in September it was certified as climate neutral. Climate-neutral companies measure all the emissions that are put into the atmosphere as a result of their operations, reduce them as much as possible and then offset the rest through investment in renewable resources. In Aldo's case, it was achieved by a 33% reduction in carbon footprint and investment in carbon offsets to counteract the rest of its carbon use. This includes hydroelectric projects in China, where it manufactures the majority of its stock, and wind farms in Europe.
"My dad always had a strong sense of social justice, and even when he was pushing hard to build a successful business, he always wanted that business to be part of creating an ideal society," explains Bensadoun.
"This is the culmination of years of work that the Aldo sustainability team had already put in," explains Michael Malara, corporate sustainability expert for sustainability solutions provider South Pole, which worked with Aldo to help it achieve climate-neutral status.
He continues: "When it comes to consumer goods, apparel and footwear, Aldo are definitely the leaders [in sustainability]. They are the only footwear brand to achieve climate neutrality [by South Pole's criteria]. Their sustainability team is incredible. They are a small team, but one of the most technically astute I have personally worked with. They are ahead of the curve."
Having already tackled what Bensadoun calls the "low-hanging fruit" to reduce carbon output – it has decreased air freight by 69% since 2013, and shifted lighting in all stores and offices to LED, which requires less energy – moving forward Aldo will to continue working to reduce its carbon output.
The leather tanning process – which can involve harmful chemicals – and improving the sustainability of synthetics are also areas of focus. Aldo Group is already 98% PVC free, and has a full-time chemical engineer, working as part of the small sustainability team, on the area of material innovation.
With its robust, varied and innovative approach to global business, underpinned by the spirit of a family business, Bensadoun is optimistic about Aldo's future. "I think it is an amazing time to be in fashion footwear," he concludes. "It's a great time to grab market share, and to gain new customers and build the business. I think the companies that have a strong balance sheet and a strong sense of who their customers are, will do very well."
Above: Aldo's Boston store
Read about how South Pole helped Aldo become the world's first carbon neutral footwear brand