By  on October 15, 2008

SAN FRANCISCO — Merrell, the multisport and casual footwear brand, wants to expand its year-and-a-half-old apparel business with its first corporate flagship here.

The 2,400-square-foot L-shaped store on Union Square, next to Macy’s West Coast flagship, will mark Merrell’s U.S. retail debut when it formally launches Oct. 23 after a six-week soft opening. The 27-year-old company’s U.S. business had been built through department, sports and specialty stores, as well as three franchise units.

Executives at Merrell, a subsidiary of Wolverine Worldwide Inc. in Rockford, Mich., said they picked San Francisco as the company’s retail hub because of Northern California’s outdoorsy lifestyle and affluence, as well as strong year-round tourism, particularly from Asia and Europe.

“We also wanted the flagship to be in an international city that is style-conscious and forward-thinking,” said Keith Anderson, marketing director.

Two more Merrell stores are to open this year — in Birmingham, Ala., and Portland, Ore. — locations where the brand has done well and where there are many outdoor enthusiasts, said Seth Cobb, vice president and general manager. More U.S. Merrell stores selling the full collection are planned in the next three to five years, but they will be limited to select cities, Cobb said, declining to discuss the number of stores. (The three Merrell franchise stores are in Huntington, N.Y., Atlanta and Nashville.)

“We are using our retail strategy to be able to tell the Merrell brand story to the consumer,” Cobb said. “If we are doing our jobs and telling the right story and integrating the brand into the community, then our business with the local retailers will increase.”

Women’s and men’s high-performance apparel accounts for 10 percent of Merrell’s sales, Cobb said. Among the women’s sportswear offerings are $75 moisture-wicking black nylon tailored travel pants, $89 zippered padded jackets and $79 soft Merino wool turtlenecks treated with copper for its natural anti-odor properties. Selling especially well across the country is a $200 waterproof hooded car coat with pockets and tailored detailing.

At the San Francisco store last month, about 20 percent of sales were apparel, and overall sales “more than doubled” expectations, he said.

The store is also being used as a product development lab to test new apparel and footwear styles on both locals and traveling customers. One early test is already under way, to determine how well a line of bright-colored $80 to $100 casual soccer-style shoes, popular in Europe and Asia, might sell in the U.S., where sports shoes in earth tones and black have reigned in popularity.

The flagship’s design has splashes of Merrell’s Mod tangerine orange signature color as trim and falling leaves against light-paneled walls. The baseboards are made of river rocks. Vertical opaque panels behind displays are filled with grass and hardware is recycled. Behind the cash register is a bulletin board for Bay Area outdoor trekking tips, reinforcing Merrell’s advertising tag line: “Let’s Get Outside” and its motto to outfit outdoor “enthusiasts, not extremists.”

As for how the stressed U.S. economy is affecting Merrell sales, Cobb said revenues are trending upward, though he declined to give specifics. “We feel fortunate to be in a nice growth segment of the economy,” he said.

Retail sales of outdoor apparel in the U.S. increased 8 percent in July to $192 million, compared with a year earlier, and footwear sales gained 4 percent, according to research firm Leisure Trends Group. However, current economic conditions will cause one-third of outdoor gear and apparel shoppers to buy less, Leisure Trends said.

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