The three problems that landed Shoes of Prey in trouble, according to Bernie Brookes
Friday, September 21, 2018/
News that Shoes of Prey was halting orders amid financial troubles last month sent shockwaves through the online retail community, surprising many who had followed the company’s rise to prominence.
The custom shoe retailer had been lauded as a trailblazer in retail personalisation, but its difficulties have sparked a discussion about the future of mass customisation.
While company co-founder Jodie Fox said the venture had been profitable in its early days, its inability to “truly crack mass-market adoption” has left the owners now trying to sell the business or reboot it with “substantial changes”.
Former Myer executive Bernie Brookes, who has spent time with the Shoes of Prey team, weighed in on what he believes were the circumstances that led to the online retailer’s current state at a CXI Research Group event in Melbourne on Wednesday.
The retail veteran believes “significantly wrong” business decisions led the company down a troubled path, notably related to range, price and lead times.
“People want it now”
Customisation is an attractive proposition to many customers, but Brookes said the lead time involved with having products manufactured to order in China and shipped to Australia likely proved challenging for Shoes of Prey.
“The lead time was just too long,” he told the audience.
“People want it now … if you want it to be made in China and then shipped across it can take seven, eight or nine days.”
According to its website, Shoes of Prey offered free prepaid shipping to most of the United States and Australia, sent out via express courier.
Custom costs money and although Shoes of Prey marketed itself at a “non-luxury” price point, Brookes believes it was ultimately too much for customers.
“You can afford a premium margin, but you can’t afford such a margin that it becomes far more expensive,” he said.
Shoes of Prey typically charged several hundred dollars for its custom made shoes, based on individually made products being more expensive to produce.
But Brookes believes the prices forced the business into a difficult position when compared with other shoe retailers.
“You can go into any one of the shoe shops on Collins St … spend $80 on a very good quality pair of shoes or a branded pair for $130,” he explained.
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Sean Sands, associate professor of marketing at Swinburne University and co-director of CXI Research Group, echoed that sentiment.
“My wife bought a pair of shoes … but she couldn’t validate the price to buy another pair,” he said at CXI’s Melbourne event on Wednesday.
Customers not designers
While Shoes of Prey’s website was popular with shoppers, Sands, who recently penned a paper on Shoes of Prey’s situation, explained 99% of potential buyers were dropping out before making a purchase, often turned off by what he called the complexity of choice.
“There’s about a billion combinations of shoes you can produce,” he said.
Shoes of Prey had been expanding into a range of pre-made products in an effort to appeal to a wider range of customers while also cutting down on costs. Conversions increased to 3-4%, Sands said, but it ultimately wasn’t enough.
SmartCompany contacted Shoes of Prey for comment but did not receive a response prior to publication.