When Scarpa and Black Diamond parted ways amicably three years ago (click here to read story), the company created a wholly owned subsidiary, Scarpa North America, and embarked on a mission to establish the brand as a year-round player for outdoor specialty footwear. With the introduction of trail running SKUs this summer, the mission is nearly fulfilled.
Kim Miller, formerly with Black Diamond, and now CEO of Scarpa North America, told SNEWS®, "The driving force for Scarpa to take control of its own distribution of product in North America was out of a realization that the company was not getting the kind of focus it needed to be competitive with other European brands, such as Asolo or Lowa, that had more of a free-standing presence. It was not about finding a better distributor, since it would be hard to find a better distribution partner than Black Diamond.
"We realized that if Scarpa wanted to change the model to a more direct link to the North American market in all facets -- marketing, sales and product development -- it would take something much different than a distribution model," Miller added.
Miller joined Chris Clark, who was named the sales and marketing manager the same day the company parted ways with Black Diamond. Together, the two quickly began making decisions to solidify relationships with retailers, including increasing margins.
"Right off the bat, we lowered prices and increased margins, which we were able to do because, as owners of the brand, we had a 30-percent margin to play with that did not have to be divided up with a distributor," Clark told us. "Our standard footwear increased to a 45-percent margin and most prices dropped by 10 percent."
Scarpa is an Italian brand, currently owned by five members of the Parisotto family: Sandro Parisotto is the Scarpa president and CEO; Davide Parisotto is the director of research, development and production for the Scarpa brand globally; Andrea Parisotto is the company CFO and the president of Scarpa North America; Cristina Parisotto is the company product manager; and Piero Parisotto is the administrative manager for Scarpa.
In early 2006, the Parisottos added another key name to the Scarpa family -- Heinz Mariacher (click here to read story) -- a well-known designer of climbing shoes and hiking footwear. Mariacher, together with Davide Parisotto and the Scarpa North America team, focused on establishing a timeline for expanding the Scarpa presence in North America.
By late 2006 and early 2007, the company began introducing an expanded climbing line and, surprisingly to some, introduced boots in a backpacking collection that other brands had all but given up -- heavier leather backpacking boots.
"Because of our Italian heritage and the expertise of our factory, we were able to introduce products that did not exist in the market anymore, and we started selling like gangbusters heavier trail and lighter mountaineering footwear," Clark told us. "It was with footwear that was still Euro-centric where retailers gave us a chance."
Mark Mathews, who joined the Scarpa North America team as the director of sales and summer product development (click here to read), told SNEWS, "Speaking as a competitor at that time (he was director of sales for Vasque), other brands could not do the business that Scarpa was doing, as it was becoming a much smaller part of the business as production moved to Asia. As a result, heavier leather boots were no longer part of the expertise for many footwear companies, including Vasque."
When we asked Miller what the sales breakdown for Scarpa NA was, he told us that in units alone, the strongest selling product for Scarpa in 2008 was rock shoes. In 2007, it was hiking boots. Ski boots, which were the primary footwear for distribution prior to Scarpa NA being established, has never been a top seller.
"We had to diversify and one of things that was clearly on the to-do list was expanding our rock climbing offering and hiking," said Clark.
But new product alone was not going to ensure expanded success for Scarpa. Miller told us that his team worked hard to ensure that Scarpa NA was not just a shell and conduit to Italy, but was considered a viable and essential part of the overall global business success for the company. Italy, we were told, fully embraced that concept, and the results are tangible.
"By year two, we began to reap the rewards of strong product development and teamwork from rock shoes to ski boots," said Miller. "We have won design and editor awards in hiking, rock and ski boots in the same 18-month period, which makes us one of the few, if only, companies that can claim such recognition, I believe."
In addition to awards, Scarpa North America has doubled its business since Scarpa Italy took over in 2005, and Miller said the company will more than double its business again this year.
"That is a tangible barometer of success," said Miller. "Are we making profit right now? No, because we are dumping every single dollar back into the business, but that is what is needed to keep us here and growing."
What was also important during the first two years was establishing a climate of listening and responding to retailers' needs, both Miller and Clark told SNEWS.
"Chris would agree that we had to address the business relationship with our dealers from the start," said Miller. "For existing dealers, it was apparent some were happy, while others had strong feedback on what we could do better. We attacked the business on a very personal level and that included everyone from the smallest retailer to the biggest retailer. As a result, we have been able to hold onto a special position in the market which allowed us to expand also into REI and MEC."
In addition to meeting the needs of retailers on a business and distribution level, it was also apparent to Scarpa NA (and the mother ship in Italy) that business was being left on the table by not offering a line of lightweight, comfortable, multi-purpose trail and athletic shoes that -- and this is an essential point of difference, according to Mathews -- maintains Scarpa's renowned fit, function and quality.
Sales reps for the brand, which now number 23 among 10 territories in North America, were telling Miller and team that Scarpa customers were using Scarpa products for skiing, mountaineering, climbing, trekking and hiking, but when it came to light trail shoes for running and scrambling, those customers were buying other brands.
Scarpa Italy and Scarpa North America put on their collective product design hats and have produced a new line for customers seeking a shoe for trail running, fast and light approach, and even travel. Called Alpine Cross, it's making its debut at Outdoor Retailer Summer Market.
Alpine Cross also represents a marked departure for Scarpa Italy when it comes to finished product, as the company fully acknowledged, Miller told us, that while it has amazing production capability and talent for high-end European footwear, it could not produce the caliber of product in this particular category for the prices North Americans expect.
Which means that while Alpine Cross footwear was designed and developed in Italy and North America, it will be built in Asia -- the acknowledged world leader in production technology for compression-molded EVA.
The Alpine Cross line will offer five platforms within the line, each with men's and women's components, some featuring Gore-Tex, with a mix of colors, adding up to 25 SKUs. Miller allowed that the SKU number may be reduced depending on reaction to colors at retailer meetings before and during Summer Market.
One shoe, according to Mathews, is emblematic of the quality and innovation that has gone into the Alpine Cross line: the Apex. While the shoe is built on a running last, it offers features that push it into more of an all-around trail shoe, we were told. Features include a dual-density, compression-molded EVA midsole, Crossbow TPU support for lateral heel stability, a TPU forefoot trail plate, a TPU rib cage surrounding breathable mesh and synthetic leather on the uppers, Trail Speed soles that strike a balance between traction and weight, and TPU toe caps. See photo to the right for the women's shoe, as an example.
With the introduction of the Alpine Cross line, the company's mission is nearly complete -- at least in terms of expanding the line -- but Miller said he knows that when it comes to defining success as a business, that comes down to people and relationships, not just product.
"The thing about our company is we have a core group of folks with a lot of passion who are all active in the sports we sell into, and that is huge," Miller told SNEWS. "From the beginning, we have tried to carry forward all of the good things about what was going on before 2005, and then address, and we are still addressing, all of the things our dealers and consumers told us we need to be better. It comes down to good communication and trust."
SNEWS® View: Communication and trust -- it really is no more complicated than that when it comes to running a business which retailers respect. While it is no secret that prices will be going up in this global economy -- how can they not? -- Scarpa realized, perhaps before others, that in this global economy, the old model of distribution, especially for European companies, no longer works in North America. There simply is not sufficient margin built in for adequate marketing, promotion, product development and customer service. Scarpa has succeeded thus far, not because of product (although the product is very strong to be sure), but because of the people it has assembled on the North American team. The team has an A-list pedigree. It also helps that Miller comes from the Peter Metcalf school of business: Spend what you must, but economize wherever you can. Running a lean ship ensures margins can remain high for retailers, while product costs are contained as much as possible. Ultimately, that helps to spell economic success.