Red Wing Shoe Company, Inc. History

Address:

314 Main Street
Riverfront Centre
Red Wing, Minnesota 55066-2337
U.S.A.

Telephone: (651) 388-8211
Fax: (651) 388-7415

Private Company
Incorporated: 1905
Employees: 2,500
Sales: $300 million (1998 est.)
NAIC: 316213 Men's Footwear Manufacturing; 316214 Women's Footwear Manufacturing; 316211 Rubber & Plastics Footwear Manufacturing; 316219 Other Footwear Manufacturing

Company Perspectives:

The company's stated vision is to "Be the world's most respected brands of performance footwear for work and outdoor."

Company History:

Red Wing Shoe Company, Inc. manufactures durable and comfortable footwear tailored to the needs of specific occupational and recreational activities, from farming to hunting and hiking. The company's brands include Red Wing, Irish Setter, Vasque, and WORX. The Sweasy family of Red Wing, Minnesota, solely own Red Wing Shoe. Until the 1970s, Red Wing's reputation rested primarily on a wide variety of footwear marketed as "work shoes," emphasizing their practical applications in the workplace. By the mid-1980s, however, as U.S. workers moved increasingly out of industrial and agricultural sectors into service related jobs, the company's scope changed. Under the direction of a new president, William J. Sweasy, and a new generation of management, the company's emphasis shifted from "work shoes" to "shoes for work," a slight semantic change that underscored the company's new commitment to innovative lines of lighter, more comfortable footwear developed to accommodate new work-oriented and recreational needs. By the end of the 1990s, Red Wing sold more than three million pairs of shoes and boots per year, through a worldwide network of more than 4,200 dealers. Within the U.S. market, this network included about 400 Red Wing Shoe Stores (of which about 160 were company owned). About 15 percent of overall revenues were generated from sales outside the United States, in more than 100 countries worldwide.

Early History

Red Wing traces its history to 1905, when German immigrant Charles Beckman closed his retail shoe store and organized the Red Wing Shoe Company with 14 other investors. The young company initially manufactured 110 pairs of shoes per ten-hour day. The brand's steady growth stemmed from the booming industries of farming, logging, mining, blacksmithing, and railroading that represented largely untapped footwear markets. Red Wing tailored its shoes to the demands of specific customer groups, offering a wide range of shoe sizes and widths to ensure fit, and a constantly growing line of specialized products with different capabilities.

Red Wing innovation in its early years reflected efforts to shod diverse markets. In 1908, the brand offered welt-constructed shoes featuring a leather strip attached to the shoe upper and sewn into the sole. The enhanced comfort and durability of the shoes particularly appealed to farmers, Red Wing's primary customers at the time. Continued demand justified the construction of a four-story factory with a daily output of 450 pairs, four times the 1906 capacity. Then in 1912, the company added the black and brown "Chief" line, commonly known as "the farmer's shoe." In addition to the traditional welt construction of earlier farming shoes, the Chief featured specially tanned, manure-proof leather for longer durability.

Numerous other shoe designs ensured the company's continued success. Red Wing began fulfilling military needs with the onset of World War I, manufacturing in 1918 the regulation Munson U.S. Army Last, designed to "fit all feet" with maximum comfort and durability. After the war, the Munson remained a top seller and influenced other popular shoe designs for over 50 years. In the 1930s, Red Wing moved into a steel toe line designed to provide added toe protection in high risk jobs. That line retained its popularity and developed into several models, one of which even became popular during the punk counterculture fad of the 1970s. Also in the 1930s, the company developed an oil-resistant, highly comfortable design named the "Oil King" boot and adopted primarily by oil field workers. For slightly more elite circles of the era, Red Wing also introduced a men's dress or riding boot dubbed the "Aristo," which served as a model for a women's line of shoes and boots.

Meanwhile, the company's early decades were also marked by significant management changes. In 1911 Beckman retired, with stockholder C.H. Boxrud taking over as president. J.R. Sweasy, who had joined the company as a "cost man" in 1914, was elected general manager in 1918. Two years later Sweasy gained control of the company through stock purchases. After Boxrud died in 1921, Sweasy became president of Red Wing Shoe.

The development of rubber added significantly to Red Wing's success in its early decades. In the early 1930s, Sweasy introduced the rubber cord sole to replace the leather norm. His gamble with the new material proved both lucrative and trendsetting. The Gro Cord soles and Goodyear heels used in Red Wing shoes set the standard for a shoe industry that grew to depend almost exclusively on synthetic materials.

In addition to durability, lowered costs figured into Red Wing's new materials. During the Great Depression, synthetic materials helped produce an extremely cost-effective shoe. Model No. 99, named after its price of 99 cents, kept the factory in production during the financial downswing.

Red Wing continued to grow at a healthy rate, and after World War II the company reached national and eventually international markets. War mandated unprecedented volume, as the U.S. government contracted hundreds of combat shoes manufactured to regulation specifications in 239 different sizes and widths. By 1949, when William D. Sweasy took over as company president following the death of his father, Red Wing had proven its reliability in meeting urgent demand under tight supervision. Sweasy turned that strength to civil ends, introducing a company reorganization to place greater responsibility on department heads and develop teams of management specialists in every department. Sweasy also initiated a new distribution strategy in which Red Wing retail stores would open on the West Coast and move east over time.

Reorganization paid off quickly. Record profits were achieved in 1952, largely attributable to the No. 877 Irish Setter Sport Boot, which continued to assure Red Wing a strong position in the competitive boot market. The Irish Setter's landslide success was partly responsible for Red Wing's introduction of its Vasque outdoor division in 1965. That division capitalized on the hiking boot craze of the 1970s and went on to include lightweight hiking boots and walking shoes in the 1980s and 1990s. Meantime, Arlo "Ole" Jensen became company president in 1972, with Sweasy becoming chairman of the board.

Shifting Focus, New Products: 1980s

After continued growth through the 1960s and 1970s, Red Wing responded to trends in market research, changing many of its marketing strategies and brand lines. In an October 1, 1984, Footwear News article, Tom McConnell, Red Wing product manager, identified three trends affecting the company: a shift from a rural to a metropolitan workplace; the replacement of a blue-collar workforce with a gray-collar or service-related one; and rising numbers of women in the workforce. To service these new markets, Red Wing changed its emphasis and its motto, from "work shoes" to "shoes for work." While the company would continue to offer work and sports boots, product development and marketing efforts in the 1980s increasingly focused on those markets promising the most growth, including footwear for such professions as computer operators, food service technicians, health care workers, and security personnel.

Red Wing's shift in marketing strategy was paralleled by a new corporate tone prompted by an increasingly younger generation of management. In 1984 William J. Sweasy, Jr., assumed the role of president after Jensen retired from the post. Sweasy represented the third generation of his family to serve as a Red Wing executive; his father, William Sweasy, remained CEO. The 33-year-old president ushered in an era of active strategic planning, greater communications, increased line diversity, and new personnel. "Before, the upper management team operated intuitively; they shot from the hip, so to speak," noted one company spokesperson in a 1986 Footwear News article. The article emphasized that overall company spirit was not critical of the old management, but favored the new approach in light of changed and emerging business opportunities. In August 1989, William Sweasy, Jr., became the first company executive from outside the Twin Cities area elected to chair the Better Business Bureau of Minnesota, representing an honor for Red Wing Shoe Company and its new leader.

New management style and brand image also brought new products to Red Wing. Special attention was paid to women's comfort footwear. While more than 40 million women held jobs involving substantial standing or walking in the mid-1980s, Tom McConnell told Footwear News that "most resources have simply remade men's styles on a scaled-down last." In response, Red Wing introduced Lady Red Wings, incorporating safety toes and lightweight urethane soles in a more feminine, less cumbersome line of shoes. McConnell projected sales of approximately 250,000 pairs, retailing at $40 and up.

In the 1980s, Red Wing also developed its Vasque Outdoor Footwear division, which produced aesthetically appealing walking shoes under the Vasque brand name. While earlier walking shoes had often sacrificed cosmetics for hi-tech features used in running shoes--rubbers, bottoms packages, heel counters, and lacing systems--Red Wing emphasized casual, multipurpose walking shoes in attractive designs. Art Kenyon, divisional manager for Vasque in 1988, told Footwear News "the consumer today really is concerned with cosmetically fine footwear, boots that can function and still look nice." In the early 1990s, Vasque also benefited from the renewed popularity of hiking boots, sales of which had been declining since the 1970s. Despite the downward sales trend, Vasque had continued to create heavy hiking boots for wilderness excursions as well as a variety of lighter styles for casual walkers and fashion customers. Discussing the company's ready position at the time of the hiking boot resurgence, Kenyon--who had by 1991 become president of Vasque--observed: "We came from the mountain down to the mainstream," adding that "the others came up from the gymnasium," in reference to competition from such athletic footwear companies as Nike, Reebok, and New Balance. In 1990 Vasque introduced Kids Klimbers, a line of hiking footwear for children, featuring a "variable fit child growth system" to accommodate quickly growing feet for an extra six months on average, and also incorporating children's tastes into shoe design. The division's hiking boot product line became the fastest-growing segment of the Red Wing Shoe Company during the early 1990s. In 1993 Vasque launched its first line of sports sandals, responding to a popular trend during that time.

In the work shoe arena, Red Wing also explored new directions. Following the demands of consumers who often wore athletic shoes outside the workplace, the company introduced steel toe athletic shoes--two safety-style athletic shoes in black and white. In addition, the company moved toward work shoes made from lighter materials and softer leather. "Our consumers are saying, make it soft but tough," explained Andy Thompson, advertising and promotions manager of Red Wing, in a 1988 Footwear News article. Red Wing also developed a group of barnyard acid resistant shoes geared for the farm industry and a "decathlon" sole made from a durable, lightweight, shock resistant, and oil resistant material.

Red Wing's new products were supported with new marketing initiatives. Lady Red Wings appeared in a TV ad campaign that was second only to Acme Boot Co. in terms of market saturation, according to McConnell. Premiering in October 1984, the commercials were computer animated to lend a contemporary feeling to the new line. Red Wing also ran a series of print advertisements featuring a top model in McCall's, Women's Day, and Mademoiselle magazines and promoting the image of an up-to-date, attractive, and fashionable Red Wing clientele.

In the late 1980s, the company began a restructuring of its retail division in order to gain exposure and market penetration. In May 1986 Wes Thies, retail division manager, outlined a twofold strategy in Footwear News. The company's object was to expand the existing specialty store concept and to introduce three prototypes geared to various consumer demographics. The first prototype was aimed at smaller markets with populations between 30,000 and 60,000. The units were designed with a sales area in front and shoe repair shop in back and targeted Red Wing's blue-collar consumers.

Red Wing also emphasized the use of a company newsletter as a marketing tool. The "Red Wing's Shoe News & Views," published monthly, helped a 40-member sales staff communicate product news and company policies with over 6,000 stores.

While the Red Wing newsletter addressed retailers, the company moved to develop more effective means of communicating brand awareness to the public. With the advent of desktop computer power and database marketing, age-old advertising techniques were losing their effectiveness. Stan Rapp, president of CRC Consulting Group in New York, told attendees of the 1992 All-Industry Marketing (AIM) Conference that marketing efforts had to be increasingly individualized as mass advertising rapidly became obsolete. He noted that shoe companies needed to micromarket and draw consumers into a feedback loop by fostering two-way, relationship marketing. In its own variation on such techniques, Red Wing launched a television campaign in the early 1990s in which it sought to foster a relationship with consumers by providing a toll-free number. The commercial claimed that "our shoes don't wear out," providing consumer testimonials and toll-free purchasing information. In addition, all customers were sent a note thanking them for their business and a form to rate their salesperson. After six months, each customer received another form to rate the shoes' performance, strengthening a personalized, two-way marketing dynamic.

Red Wing's efforts to adapt to changing markets also included greater emphasis on international growth. By 1990 several brands were being distributed in over 80 countries. Despite the intricacies of dealing with currency fluctuations and of identifying elusive, foreign trends, the market for U.S. footwear exports offered substantial growth potential for Red Wing. Palmer Beebe, one executive instrumental in setting up Red Wing's international department, moved on to run Team America, an export business handling footwear for a consortium of U.S. companies. "U.S. footwear is underexported," Beebe claimed in a July 1991 Footwear News article.

Red Wing faced pressing issues regarding employee health insurance as it entered the 1990s. With medical costs skyrocketing, the company confronted several challenges. In 1992 the company encountered astronomical expenses for worker's compensation insurance, a burden that prompted Red Wing--and other Minnesota companies&mdashø look at other states with cheaper policies for future expansion. Even though Red Wing earned a 25 percent discount in 1992 for the job-classification quoted rate, for a positive safety record, premiums still increased 41 percent from 1988 to 1992. In an effort to ease such burdens, the 1992 state legislature changed some benefits and gave broad authority to the Department of Labor and Industry to cut overall costs by 16 percent. Later that year, Rich Chalmers, vice-president of human resources at Red Wing, collaborated with Ron Schiemann, a Minnesota entrepreneur, to conceive a healthcare purchasing group designed to improve the delivery of healthcare and reduce costs for ten employers, including Red Wing Shoe, Riedell Shoes Inc., and the City of Red Wing. According to the plan, participating employers would be self insured for a given dollar amount, beyond which reinsurance would take effect. The Chalmers/Schiemann plan was just one of several healthcare measures that Red Wing considered to best cover its employees.

1990s and Beyond

In 1988 Red Wing Shoe Company moved its company headquarters to the company owned St. James Hotel/Riverfront Centre, located on the Mississippi River in downtown Red Wing (the St. James Hotel had been built in 1875 and renovated in 1977). In 1991 Sweasy, Jr., added the CEO position to his title of president.

As a whole, the U.S. shoe manufacturing industry produced only one-fourth as many shoes in 1994 as it did in 1968. Bucking this industry trend, Red Wing Shoe continued throughout the 1990s to make most of its shoes and boots in the United States. Some products were made in Mexico and China, with the entire Vasque line produced overseas. When the company sought to expand its production capacity in the early 1990s, however, the company looked outside of the City of Red Wing. In 1994 Red Wing Shoe added to its two production facilities in its namesake city through the purchase of shoe factories in Potosi, Missouri, and Danville, Kentucky. The Potosi plant was earmarked for production of a new Red Wings for Women product line, which was established in 1994. At mid-decade, Sweasy, Jr., handed the presidential post to Joseph Goggin, remaining chairman and CEO himself. Goggin had been with the company for nearly 30 years, serving as chief financial officer prior to becoming president.

In 1999 Red Wing Shoe restructured into brand-centered divisions in order to better focus on its customers and to aid the company's international expansion efforts. The Red Wing division offered premium work-oriented footwear, including steel toe, rugged work, work casual, service, and women's wear product lines. The Irish Setter division centered on hunting and sports boots, while Vasque focused on the footwear needs of hikers and backpackers. A fourth division, the WORX brand, had been launched in 1998 and offered a line of moderately priced work shoes and boots. The WORX line was produced overseas, and the lower price of the line allowed the company to pursue different markets and distribution channels than that of the flagship Red Wing brand, the handling of which was limited to protect the trade areas of existing dealers. The WORX brand could thus be distributed to a wider range of retailers, sold via mail order, and sold directly to companies.

Also in 1999 the Vasque division entered into a strategic alliance with Marmot Mountain Ltd. that, according to Red Wing Shoe, "will share key operational, logistical, delivery and information-support systems ... [to] create broader opportunities in global brand development, increased customer service levels, and progressive information systems solutions." That year also saw Red Wing Shoe open a flagship retail store in the Mall of America, located in Bloomington, Minnesota, and the largest shopping mall in the United States, boasting of 43 million visitors a year. The company hoped to educate and ultimately convert shoppers to its premium shoe and boot brands through this store, which featured a multimedia interpretive center with information on the company's history, products, and manufacturing process. Roger Bunn, vice-president and general manager of retail at Red Wing, hoped the store would result in Red Wing converts. He told the Minneapolis Star Tribune, "We feel very strongly that one of the hidden benefits of buying Red Wing boots is the construction, the craftsmanship, the fact that we control all processes in Red Wing. We're not real sure that most of the buying public is even aware of those benefits. We needed to find a way to send out the message that there's a reason why to buy the boots."

At the turn of the century Red Wing Shoe offered more than 180 styles of shoes and boots and 120 shoe sizes and widths for men and women. The company's two factories in Red Wing produced about 10,000 pairs of shoes daily, with about 12,000 pairs produced in the plants in Missouri and Kentucky. With its new divisional structure in place, Red Wing Shoe seemed likely to continue its successful promotion of high quality footwear.

Principal Subsidiaries: S.B. Foot Tannery; St. James Hotel/Riverfront Centre.

Principal Divisions: Red Wing Brand; Vasque Brand; Irish Setter Brand; WORX Brand.

Red Wing Shoe Company, Inc. History

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Company History:

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