DC Shoes Following Giants’ Steps
DC Shoes Co. shook up skateboard-shoe marketing by being a good copycat.
When boxy, thick-soled sneakers were in vogue, DC Shoes sold contoured styles inspired by athletic shoes. When its rivals wooed kids with free stickers, it wowed youngsters with staged skateboarding events.
President Ken Block admits that many of his ideas, novel in the skate business, came from athletic footwear leaders. A shoe called Lynx has a toe-protector of laminated suede, a feature adapted from a soccer shoe. DC Shoes rushed out sneakers with air-cushioned soles the minute a Nike patent expired.
Block and his co-founder, Damon Way, recruited top skaters as endorsers and designed signature shoes for them, following an established model. DC Shoes is named for its best-known endorsers--Way’s brother, Danny Way, and Colin McKay.
“They took what Michael Jordan did for Nike and applied it to skate,” said Ryan Quinn, head of Adidas’ skate business. “They were the first to do that in skate.”
The steps helped make 7-year-old DC Shoes a leader in the skate-shoe business, with $40 million in sales last year. It’s a reminder to small businesses that the best ideas can come from anyone, including competitors.
“We didn’t invent anything,” Block said.
Not that Vista, Calif.-based DC Shoes is short on tactical ideas. It made a huge splash three years ago when it arranged for skater Danny Way to jump 10 feet from a helicopter onto a wooden ramp covered with DC Shoes logos. The aerial stunt made the cover of an influential skateboarding magazine and last fall was restaged for MTV.
Way tore his shoulder duplicating the trick. But the performance, replayed on TV again and again, pumped DC Shoes’ coolness factor. Board-Trac, a marketing firm specializing in extreme sports, reports DC Shoes is among the most sought-after sneaker brands among boys 8 to 15.
DC Shoes also is benefiting from the overall popularity of skate styles. Thanks to the growth of extreme sporting events such as the Gravity Games and X Games, the skate look is in fashion.
“The shoe of choice is a skate shoe, whether it’s worn as a casual shoe or dress shoe,” said Angelo Ponzi, president of Board-Trac.
That’s created an opportunity for DC Shoes to move beyond specialty skate shops into sporting goods chains and department stores. But unless it is carefully managed, the expansion could hurt DC Shoe’s image among hard-core skaters, marketers say.
Founded in 1994 with a $20,000 investment, DC Shoes isn’t the first venture for former skaters Block, 32, and Damon Way, 28. In 1992, they started a skate clothing line called Droors and added a snowboarding clothing line after that. They recently sold those businesses to focus on DC brand shoes and apparel.
Smart marketing helped DC Shoes record profit from the start. The privately owned company wouldn’t disclose how much it earns. Endorsed by a team of top-flight skaters, DC Shoes had no trouble getting distribution in skate shops--the first, crucial rung on the retail ladder.
“They had instant credibility,” Quinn said.
DC Shoes stoked sales with splashy two-page ads in skating magazines. And Block said he twice grabbed the cover of Larry Flint’s racy Big Brother skate magazine by arranging a press junket to Europe that showcased skaters sponsored by DC Shoes. The October 1998 issue has 34 pages of photos and stories about the athletes.
Dave Carnie, a Big Brother editor, confirmed the arrangement and said such pay-for-play deals are common in skateboarding.
Though critical, marketing is, of course, one ingredient in DC Shoes’ success. Manufacturing is also important; skate shops can ill-afford customer returns of poorly made sneakers. Through an Orange County shoe-store owner with Asian ties, DC Shoes found a factory in South Korea skilled in making shoes. And DC Shoes recently invested an undisclosed sum in a joint venture with its Korea-based manufacturer, Boss Corp.
“They have good quality control,” said Jeremy Lopez, who owns skate shops in Upland and Chino Hills.
In trying to stay ahead of competitors, DC Shoes has sometimes gone too far. Sales were flat in 1999 in part because the company’s designs were too fashion-forward, skate shop owners say.
“1999 was not our strongest in design,” admits Jeff McCall, DC Shoes footwear production chief, who also blames industry-wide price cutting. “We may have pushed the envelope too far for kids.”
And last fall, five skaters abandoned endorsement deals with DC Shoes over issues related to the expansion into Copeland’s Sports, Nordstrom and others. Block said the defections haven’t hurt sales.
The skaters who left DC Shoes were less concerned about image than about pay, Block said. With sales poised to hit $60 million this year, skaters wanted a bigger cut from the growing company, Block said.
“When you don’t reward the people who helped you get where you are going, that’s where the conflict starts,” said Kelly Bird, former DC Shoes team manager who jumped with four skaters to rival Podium Distribution of Tarzana.
Bird said skaters also worried that DC Shoes would no longer be seen as cutting edge. “When the main focus is skate, it’s awesome,” he said. “When it is not the principal focus, it is weird for skaters.”
DC Shoes’ decision to venture outside traditional skate shoe outlets will put its marketing skills to the test. In an informal telephone survey, some skate shops said they reduced or stopped ordering DC Shoes because they feared competition from larger outlets. Merchants who hadn’t cut back still expressed concern.
“We are not too happy about Nordstrom. It could hurt skate shops,” Lopez said. “Though now DC sales are strong.”
DC Shoes is taking steps to court small merchants, including grass-roots tactics borrowed from rival skate shoe marketers. It revised its pricing structure so small shops also can qualify for volume discounts available to big chains. The company is developing its first street-level marketing program, under which its skaters will conduct demonstrations and giveaways at local skate shops. And it is preparing its first television commercial.
Chief Financial Officer and co-owner Clayton Blehm said the initiatives will push marketing and promotional costs to 10% of sales. DC Shoes’ marketing costs typically average about 6% of sales.
The expense might be worth it, judging from the reaction of the owner of Active Ride, which has five shops, all in Southern California. The Chino-based chain has increased the number of DC Shoe styles it sells to 24 from 10 in 1999, owner Shane Wallace said.
“DC has a solid shoe, a legitimate skate team, and plans to do skate demos,” he said. “It is a professionally run company. The Nike of skate shoes.”
