How Aldo Survives the Mall

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Aldo was the only place to shop for shoes that wasn’t hidden deep in the musty depths of a department store or tied to an unfortunate name like Shoe Carnival or Payless. It was built like a boutique, but nothing was too expensive. I knew I could always find a pair or two that at least vaguely resembled what I saw in Seventeen.

This was before the explosion of H&M, Forever 21, and Zara; the teens were all wearing Abercrombie & Fitch, American Eagle, and Aeropostale. But Aldo was always there. And it's still there now.

In a retail industry marked by layoffs, store closures, and experimental upstarts, Aldo isn’t sweating it. There are still new shipments of shoes reaching Aldo stores anywhere from two to five times per week, the same way that it has been done "forever," according to the president of Aldo Group North America, David Bensadoun. It’s still the only shoe store in the mall that focuses on selling trendy, not-too-expensive shoes in a small, boutique-y environment, and while it has had to navigate the sea changes in retail just like everybody else, there’s not quite the same air of underlying panic among its leaders.

Photo: Luciana Pampalone/Aldo

Forty-four years ago, Aldo Bensadoun founded the company by scraping together enough money to fund production for 60 pairs of wooden clogs in Montreal, Canada. Now, Aldo has over 2,100 stores across the globe. PrivCo, a market research company that tracks private companies’ financial data, pegs the Aldo Group’s total revenue at over $2 billion for 2015 (that’s including revenue from Aldo’s other brands Call It Spring, a younger, less expensive Aldo offshoot, and Globo, a DSW-like chain in Canada, plus the company’s wholesale and private label operations).

According to the report, Aldo has maintained remarkably strong revenue growth over the past decade, which PrivCo analyst Evan Danckworth notes as indicative of how Aldo hasn’t overextended itself in the wrong markets. To contrast with the store’s neighbors on the other side of the mall, Gap reported net sales (comparable to net revenues) of $5.75 billion in 2015, down from $6.16 billion in 2014 and $6.35 billion in 2013. J.Crew reported net revenues of $2.14 billion in the same fiscal year, down from $2.29 billion in 2014 and $2.21 billion in 2013. Aldo’s estimated net revenue was $2.02 billion in 2015, up from $1.85 billion in 2014 and $1.81 billion in 2013. (Aldo declined to comment on the estimated financial figures.)

When discussing Aldo’s revenues, Danckworth also noted that Aldo’s successful embrace of online shopping has helped to strengthen its numbers. According to Bensadoun, online sales made up 5 or 6 percent of Aldo’s total sales five years ago. Now, that number has doubled. Conversion rates — or the amount of customers who visit Aldo and complete a sale — are up by 15 percent online this year versus last year, and up by 5 percent in stores. Bensadoun chalks both increases up to better site features easing the sale process online, and integrating more tech in stores to better facilitate sales there.

"Brick-and-mortar stores are starting to integrate the strengths of online and mobile into their stores because nobody wants to go into a big department store and wait for 20 minutes for the salesperson to go get the shoes from the stockroom and then if they have them and you do want to buy them, you’ve got to find a register and wait another ten minutes to pay," says Beth Goldstein, executive director and industry analyst for footwear and accessories for the NPD Group, a market research company. "Consumers just want a much more efficient process."

Aldo has plans to roll out deep integration between the brand’s app and the in-store experience. Marketing magazine described a recent Aldo tech demo that featured a hypothetical shopper who had abandoned her cart online, but downloaded the Aldo app when prompted. In the future, when she happened to walk by an Aldo store, the app sent her a push notification advertising a discount on the shoes that she had abandoned in her cart earlier, and if she walks inside, a salesperson would get pinged with information on which shoes she is looking for. The salespeople would be equipped with tablets that could pull up any app user’s buying history, their "estimated lifetime value" as an Aldo customer, and, if the shopper linked to any of their social media profiles in the app, a photo of the person.

The experimental tech integration isn’t so much about driving shoppers toward either online or in-store shopping, but rather just making both experiences work better together. "I really believe that people shop in many channels," says Bensadoun. "They shop on their mobile while they are in a cab, they shop when they go to the mall. The place where they pay, we need to stop worrying about where that is. We need to just accept that the consumer is going to do what is convenient for them."

Photo: Luciana Pampalone/Aldo

While the online initiatives are increasingly more important each year, the bulk of Aldo’s sales still come from purchases made in physical stores. Bensadoun estimates that Aldo occupies about half of all enclosed malls in the US, but isn’t worried about the so-called death of the American mall.

"What’s the phrase? ‘Don't believe the hype,’" Bensadoun says. "As humans, we are programmed to be social animals and we need to get out of our routines. I think shopping will always be one form of entertainment. I think a big city that has six enclosed fashion malls maybe will end up with four or five but we are not in the fifth and sixth malls anyways. We really are in the top malls."

Since there’s no other fashion footwear retailer occupying the same space as Aldo anywhere else in the mall, Bensadoun tells Racked that Aldo’s main competition is the shoe section of department stores. But even the competition is more opportunity rather than obstacle, since the company currently sells its shoes through branded wholesale partnerships with a variety of retailers including Zappos, DSW, Asos, and Macy’s, and Bensadoun says that Aldo is planning to announce partnerships with two more department chains next year.

"We know that our customers are going to those places, so we want to be where our customers are shopping," Bensadoun says.

Aldo did, however, have to dig itself out of another industry-wide problem: running too many sales. While brands like Coach and Kate Spade have pulled their products out of department stores to better control markdowns, and Gap and J.Crew keep promising that they are trying to curb sales patterns, Aldo went ahead and cut its number of sale weeks in half from last year to this year.

It’s a remarkable move in a world where public companies usually spend a lot of time talking about the fact that they are running too many sales and not a lot of time implementing sweeping new strategies because of the pressure to keep hitting quarterly revenue goals. Hypothetically, if a brand stops offering discounts as frequently, the fear is that the customer will walk away because they’ve already become accustomed to regular sales — why would they go back to paying full price for the same products?

As it turns out, Aldo customers didn’t leave in droves when it cut back on the number of sales. "You will see a little bit of a reduction because some of the very value-oriented customers won’t come, but I think what you end up with is your ‘real customers,’" Bensadoun observes of the shift.

Photo: Luciana Pampalone/Aldo

Aldo made another big move this year when it hired Daianara Grullon Amalfitano as the company’s first-ever vice president of global footwear. Amalfitano built her career at Steve Madden, and was brought in to oversee global women’s and men’s shoe design for both Aldo and Call It Spring.

Amalfitano's goal is to help the brand become more and more "customer-focused" — not stuck in a staid retail mindset — which she hopes to achieve by "really paying attention to what our customer needs are and building product for them." "Our purpose is no longer selling all variety of shoes but being able to connect and engage with our customer in a relevant way," she tells Racked.

Her team refers to Aldo customers as "style seekers" who don’t necessarily break down into age demographics, but rather are characterized by their lifestyles and interests. Aldo is looking at how it can reach them through those angles.

When it comes to assessing the business right now, Amalfitano points to — brace for it — fashion’s "buy now, wear now" upheaval as a big catalyst for change at Aldo. Even though Aldo sits solidly in the definition of a fast fashion retailer, Amalfitano says that even just a few seasons ago, people weren’t buying shoes the same way they are now. Now, it’s important to stock a wider array of footwear year-round.

"It’s no longer about seasons happening so far in advance," Amalfitano says. "There’s not that shift where it's now fall and everything I buy must be fall or vice versa for spring. The mindset is always around ‘buy now, wear now.’"

NPD’s Goldstein confirms that this is an industry-wide shift in footwear. "The seasons aren’t as defined as they used to be," she explains. "We used to have a clear delineation of when sandal season was and then we’d move to boot season, but now it’s not as defined as the weather gets more unpredictable and the seasons sort of blur together." Booties, for example, have become a seasonless item that shoe retailers stock all year round, not just for fall.

Goldstein pins the shift on the rise of online shopping, where shoppers can get whatever they want whenever they want. Nobody plans on buying sandals in February and boots in July anymore, when stores used to get those shipments. Purchases are made as customers need the products, not months beforehand.

That’s not to say that online shopping will replace stores (Goldstein says 75 percent of shoe shopping is still done in stores), but rather retailers are slowly moving toward finding the right balance between brick and mortar and online shopping.

"I think a well-rounded retailer or brand needs to consider all channels and not be too reliant on one, whether it’s direct-to-consumer, brick-and-mortar stores, online stores, or mall stores versus wholesale," notes Goldstein. "I think it’s got to be a balance and considering a diversification strategy." If Aldo’s approach is any indication, that’s exactly what the company is doing. It simply meets the customer in whatever way that they want to buy a pair of shoes.