The Rise and Fall of Timberland
There’s a high chance that you have come across Timberland shoes while out shoe-shopping. The first Timberland shoe, introduced in 1973, was actually targeted for outdoors-men and blue-collar workers. The Swartz brothers, Herman and Sidney, designed the shoe to be sturdy and water-resistant. The build quality was such that it was even sold in army-navy stores. Nowadays Timberland offers a range of outdoor footwear and apparel. But let’s back up a bit.
Timberland rose to fame in the 1980’s when an Italian businessman spurred a craze about the Timberland boots in Italy. He thought that the boots were the perfect fashion accessory for the Italians. And his gamble definitely paid off. In a matter of months, he was distributing Timberland boots throughout Italy. Obviously, Timberland benefited from an explosion in sales. The brand caught the eyes of retailers in the U.S. and Europe who also wanted to distribute the boots.
Their growth trajectory was so impressive that they were on the radar of conglomerates who wanted to buy it out. The VF Corporation was the first one to offer Timberland a deal, worth 60 million dollars. However, the brothers could not reach a decision in time and VF Corp. withdrew their offer. Two years later, they got another offer. Once again, the brothers did not see eye to eye. This is when Sidney decided to buy out Herman to grow the business even further. That might have been for the best.
But Timberland was growing so fast that Sidney started to lose control of the business. The company introduced over 100 new models, which added too much stress on their factories. This created an inventory problem that led to disruptions in the supply chain. Customers and retailers were unhappy about the level of service. Although revenue did not take a hit, profits fell by 14%. They quickly tackled the manufacturing problems and renewed their focused on their core customers.
By the 1990s, the boots were making waves with the hip-hop crowd and became the footwear for urban hipsters. Other companies such as Adidas and Nike jumped in the rugged footwear market. But it seemed that Timberland had cemented its position as the number one rugged footwear brand. Customers stayed loyal to the brand.
But Timberland hit another bump in the road in the mid 1990s. Whilst revenues were stable, profits were dampened due to cuts in prices. The sluggish retail environment did not help either. Soon enough, they found themselves back to square one. They were piling on inventory and the supply chain took a hit. Timberland restructured their operations. They closed down some manufacturing plants and laid off employees in an effort to become leaner. They even started to outsource production to lighten the manufacturing burden. In 1999, the company also introduced Timberland Pro, a line of premium, durable boots to professional tradespeople. All of the strategies worked as sales crossed the 1-billion-dollar mark in 2000.
Timberland was on an uptrend since then. Sales kept rising, reaching the high of 1.6 billion dollars by 2005. But they wanted to diversify their product line to boost sales. They thought that their core brand would not play well in other categories. Thus, they started a new outdoor performance brand called Mion, which targeted the watersports category. They also announced a Timberland Boot Company project that targeted younger consumers in Europe. This was the beginning of the downtrend.
By 2007, sales had fallen to 1.4 billion dollars. Timberland boots were losing ground to brands such as Vans and Crocs. They closed down retail stores globally and eased down on their transition to a licensing model. They even outsourced clothes designs to Philips-Van Heusen, the owner of Tommy Hilfiger. By 2009, sales fell further to 1.3 billion dollars, granted the 2007 to 2009 period was not great for businesses in general. Shareholders were indeed displeased with the stock price performance. The problem started way before the onset of the financial crisis.
Remember when VF Corp. tried to acquire them in the 1980’s? Well, they finally got to buy Timberland in 2010 for 2 billion dollars. Sidney was right to hold off the sale. Now Timberland was under the same roof as North Face and Vans. Management could tap into the expertise of VF Corp to reignite sales. And VF Corp. managed to pull Timberland’s sales to 1.8 billion dollars by 2014.
It is indeed an impressive feat. I mean, management was now so confident in their strategy that they laid out a bold plan. By 2019, they wanted Timberland sales to reach 3.1 billion dollars. And I cannot blame them for setting a high target. They had proven themselves capable of growing sales. They expected the growth to be driven by product innovation, product diversification and expansion in the direct-to-consumer business.
But it seems that the brand lost itself. It had an identity crisis. The marketing confused consumers. I might even say Timberland was repeating the same mistake it made in the 1980’s. They were trying to cater for all types of customers and in the process were neglecting the existing customer base. Moreover, international expansion did not go as planned. They had to pull out of India as well after it failed to attract the local customers who were loyal to the local version of Timberland called Woodland.
Timberland tried to revamp its strategy by focusing marketing dollars in urban locations in Americas and Europe. But sales remained flat and the 3.1-billion-dollar target became a pipe dream.
I actually own a pair of Timberland. I wore it a couple of times and now it’s collecting dust in my closet. I still don’t know why I bought it in the first place. Do you own any of their products? How are they compared to other major brands? What could they be doing better? Let me know.
