MONTRÉAL, Canada — Right at the heart of shoes and accessories giant Aldo’s sprawling, one million square foot global campus-cum-headquarters in suburban Montréal is an olive tree — not a common sight in a city with a climate that swings between frigid winters and hot, humid summers.
“I like planting trees. I plant an awful lot of trees,” explains Aldo Bensadoun, who founded his namesake business 40 years ago, this year. “I find that they last for a long time and I hope that it symbolises the company.”
But even with an almost spiritual belief in his business, Bensadoun could not have known that the shoe company he started with just one design (a clog) would grow into one of the world’s largest footwear retailers, with over 1600 stores in 80 countries around the world. This year the privately held company, still controlled by Mr Bensadoun and his family, is expected to turn over more than $1.8 billion.
Known affectionately around the Aldo headquarters simply as ‘Mr. B,’ Bensadoun’s entrepreneurial journey is one we can all learn from. He developed an end-to-end vertically integrated business model from scratch, focused on offering special, up-to-date products in the latest trends and styles, at affordable prices, all before the term ‘fast-fashion’ was even coined. Indeed, like H&M and Zara in the apparel sector, Aldo has made a name for itself around the world as a lightening-quick designer, manufacturer and retailer of fashionable shoes, moving product from concept to store in 12 weeks or less.
Today, the Aldo Group has grown to include four distinct brands, which are frequently reinvented and refreshed, a new handmade men’s shoe offering called Mr B’s, and a white label product development service with clients including Kohl’s, JCPenney and Madonna. The white label business was born in order to make use of the thousands of shoes that are designed and then rejected by an internal buying marketplace that keeps Aldo’s design teams on their toes.
In a rare, in-depth interview during the kick-off of Aldo’s 40th anniversary celebrations in Montréal, following a day long tour of Aldo Group’s operations, I sat down with Mr Bensadoun to understand the secrets of his global success.
BoF: Tim McGuire, a partner at McKinsey, once said about Aldo: “This is the most successful global retailer that Canada has ever built.” There are so many things it takes to achieve something like this. Great product, a solid team, efficient global logistics, reliable high-quality production. If you were going to pick the one thing that has made the greatest difference for Aldo, looking back over the past 40 years, what would it be?
AB: I’m hesitant because the product is super important, but to deliver good service to the customer is also so important that you wonder, ’What’s more important, the service or the product?’ I think it’s very hard to be successful in the fashion business unless you have a good product and a good service.
The strength of the company has also been that its business model was very different from the beginning. We wanted to increase the content value of the shoes by eliminating intermediaries. So, we started with creation and went directly to the manufacturing process and we [retail] directly to the customer. We were cutting out the middle man in the supply chain and that’s why the customer was saving and the value is so high.
BoF: That’s quite similar to Louis Vuitton or Hermès. These are very different brands, of course, but like you, they are completely vertically integrated from design to retail.
AB: Exactly, we are the same. We don’t go through a distributor or wholesaler to buy goods. They create their own goods and sell them, just like we do.
BoF: Montréal isn’t necessarily the first place people would think of to house a company like this. What role did the city of Montréal play in the Aldo success story?
AB: Montréal is a wonderful city. The strength of Montréal is that it has both English and French culture. You have a mixture of people that is fantastic. You have great companies here, like Cirque du Soleil and a lot of people designing video games. It’s a very rich culture. It’s multicultural and that makes it a great city. There are so many people that speak different languages.
BoF: But still, so many Canadian retailers fail when they try to enter the American market. What was it about Aldo’s approach to America that made it work?
AB: I think it’s because we were offering a different product, a product that others didn’t have. We were offering fantastic value to our customer.
In fact, we are also doing very well in Italy, the home of footwear. We are doing very well in France. And the reason is because our formula of reading what the customer wants and giving them the right product. That’s the success of our company. Our product is different from the other product being offered. It’s value that’s different. It’s all the people working. It’s a passion in our company. We always question ourselves. We always wonder, ‘What can we do to serve our customer better?’
BoF: Aldo first became known for its iconic clog, the very first product that you developed. That one product has now led to so many other things. How does product development happen in the Aldo business today?
AB: A lot of the design is done in Europe, in London and Italy, and also in China. We bring some of those ideas together here and we work in conjunction with the different cities and offices to come up with the right product. We are a global brand. We are serving a global market, so it’s very important for us to have the right sense of what is happening in London, in Italy or in France to be able to design the right thing.
BoF: But there are challenges with this kind of global design, sourcing and retail model. You have to own the whole process. So as the business has grown from a Canadian business, then to a North American business and now a global business, how have you managed to adapt the supply chain to this massive increase in scale?
AB: I mean it’s a challenge. It’s not been solved completely. We keep tweaking it constantly. We are fast fashion, so that means we come up with an idea and we want to be able to have it in the store 5 or 6 weeks later. It’s quite hard to do that, but that’s what we are striving to do. It’s basically common sense and volume that allows us to have this… at one point I remember we were chartering our own planes to bring footwear to certain places.
BoF: Do you think of yourself as an H&M or Zara for shoes?
AB: Definitely. A lot of people compare us to H&M, but mostly Zara.
BoF: What is ‘fast fashion’ according to you?
AB: Fast fashion to me is basically asking, ‘What does the customer want?’ It’s serving the customer. As a matter of fact, we have a huge cross-channel initiative now, trying to serve our customers in the most efficient way. Maybe that customer is going to decide they want to buy the shoe through their mobile phone and they want to have it the same afternoon in their home. We are working very hard to be able to do that.
BoF: One of the things we were talking about in the distribution centre today was replenishment, the ability to get feedback from the store and act on it. How does that fit into the model that you’re using in terms of fast fashion?
AB: We can see what is selling in the stores and we can automatically replenish those stores on a daily basis. We communicate with every single store on a daily and weekly basis to find out what is the demand of the consumer and understand the consumer.
BoF: Another thing that I found really striking today is the culture that you’ve created here at Aldo. You seem to have a special ability to attract, motivate and challenge people to do really great things.
AB: I think a company is like a human being in the sense that it is a collectivity. And, as a collectivity we have some rules. We have some ways of acting together, in the same way we understand each other. I wanted to make sure our company was — that we were good citizens.
What is a good citizen? It’s someone that can act with a lot of respect for human beings, with a lot of integrity. Also when you are working — you might be designing a shoe, you might be distributing a shoe, you might be serving a customer — you should do it with love. When you love what you’re doing, you end up loving the product itself, you end up loving the person you’re working with, and this creates a model society in the sense that you are helping each other and we are growing together.
To me the most pleasurable thing in the company is to see what we’ve done. You don’t count it in money, you count it in what you do. Like, you hire somebody and that person comes from a small village or a small town and five or six or ten years later they’re in charge of a given country. They live in Dubai or Los Angeles and are in charge of 100 stores.
BoF: These stories you’re talking about are real stories. So many people I met with today have been with Aldo for 8 years or 15 years or even 40 years, just like you!
AB: Yes, and that is what makes life worthwhile. As a company, we have an obligation to help society. We have an obligation to share. We have an obligation to make sure that the gap between the different levels in society are raised.
I’m not lying when I see somebody that can help us and I attract them. I am not lying to them saying ‘Come work for us!’ They come by themselves because they like what we are doing and they want to be part of that happiness. And they want to be part of that hope.
As a human being what are you? You are part of the hope of contributing to make the world a better place.
BoF: Someone said that to me today, that there is this culture at Aldo of constant innovation and reinvention. Everything is changing all the time.
AB: You have to evolve.
BoF: Thinking about that evolution, it’s been 40 years, you now have your sons, Douglas and David, running two big parts of the business. You must be thinking about the future. In your dreams, when you think about what Aldo can be in the next 25 or 50 years, where would you like to see it go?
AB: One, I’d like to see the product evolving and growing. I’d like to see the business answering the needs of our customers, never taking the customer for granted and continuing to evolve. Two, I want to see the people that are working in the company grow and reach their full potential as human beings. And three, to make sure the contribution that the company is making to society and the world continues to be stronger and stronger. To make the world a little gentler.
CEO Talk is BoF’s forum for in-depth discussions with the fashion industry’s global decision makers, conducted by founder and editor-in-chief Imran Amed.