Sportswear maker Fila always meant to get online sales right. When stores shut down, it didn’t have a choice.
In 1954, President Dwight D. Eisenhower visited Northwestern University and gave advice now held sacred by business folks.
“I have two kinds of problems, the urgent and the important,” Mr. Eisenhower said. “The urgent are not important, and the important are never urgent.” This has become known as the Eisenhower Matrix.
The coronavirus has led to a Great Restructuring in business. Contracts are being entirely redrawn and playbooks are being ripped up. In recent months, what is urgent has been of utmost importance. Everything else can wait.
Jennifer Estabrook is an executive wrestling with this new calculus.
She is in month 16 at the helm of Fila Holdings Corp. ’s North American business, a job she took after the unexpected death of then-CEO Jon Epstein. Ms. Estabrook knew when she took over that it was important for Fila, a company dedicated to selling its shoes and clothes wholesale to retailers, to breathe life into an ecommerce business that was essentially nonexistent.
It became urgent when the Covid-19 pandemic shut down the world.
Early returns are good. Ecommerce sales have shot up 750% over five months, from an extremely low base in the same period last year. In April, with much of the U.S. on lockdown, Fila sold more than $1 million through Fila.com for the first time. This rapid acceleration in online sales came as other initiatives went on hold, including advertising and event sponsorship.
“In April, with much of the U.S. on lockdown, Fila sold more than $1 million through Fila.com for the first time.”
Many would argue that this ecommerce initiative was so urgent that many of these issues should have already been solved long ago. But what was most important to Fila? Maintaining its strong relationship with retailers who needed stylish and affordable fashion offerings. Until the pandemic, big retailers still sold the vast majority of
merchandise in physical stores.
“We strive to be very good partners to our retail customers,” Ms. Estabrook said. Fila is a wholesaling juggernaut, far more agile than iconic. If Foot Locker or Urban Outfitters want to tweak a shoe design or change the color of a certain item, Fila wastes little time.
Fila didn’t need to replicate the magic of Apple stores, copy Nike.com or build a Fifth Avenue flagship next to Adidas or Lululemon. “We are a sourcing powerhouse with a brand strapped to the front,” she said.
What happens when a virus shuts your main customers down for several months? They stop selling what’s on the shelves and stop ordering inventory. They renegotiate repayment terms. They stop advertising your brand.
This disrupts the life of a Fila manager. Part of the day can be spent renegotiating warehouse leases with landlords; another part spent figuring out what to do with all the soon-to-be-released gear commemorating slain rapper Christopher “Biggie Smalls” Wallace that retailers no longer need in the absence of customer foot traffic; and part of it working to fill the marketing void left by the cancellation of the BNP Paribas Tennis Open, a major event that Fila sponsors.
“I felt like I was getting punched in the stomach over and over,” Ms. Estabrook said.
Fila’s North American business, which generates the bulk of the brand’s world-wide revenues, was in a bind. Ms. Estabrook, whose husband is a physician in Connecticut, spent sleepless nights listening to alarming reports from hospitals. She wondered if her business could weather the storm.
Five years ago, the answer was probably no. At that point, its 1990s run as a pop-fashion symbol had faded. It was living off the reputation built by a long retired Swedish tennis star.
“A lot of people said, ‘Oh Fila, are they still around?’” Ms. Estabrook recalled. “Or they’d say, ‘Fila? What’s that?’ And they’d say, ‘It’s the brand Björn Borg wore.’”
Back then, they weren’t lining up to buy it. “Our old president, Jon Epstein, used to say the reason he didn’t want to spend time and money on Fila.com was because people weren’t waking up in the morning and saying, ‘Oh, my God, I’ve got to buy some Fila today.’”
By the end of 2019, though, sales of Fila had climbed to $537 million, up 92% from its 2014 sales figures, and operating profit nearly doubled. The brand’s stature has grown over the period as celebrities such as model Kendall Jenner and singer Rihanna wore it, and after a collaboration with luxury brand Fendi was popular at the February 2018 Milan fashion week. Its “Disruptor” sneaker, meanwhile, capitalized on the chunky-shoe trend.
Relying solely on retailers to push Fila products meant it was largely dependent on them to do Fila’s storytelling, Ms. Estabrook said. “We would have these lumps of marketing and visibility and then we would go quiet for a while.” She wanted consistency; selling direct to consumers in addition to the wholesale business would help Fila smooth out the lumps.
Among her most important moves was earlier this year hiring Dawn Trenson, an ecommerce veteran who managed digital efforts at Gap Inc.’s Intermix women’s fashion boutique. Ms. Trenson has figured out some of those tough questions her boss wrestled with early on.
Solving the Biggie Smalls puzzle topped the list. The “FILA x Biggie’’ collection was slated to debut in stores across the country in May. Without customer traffic, retailers across the country canceled orders. Ms. Trenson’s team pivoted, launching the collection on Fila.com on May 19 and making it an exclusive online product over the first few days. Tractor trailers were rerouted to Fila warehouses to make sure enough supply was in stock.
The collection sold out. Now, the company is dreaming up ways to replicate the Biggie success. Gene Yoon, Fila’s chairman based in Korea, has issued a challenge that is lofty for a company that only recently celebrated selling $1 million of goods in a month.
“He’s given us the goal of selling a million dollars a day,” Ms. Estabrook said. “I don’t know if we’ll ever get there, but at least it’s something to aspire to.”
Fila has a tailwind for that push. “The switch from an often-digital to a 100% digital world dovetailed incredibly well with our change in business strategy,” she said. Despite the early success, the hard part is trying to get a staff of 375 people—most of whom spent their pre-pandemic careers not thinking much about ecommerce—to agree that cultivating Fila.com is as important as it is urgent.
“I have to get a bigger club out because the organization needs to do some pivoting,” Ms. Estabrook said. She aims to open a flagship store in Manhattan, but that is more on the important side of the ledger than the urgent one.
If she figures these puzzles out, we may have found the Estabrook Matrix.