Greenberg, Robert 1940–

Robert Greenberg
1940–

Chief executive officer, Skechers USA

Nationality: American.

Born: 1940, in Boston, Massachusetts.

Education: Attended hairdressing school.

Family: Son of Harry Greenberg (grocer) and Belle (maiden name unknown); married (wife's name unknown; divorced); children: six.

Career: Talk of the Town, 1962–1969, owner; Wig Bazaar, 1965–1968, owner; Wigs 'n Things, 1968–1970, owner; Europa Group, 1970, owner; Europa Hair, 1971–1974, owner; Wild Oats, 1974, importer; Removatron, 1977, investor; Roller Skates of America, 1979–1983, owner; L.A. Gear, 1983–1992, CEO; Skechers USA, 1992–, CEO.

Address: Skechers USA, 228 Manhattan Beach Boulevard, Manhattan Beach, California 90266; http://www.skechers.com.

■ Robert Greenberg built two shoe companies from the ground up, each of which became a major player in the competitive footwear industry. His first creation was L.A. Gear, which capitalized on the aerobics craze of the 1980s. When L.A. Gear started going under, Robert and his son Michael were forced out. The Greenbergs quickly rebounded and started Skechers—a word which, appropriately, was street slang for someone who could not sit still. The company marketed a wide range of affordable, trendy footwear to 12- to 24-year-olds.

ENTREPRENEURIAL SKILLS

The entrepreneurial spirit ran in the Greenberg family. In the 1930s Greenberg's father opened Belle's Market, which he named after his wife. He worked Robert hard, not allowing him to wear gloves in the winter in order to toughen him up. After finishing high school, the younger Greenberg chose a different business route, attending hairdressing school. In 1962 he opened Talk of the Town, which grew into a chain of salons and would be the first of many business endeavors. Next came wigs: Greenberg found he could sell a $50 hair piece for $300, opening Wig Bazaar and then later Wigs 'n Things. By 1970, at only 30 years of age, Greenberg had purchased Europa Group as a holding company for his many business ventures. He also bought Medata Computer Systems, renaming it Europa Hair. Greenberg was already learning the common sense behind the whimsical field of fashion; he was quoted in Fortune as saying, "Things that change have opportunities in them all the time. Stodgy things don't change—no glamour, no dance shows, no hoopla" (March 31, 2003).

By the mid-1970s Greenberg was in full swing and rapidly moving from one idea to the next. At one point he was importing South Korean clocks; at another he was buying jeans. He ventured into Removatron and the selling of electronic hair-removal devices. He eventually moved to the West Coast for both business and personal reasons; having divorced, Greenberg moved his children to Los Angeles, where he was intrigued by the number of people who seemed to be wealthy but did not work very hard. He opened up Roller Skates of America, later ditching the rental business when the fad ended. However, roller skates were what brought him to his first shoe-industry trade show. After earning $3 million off of a $10,000 license to sell shoelaces promoting the movie E.T., Greenberg had the capital with which to start L.A. Gear.

What later became the third-largest shoe manufacturer in the Untied States started from humble beginnings as a women's clothing store and shoe importer; Greenberg soon followed Reebok's lead in selling aerobics shoes when the exercise fad took off in the early 1980s. He copied the hottest aerobic styles, affixing them to the L.A. Gear brand. To keep the business booming, Greenberg relied on his charisma and attention-grabbing stunts, such as showing up to a tradeshow in a Thunderbird convertible covered with different-colored shoes. He hired men to wear black satin L.A. Gear jackets to sell one style of shoe in 12 colors. When asked about variety, Greenberg simply said, "The shoe comes in many sizes!" (Sloan, March 31, 2003). Drawing back on his jeans-selling days, he added sequins, rhinestones, and tassels to shoes in gold, silver, and neon. As the brand took off, Greenberg's oldest son, Michael, quit college to help his father keep up. In 1986 they took their company public.

L.A. GEAR'S BOOM AND BUST

Shoes became Greenberg's lasting obsession. Even as revenues soared, he continued to work Saturdays at Sneakerland to see what people were buying. Sales went from a mere $11 million to top out at $800 million in 1990. Greenberg became a lurker at trade shows, eavesdropping on sales talk and spying on competitors' shoes so that he could recreate his own versions for L.A. Gear. He avoided having his picture taken.

While Greenberg shunned the spotlight, L.A. Gear pulled in a line of celebrities to promote the brand, including Paula Abdul, Belinda Carlisle, and Joe Montana. Licensing deals were struck, extending the brand name to watches, T-shirts, and jeans. Then two hard blows fell at the same time: market oversaturation and a fashion flip from glitz to grunge. Aerobics was out, and even Kareem Abdul-Jabbar and Michael Jackson were unable to help push L.A. Gear products. A surplus of 11 million pairs of shoes built up. To make matters worse, an L.A. Gear shoe fell apart during a nationally televised college basketball game. The shoes and the company's reputation were relegated to the discount bin.

In December 1990 the company posted a fourth-quarter loss that caused a $360 million line of credit from Bank America to be pulled. In a desperate move Greenberg sold a 34 percent stake in L.A. Gear to Trefoil Capital Investors in order to maintain an influx of money. As an unexpected result he was pushed out of his own business; his son as well was given the boot soon afterward.

By the Greenbergs' own account, they sat on a couch at home in shock for less than a week. They then thought up the Skechers idea and decided to put it into action with the $55 million they had left—far more than what Greenberg had used to start his first shoe company. By the time L.A. Gear declared bankruptcy in 1998, Greenberg's new shoe company was going public with a $115.1 million public stock offering.

SKECHERS' SUCCESS STORY WITH A L.A. GEAR GHOST

Greenberg began Skechers USA out of his Manhattan Beach, California, home, from which he distributed Doc Marten shoes. That relationship did not last long, however; thus, Greenberg turned back to his trademark skill of fashioning reproductions. He imported Asian Doc Marten look-alikes, eventually sparking a legal battle, and marketed them under the Skechers brand. The new product lines were less flashy than those of the L.A. Gear era but still relied on trends and the very fickle target market that made up over 20 percent of the U.S. population: young consumers, who had approximately $136 billion burning holes in their pockets. Skechers was one of the first to capitalize on the work/utility trend with loggers and biker boots in the $50 to $75 range. With Greenberg as the lead fashion spotter, the success of Skechers' product lines was heavily dependent on the company's beating other U.S. shoe manufacturers to the punch—and doing it for less money.

Greenberg embraced intensive marketing, saying in Footwear News, "unseen, untold, unsold" (October 4, 1993). To get teens' attention, Skechers set television commercials to a techno groove and filled magazine ads with stylish men and women lounging in Skechers active footwear and looking hip. This marketing ploy, enhanced by the presence of celebrities, worked especially well with teenage girls. Britney Spears hawked Skechers, but only overseas, so that the company could avoid establishing too much of a bubble-gum image. In the States, Christina Aguilera was used instead, giving the brand an edgier feel; Rob Lowe and Matt Dillon were the faces of the men's line. These endorsements came with hefty price tags; in 2002 and 2003 Skechers topped the list of big corporate spenders, paying out more than $11 million for advertisements, even during a weak economy.

The parallels between Greenberg's two companies were numerous. Both companies were founded and headed by Robert, with Michael at his side. Both had explosive growth and strong celebrity presences that thrust the companies up to the number-three spots in the shoe industry. And both companies had similar trouble with lawsuits from their celebrity endorsers.

MANAGEMENT OF THE FAMILY BUSINESS

With Greenberg's five sons, his daughter, and a niece all working for the company, Skechers could be described as a family business that also happened to be an international company. The patriarch was described in Forbes as a "gregarious, diminutive man with a deep California tan, a thick Beantown accent, and an overdeveloped sense of showmanship" (August 6, 2001). Greenberg referred to himself as Captain Marvel but said of Skechers, "I'm not driven to do anything other than build a nice family business" (October 4, 1993).

Greenberg's son Michael was groomed to take over the company and was seen as the counterbalance to his father's flamboyancy. Michael was the one who encouraged the company to go public when Greenberg was still spooked by the L.A. Gear fallout. Another son, Jeffery, was in charge of Skechers' successful TV campaign, and the whole family shared their father's obsession with feet. At the movies and in restaurants they watched feet as people came and went.

Skechers became so good at mimicking styles—or interpreting categories, as Greenberg preferred to define the process—that other companies were forced to knock off their own best shoes. The Greenberg family also knew when a fad was finished. When clunky shoes faded, Skechers was ready with a new Michelle K line of sexy, frivolous shoes for 18- to 34-year-old women, priced at $60 to $250 a pair; a junior Michelle K line was produced as well. The company paid special attention to the shopping habits of women who bought shoes for the whole family while shopping for themselves. Salespeople in Skechers' 60 stores were trained to bring out several colors and styles for every one pair a customer wanted to try on. The plethora of selection and low prices led to 30 percent of Skechers' customers walking out with more than one pair of shoes. Prices were kept low through the use of less expensive leather and the avoidance of the high-tech features of Nike and Reebok performance wear.

Although some analysts continued to see risks attached to investing in Greenberg's company, in 2002 Smartmoney.com named Skechers an attractively valued small-cap company with good prospects for growth. The company also made BusinessWeek 's list of top 10 hot-growth companies in 2000, 2001, and 2002. And even though Greenberg said in Sporting Goods Business, "Skechers isn't planning on getting into apparel and will continue to focus exclusively on footwear" (September 23, 1999), he must have been referring only to the present; in 2003 and 2004 Skechers signed 20 new contracts licensing its brand to everything from hosiery and handbags to jeans and outerwear for men, women, and children. No one doubted Greenberg's ability to create a successful company; still, some continued to question whether he could maintain one.

See also entries on L.A. Gear, Inc. and Skechers U.S.A. Inc. in International Directory of Company Histories.

sources for further information

Earnest, Leslie, "There's Something Afoot at Skechers: Analysts Say the Footwear Company, Led by a Father-Son Team, Has Hit Its Stride," Los Angeles Times, June 16, 2002.

Heiderstadt, Donna, "Robert Greenberg Still Shifting Gears," Footwear News, October 4, 1993, p. 41.

"Image Makers: Top 10 Nonathletic Ad Spenders," Footwear News, September 29, 2003, p. 26.

Sloan, Julie, "Waiting for the Other Shoe to Drop," Fortune (Europe), March 31, 2003, p. 56.

Taub, Daniel, "Former L.A. Gear Chief Puts on New Shoe—Robert Greenberg's Skechers USA Inc.," Los Angeles Business Journal, August 10, 1998.

Tedeschi, Mark, "Greenberg Plots Skechers' Next Step in Growth Plan," Sporting Goods Business, September 23, 1999, p. 22.

Wells, Melanie, "Sole Survivors," Forbes, August 6, 2001, p. 62.

Zmuda, Natalie, "Driving Licenses: As Cautious Consumers Stick Close to Well-Known Brands, Footwear Vendors Reach Out with More New Products," Footwear News, February 9, 2004, p. 24.

—Margaret E. Gillio