Red Wing Shoe Company, Inc.

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Red Wing Shoe Company, Inc.

River Front Ctr.
Red Wing, Minnesota 55066
U.S.A.
(612) 388-8211
Fax: (612) 388-7415

Private Company
Incorporated: 1905
Employees: 1,200
Sales: $86 million
SICs: 3140 Footwear Except Rubber; 3143 Men’s Footwear Except Athletic; 3149 Footwear Except Rubber, Nee; 3021 Rubber & Plastics Footwear

Red Wing Shoe Company, Inc. manufactures durable and comfortable footwear tailored to the needs of specific occupational and recreational activities, from farming to hunting and hiking. Until the 1970s, Red Wing’s reputation rested primarily on a wide variety of footwear marketed as “work shoes,” emphasizing their practical applications in the workplace. By the mid-1980s, however, as American workers moved increasingly out of industrial and agricultural sectors into service related jobs, the company’s scope changed. Under the direction of a new president, William J. Sweasy, and a new generation of management, the company’s emphasis shifted from “work shoes” to “shoes for work,” a slight semantic change that underscored the company’s new commitment to innovative lines of lighter, more comfortable footwear developed to accommodate new work oriented and recreational needs. By the 1990s, Red Wing maintained a workforce of over 1,400 employees and sold over 12,000 pairs per day, both nationally and internationally. In the United States, Red Wing shoes were distributed to 400 Red Wing Shoe Stores (of which 40 percent were company owned) and through approximately 4,800 privately owned shoe stores. International markets had expanded to include over 80 countries by 1992.

Red Wing traces its history to 1905, when German immigrant Charles Beckman closed his retail shoe store and organized the Red Wing Shoe Company with 14 other investors. The young company initially manufactured 110 pairs of shoes per 10-hour day. The brand’s steady growth stemmed from the booming industries of farming, logging, mining, blacksmithing, and railroading that represented largely untapped footwear markets. Red Wing tailored its shoes to the demands of specific customer groups, offering a wide range of shoe sizes and widths to ensure fit, and a constantly growing line of specialized products with different capabilities.

Red Wing innovation in its early years reflected efforts to shod diverse markets. In 1908, the brand offered welt-constructed shoes featuring a leather strip attached to the shoe upper and sewn into the sole. The enhanced comfort and durability of the shoes particularly appealed to farmers, Red Wing’s primary customers at the time. Continued demand justified the construction of a four-story factory with a daily output of 450 pairs, four times the 1906 capacity. Then in 1912, the company added the black and brown “Chief” line, commonly known as “the farmer’s shoe.” In addition to the traditional welt construction of earlier farming shoes, the Chief featured specially tanned, manure-proof leather for longer durability.

Numerous other shoe designs ensured the company’s continued success. Red Wing began fulfilling military needs with the onset of World War I, manufacturing in 1918 the regulation Munson U.S. Army Last, designed to “fit all feet” with maximum comfort and durability. After the war, the Munson remained a top seller and influenced other popular shoe designs for over 50 years. In the 1930s, Red Wing moved into a steel toe line designed to provide added toe protection in high risk jobs. That line retained its popularity and developed into several models, one of which even became popular during the punk counterculture fad of the 1970s. Also in the 1930s, the company developed an oil-resistant, highly comfortable design named the “Oil King” boot and adopted primarily by oil field workers. For slightly more elite circles of the era, Red Wing also introduced a men’s dress or riding boot dubbed the “Aristo,” which served as a model for a women’s line of shoes and boots.

The development of rubber added significantly to Red Wing’s success in its early decades. In the early 1930s, the company president, J. R. Sweasy, introduced the rubber cord sole to replace the leather norm. His gamble with the new material proved both lucrative and trendsetting. The Gro Cord soles and Goodyear heels used in Red Wing shoes set the standard for a shoe industry that grew to depend almost exclusively on synthetic materials.

In addition to durability, lowered costs figured into Red Wing’s new materials. During the Great Depression, synthetic materials helped produce an extremely cost-effective shoe. Model No. 99, named after its price of 99 cents, kept the factory in production during the financial downswing.

Red Wing continued to grow at a healthy rate, and after World War II the company reached national and eventually international markets. War mandated unprecedented volume, as the U.S. government contracted hundreds of combat shoes manufactured to regulation specifications in 239 different sizes and widths. By 1949, when William D. Sweasy took over as company president, Red Wing had proven its reliability in meeting urgent demand under tight supervision. Sweasy turned that strength to civil ends, introducing a company reorganization to place greater responsibility on department heads and develop teams of management specialists in every department. Sweasy also initiated a new distribution strategy in which Red Wing retail stores would open on the west coast and move east over time.

Reorganization paid off quickly. Record profits were achieved in 1952, largely attributable to the No. 877 Irish Setter Sport Boot, which continued to assure Red Wing a strong position in the competitive boot market. The Irish Setter’s landslide success was partly responsible for Red Wing’s introduction of its Vasque outdoor division in 1965. That division capitalized on the hiking boot craze of the 1970s and went on to include lightweight hiking boots and walking shoes in the 1980s and 1990s.

After continued growth through the 1960s and 1970s, Red Wing responded to trends in market research, changing many of its marketing strategies and brand lines. In an October 1, 1984, Footwear News article, Tom McConnell, Red Wing product manager, identified three trends affecting the company: a shift from a rural to a metropolitan workplace; the replacement of a blue-collar workforce with a gray-collar or service related one; and rising numbers of women in the workforce. To service these new markets, Red Wing changed its emphasis and its motto, from “work shoes” to “shoes for work.” While the company would continue to offer work and sports boots, product development and marketing efforts in the 1980s increasingly focused on those markets promising the most growth, including footwear for such professions as computer operators, food service technicians, health care workers, and security personnel.

Red Wing’s shift in marketing strategy was paralleled by a new corporate tone prompted by an increasingly younger generation of management. In 1984, William J. Sweasy, Jr. assumed the role of president after Arlo “Ole” Jensen retired from the post. Sweasy represented the third generation of his family to serve as a Red Wing executive; his father, William Sweasy, remained CEO. The 33-year-old president ushered in an era of active strategic planning, greater communications, increased line diversity, and new personnel. “Before, the upper management team operated intuitively; they shot from the hip, so to speak,” noted one company spokesperson in a 1986 Footwear News article. The article emphasized that overall company spirit was not critical of the old management, but favored the new approach in light of changed and emerging business opportunities. In August 1989, William Sweasy became the first company executive from outside the Twin Cities area elected to chair the Better Business Bureau of Minnesota, representing an honor for Red Wing Shoe Company and its new leader.

New management style and brand image also brought new products to Red Wing. Special attention was paid to women’s comfort footwear. While over 40 million women held jobs involving substantial standing or walking in the mid-1980s, Tom McConnell told Footwear News that “most resources have simply remade men’s styles on a scaled-down last.” In response, Red Wing introduced Lady Red Wings, incorporating safety toes and lightweight urethane soles in a more feminine, less cumbersome line of shoes. McConnell projected sales of approximately 250,000 pairs, retailing at $40 and up.

In the 1980s, Red Wing also developed its Vasque Outdoor Footwear division, which produced aesthetically appealing walking shoes under the Vasque brand name. While earlier walking shoes had often sacrificed cosmetics for hi-tech features used in running shoes—rubbers, bottoms packages, heel counters, and lacing systems—Red Wing emphasized casual, multipurpose walking shoes in attractive designs. Art Kenyon, divisional manager for Vasque in 1988, told Footwear News “the consumer today really is concerned with cosmetically fine footwear, boots that can function and still look nice.” In the early 1990s, Vasque also benefited from the renewed popularity in hiking boots, sales of which had been declining since the 1970s. Despite the downward sales trend, Vasque had continued to create heavy hiking boots for wilderness excursions as well as a variety of lighter styles for casual walkers and fashion customers. Discussing the company’s ready position at the time of the hiking boot resurgence, Kenyon—who had by 1991 become president of Vasque—observed: “We came from the mountain down to the mainstream,” adding that “the others came up from the gymnasium,” in reference to competition from such athletic footwear companies as Nike, Reebok, and New Balance. In 1990, Vasque introduced Kids Klimbers, a line of hiking footwear for children, featuring a “variable fit child growth system” to accommodate quickly growing feet for an extra six months on average, and also incorporating children’s tastes into shoe design. The division’s hiking boot product line became the fastest growing segment of the Red Wing Shoe Co. during the early 1990s. In 1993, Vasque launched its first line of sports sandals, responding to a popular trend during that time.

In the work shoe arena, Red Wing also explored new directions. Following the demands of consumers who often wore athletic shoes outside the workplace, the company introduced steel toe athletic shoes—two safety-style athletic shoes in black and white. In addition, the company moved toward work shoes made from lighter materials and softer leather. “Our consumers are saying, make it soft but tough,” explained Andy Thompson, advertising and promotions manager of Red Wing, in a 1988 Footwear News article. Red Wing also developed a group of barnyard acid resistant shoes geared for the farm industry and a “decathlon” sole made from a durable, lightweight, shock resistant, and oil resistant material.

Red Wing’s new products were supported with new marketing initiatives. Lady Red Wings appeared in a TV ad campaign that was second only to Acme Boot Co. in terms of market saturation, according to McConnell. Premiering in October 1984, the commercials were computer animated to lend a contemporary feeling to the new line. Red Wing also ran a series of print advertisements featuring a top model in McCalls, Women’s Day, and Mademoiselle magazines and promoting the image of an up-to-date, attractive and fashionable Red Wing clientele.

In the late 1980s, the company began a restructuring of its retail division in order to gain exposure and market penetration. In May 1986 Wes Thies, retail division manager, outlined a twofold strategy in Footwear News. The company’s object was to expand the existing specialty store concept and to introduce three prototypes geared to various consumer demographics. The first prototype was aimed at smaller markets with populations between 30,000 and 60,000. The units were designed with a sales area in front and shoe repair shop in back and targeted Red Wing’s blue-collar consumers.

Red Wing also emphasized the use of a company newsletter as a marketing tool. The “Red Wing’s Shoe News & Views,” published monthly, helped a 40-member sales staff communicate product news and company policies with over 6,000 stores.

While the Red Wing newsletter addressed retailers, the company moved to develop more effective means of communicating brand awareness to the public. With the advent of desktop computer power and database marketing, age-old advertising techniques were losing their effectiveness. Stan Rapp, president of CRC Consulting Group in New York, told attendees of the 1992 All-Industry Marketing (AIM) Conference that marketing efforts had to be increasingly individualized as mass advertising rapidly became obsolete. He noted that shoe companies needed to micromarket and draw consumers into a feedback loop by fostering two-way, relationship marketing. In its own variation on such techniques, Red Wing launched a television campaign in the early 1990s in which it sought to foster a relationship with consumers by providing a toll-free number. The commercial claimed that “our shoes don’t wear out,” providing consumer testimonials and toll free purchasing information. In addition, all customers were sent a note thanking them for their business and a form to rate their salesperson. After six months, each customer received another form to rate the shoes’ performance, strengthening a personalized, two-way marketing dynamic.

Red Wing’s efforts to adapt to changing markets also included greater emphasis on international growth. By 1990 several brands were being distributed in over 80 countries. Despite the intricacies of dealing with currency fluctuations and of identifying elusive, foreign trends, the market for American footwear exports offered substantial growth potential for Red Wing. Palmer Beebe, one executive instrumental in setting up Red Wing’s international department, moved on to run Team America, an export business handling footwear for a consortium of U.S. companies. “U.S. footwear is underexported,” Beebe claimed in a July 1991 Footwear News article.

As early as 1984, Red Wing had reported that two to three percent of overseas laborers in supervisory positions were company customers. Phil Margolis, director of marketing at the time, projected 25 percent growth over the next few years, citing wider distribution base and increased technology as means of lowering prices to raise foreign sales. By 1990, Census Bureau statistics indicated that the best European customers for American footwear were West Germany, France, Italy, the United Kingdom, and Spain. Other large importers included Canada, Japan, Mexico, Hong Kong, and Saudi Arabia.

The uncertain outcome of a proposed common market in Europe as well as of the North American Free Trade Agreement (NAFTA) overshadowed Red Wing’s international activity in the early 1990s. Red Wing’s projected expansion in European markets remained uncertain until common market regulations solidified in Brussels.

In addition to international trade concerns, Red Wing faced pressing issues regarding employee health insurance as it entered the 1990s. With medical costs skyrocketing and health care reform a top priority for the Clinton Administration and the press, the company faced several challenges. In 1992, the company encountered astronomical expenses for worker’s compensation insurance, a burden that prompted Red Wing—and other Minnesota companies—to look at other states with cheaper policies for future expansion. Even though Red Wing earned a 25 percent discount in 1992 for the job-classification quoted rate, for a positive safety record, premiums still increased 41 percent from 1988 to 1992. In an effort to ease such burdens, the 1992 state legislature changed some benefits and gave broad authority to the Department of Labor and Industry to cut overall costs by 16 percent. Later that year, Rich Chalmers, vice-president of human resources at Red Wing, collaborated with Ron Schiemann, a Minnesota entrepreneur, to conceive a health care purchasing group designed to improve the delivery of heath care and reduce costs for ten employers, including Red Wing Shoe Co., Riedell Shoes Inc. and the City of Red Wing. According to the plan, participating employers would be self insured for a given dollar amount, beyond which re-insurance would take effect. The Chalmers/Schiemann plan was just one of several health care measures that Red Wing considered to best cover its employees.

The decisive factor in Red Wing’s continued success remained its servicing of new markets, as it shifted emphasis from “work shoes” to “shoes for work” in a service oriented economy. With Sweasy presiding over new initiatives in marketing and brand development, Red Wing would likely continue its successful promotion of high quality footwear.