by Mark Palmer
But the biggest change came in September 1986 when Daniel himself finally stood down as chairman and was replaced in a non-executive capacity by Lawrence (Larry) Tindale, the deputy chairman of Investors in Industry Group plc, known as 3i. Richard Clark was instrumental in this appointment after consulting Robert Morison, who had been a partner in KPMG and who had advised companies associated with North Sea oil. Morison recommended Tindale and Bancroft was one of those who strongly supported this appointment – although reportedly he was heard to say many years later that it was one of the worst decisions of his life. Shortly after Tindale’s appointment, Morison himself was invited to join the board.
Daniel had endured a torrid time. Shortly after making his announcement to give way, he wrote to his cousin, John H. Clark, who had been working for the company in New Zealand. He was candid about his years in charge.
There was a basic ownership instability in the business arising from the now wide dispersal of family shareholding and the fact that although most family shareholders’ wealth is in the business very little of it is involved in a direct management or Board way. A couple of mediocre years allowed this instability to ferment …. I am sad, personally, that the contribution I can make is now so limited but pleased that I can now give more time to other things.
Daniel’s father, Bancroft, wrote to his son, thanking him for everything he had done in ‘conditions of extreme difficulty.’ He said:
Family shareholders are better off at the end of your time than they were at the beginning. That is indeed a solid achievement. They owe you a great deal …. You made bold acquisitions. Some of these have added great strength to the business, some have been harder to master.
Tindale, Daniel’s successor, was a seasoned institutional investor who, according to one board member, could ‘read a balance sheet with his eyes closed’, but lacked any experience or appreciation of the footwear industry. A trained chartered accountant, he had sat on the board of a number of companies, notably Britoil and Caledonian Airways, and been chairman of the British Institute of Management from 1982 to 1984.
‘The fact was that he was coming to the end of his career,’ says Roger Pedder, who finally was invited to join the board as a non-executive director in 1988. Pedder continues:
He spoke a lot about a return on capital when the issues were commercial not financial. He was the right appointment at the wrong time and his time as chairman delayed further what should have happened. He did not see what really needed to be done and he allowed the internal bickering to continue.
Pedder remembers attending a board meeting some months later when Nathan Clark expressly asked him to take along a plastic bag containing some Chinese shoes with a wholesale price of $10 a pair, almost half what it cost Clarks to make similar shoes in the UK. ‘The board meeting started off, as it always did, focusing on the troubles,’ says Pedder. ‘I’d never seen a shoe on the boardroom table since I’d been back. I said, “Excuse me, gentlemen, I think these are what we should be talking about,” as I laid the shoes out across the table. There was a frosty silence and nobody said anything and then we carried on as normal.’
Pedder describes the next few years as a period of endless deliberations and no decisive action. In a 2011 Harvard Business School case study, Clarks at a Crossroads, by Professor John A. Davis, Pedder is quoted as saying:
We were entrenched in the problems of being in uncompetitive, first-world shoe manufacturing and the response to this challenge had been, and continued to be, impossibly slow. The retail side of the business had grown to rival manufacturing, increasingly outsourcing its requirements, and building its own separate management and infrastructure, which created not only a dual overhead but also vituperative internal conflict.
A change at the top coincided with the introduction of a new logo. It was a subtle switch but an important one because it presented a unified corporate image, triggered in part by the need to do away with up to five different shades of green on Clarks’ distinctive boxes. The new logo incorporated the Clarks green to represent its heritage and tradition, and a modern grey, which had proved successful in point-of-sale material produced for the shops. This new colour coordination came shortly before an advertising campaign in the spring of 1987 to promote the ‘original’ Desert Boot, drawing attention to its many imitations by competitors around the world. For a number of years, the Desert Boot was far more fashionable on the continent than it was in Britain. Stylish young Italians were wearing them – though not necessarily the Clarks brand – with their Armani suits, and in Paris they were referred to as ‘Les Clarks’, even though they were often made by an entirely different company.
By 1987, Clarks was using Boase Massimi Pollitt as its advertising agency. Boase Massimi Pollitt’s brief was to do for the Desert Boot what advertising had done for Levi 501s and Doc Martens. Using the strapline ‘There is only one desert boot. Clarks. The original’, the ads were unquestionably sexual, with the photographs taken by Helmut Newton. One showed a man lying on his back draped over a wall near an inviting blue sea, a woman climbing on top of him, her knee pushed into his groin. Another featured a man leaning against the back of a tractor, his arms behind his head, as a woman stands suggestively in front of him. In both, the man is wearing a desert boot on one foot, nothing on the other.
The ads ran in selected fashion and style magazines such as the Face, the Wire, Blitz, Arena and the Manipulator. ‘The intention was to drop a small pebble in the pond and wait for the ripple to spread out,’ Graham Sim, a member of the Clarks marketing department, told the Courier. Mission accomplished. Almost all the national newspapers picked up on the ads, with the Sunday Mirror running a centre spread headlined ‘Hard Sell, Soft Porn’. The Sunday Telegraph was more measured, with a piece entitled ‘Easily Suede’, which concluded that ‘the desert boot has all the qualities of the style object … and a profile just begging to be raised’. The Today newspaper – which launched in 1986 and folded in 1995 – must have made for good reading in Street when it said ‘Move over Doc Martens, the desert boot is back’.
On another level, Clarks sought to shore up its hold on the children’s market, which it had so successfully built up in the post-war years, by launching ‘The Foot No. 1’, a brochure intended to look like a mini magazine, which was sent out to more than 5 million homes. This was the first time Clarks had tried direct marketing of this nature, showing parents and children up to 26 shoe styles so they could discuss what to buy for school before setting off to the shops. Perhaps prophetically, Clarks could not find a printer in the UK able to deliver the magazine on time and on budget, so went overseas and hired a company in Verona, Italy.
The pressure on the children’s division was enormous. It was the biggest earner for the company, maintaining a unique relationship with the consumer that still persists today. In the 1980s, there were some 300 different children’s styles at any one time, and of those between 40–50 per cent would be changed each year.
Karl Kalcher moved from Clarks Europe, where he was the territory manager for Germany and Austria, to become marketing manager of Clarks children’s division in the autumn of 1984 and later took over as children’s director. He was determined that children should engage with the product almost as much as their parents. ‘Can I have a pair of these?’ is what he wanted to hear children saying, rather than a mother deciding by herself what to buy her offspring.
A case in point was the Magic Steps sub-range for girls and Hardware range for boys. Magic Steps was aimed at four-to-eight-year-olds and was based around the idea of young girls wanting to be a princess. A little diamond appeared on the top of the shoe and when you turned it over there was a secret key encased in a small magnified transparent plug recessed into the heel. A television commercial based around a witch, the magical key and a princess proved hugely effective.
The biggest success for junior boys was the Hardware range, which featured a sole that looked like a computer games console. The styling cleverly
combined child-friendly details and splashes of colour, but still within a form that was appropriate to go with school uniforms. The range was dressed up in a concept similar to space warfare video games and was backed by strong television advertising. It was massive in the UK and also proved to be the most successful launch of children’s shoes into Europe.
Clarks also re-launched ‘First Shoes’ (for infants up to two years old) in 1986. This was the bedrock of the Clarks children’s brand and where Clarks aimed to win over the hearts and minds of parents and lock them in as customers. The re-launch featured a strong, shrine-like point-of-sale package to give a clear focal point in the shop. The range was expanded to include more premium styles with softer leathers and a greater variety of colours and was a direct response to the leading European brands trying to enter the UK market.
Kalcher insisted on holding regular innovation meetings for his marketing and styling teams, when new ideas could be discussed and advanced. Watching programmes such as Tomorrow’s World and visiting the research labs at the University of Manchester Institute of Science and Technology was encouraged as a means of keeping abreast of the latest fastening mechanisms and the introduction of potential new materials.
Andrew Peirce was a product manager in the children’s division at that time, working with Kalcher. He remembers those days as both frenetic and stimulating:
Karl instilled a real sense of purpose. The challenge was demanding but the satisfaction levels were high. The reverberations went beyond the product and marketing departments. Expectations of quality and innovation from the factories [were] raised and the buying office was expected to become much more pro-active. Product was everything – the focus was on excellence and the challenge for a product range manager was somehow to know when to insist that we sacrifice that ‘little bit more’ so that we could get the shoes ready, at a commercial price, in time for the new back-to-school season.
Children’s shoes were central to Clarks’ business and to its standing in the minds of consumers. Other initiatives were more peripheral, more questionable – such as the decision to pay some £2 million for a majority interest in Rohan Designs plc. Rohan made outdoor clothing popular with walkers. It was started in 1975 by Paul and Sarah Howcroft, who lived in North Yorkshire, and by 1987 it had thirteen shops and was turning over £5 million a year. When the idea of buying Rohan was first raised, the Specialist Research Unit – the market research company headed by Peter Wallis – warned against it. One of Wallis’s partners, Colin Fisher, recalls a conversation when John Clothier told him that Clarks understood brands and that was why it would make a success of Rohan.
‘I told Clothier that Clarks did not understand brands – but it did understand Clarks,’ says Fisher, who in a remarkable turn of events is now executive chairman of Rohan. Clothier pushed on with his plan, telling the Courier that he considered the ‘Rohan brand as having the potential to be an exciting complementary business to the mainstream Clarks and K Shoe brands in the UK’. The press picked up on the story with The Times quoting Paul Howcroft as saying, in August 1988: ‘This will be a big leap forward for Rohan although there is a limit to how big you can get without compromising quality … I would like to see Rohan doing in its sector what Laura Ashley has done in theirs.’
David Hawkes, managing director of K Shoes, was an enthusiastic walker who already had several Rohan items in his wardrobe. He was made chairman of the company, but it wasn’t long before Rohan was wandering around Clarks like an orphan looking for a proper home. In 1996, it was sold on, but changed hands again in 2001, by which time Hugh Clark, Daniel’s son, and Fisher had joined Rohan. They found new backers in 2007 and today Rohan has 61 shops in the UK and turns over some £28 million a year. Hugh Clark is no longer involved with Rohan, but sits on the C. & J. Clark Ltd board as a non-executive director, representing family shareholders.
George Probert retired on 30 September 1987, the same year as James (Jim) Power was appointed a non-executive director. Power, who within five years would find himself in the thick of an escalating boardroom feud, had spent ten years with the Burton Group and eight years with British Home Stores, and was the director of finance and planning at Storehouse plc. Probert was replaced as group managing director by John Clothier, leading to another structural tinkering and some short-lived new appointments.
Lance Clark left the company in 1987, but remained a non-executive director. Neville Gillibrand, a popular figure with significant expertise in manufacturing and marketing, became managing director of Clarks Shoes and a director of C. & J. Clark International at the age of 43. Among his responsibilities was to strengthen the retail side of the business by expanding the number of dedicated Clarks shops.
‘The problem was that I had no experience of retail,’ says Gillibrand, ‘and this became quite obvious after a few months.’ And, so, in July 1988, Malcolm Cotton returned from Australia – where his responsibilities had expanded to include North America and Avalon – and was given back his old job as managing director of Clarks Shoes, with Gillibrand working for him as head of the Men’s and International Division (except for North America).
A K Shoes shopfront in 1989 – a familiar high-street sight throughout Britain until the brand disappeared in 2000.
In Australia, Cotton had gained considerable knowledge of retailing, but was at heart a manufacturer. Interviewed by the Courier shortly before assuming his new role, he hinted at the endemic problems between manufacturing and retail and said:
It seems to me that this complex process of changes associated with integrating our manufacturing, resourcing, wholesaling and retailing businesses has, not surprisingly, brought about some problems of control and balance. This has been affecting the company’s results and hence morale.
Morale took a further dive when Tindale announced the company’s results for the year ending 31 January 1988, which showed no improvement on the previous year, a set of figures saved only from further embarrassment by profits from the property side of the business. ‘This is the fourth year of static turnover, which obviously implies a down-turn in real activity,’ admitted Tindale. Operating profits for Clarks in the UK were down from £15.3 million the previous year to £7.1 million– although C. & J. Retail showed some gains. Tindale said the outcome was ‘well below’ what it should have been and promised to ‘undertake a major review of strategy’, drawing on the recommendations of McKinsey & Co., who, along with the Boston Consultancy Group, had been hired yet again as outside business consultants.
Central to that plan was concentrating efforts on three branded chains: Clarks, K Shoes and Ravel, with Peter Lord gradually being rebranded as Clarks. Lord & Farmer would confine itself to multi-brand retailing, and UK manufacturing would continue, but with the proviso that underperforming factories would close. Avalon Industries would cease trading, apart from some core activities directly affecting shoemaking in the West Country – a bitter blow given the historic links with Avalon going back more than a century. On the continent, France Arno would be disposed of and a close eye kept on North America, where profits were ‘unacceptably low’.
The worse-than-imagined results fuelled more bad blood between some family shareholders and the board. This forced Tindale to reassess his earlier position regarding a possible flotation of the company, something that had been discussed privately for many years and which caused concern among many family member shareholders who feared it would lead to a full-scale hostile bid.
As Tindale put it:
Although it should still be possible to obtain a listing for the ordinary shares in the spring of next year [1989], I do not think that it would be in the shareholders’ or the company’s interests so to do. It would mean going to the general public before the outcome of the major reorganisation had been fully proven and well before the benefits could be demonstrated in terms of earnings per share. The result might well be that the company would get off to a bad start as a listed company, not only in relation to the immediate pri
ce of its shares, but also in market understanding. If this were to happen, it would do a substantial disservice to both company and shareholders. I suggest, therefore, that the question of a public listing should be reconsidered when the successful results of the strategy are clear to see.
Tindale received a letter in January 1989 from the Street Family Shareholder Association, a grouping of like-minded shareholders. ‘This is the time for plain speaking,’ it began, before expressing grave fears for the future of the company. ‘We are not saying the value of the whole business will necessarily continue to drop. But we are saying that our members’ wealth is at risk. Furthermore we think our members are being asked to take too much on trust.’
Times were hard across the established UK footwear industry as the recession of the late 1980s took hold. Sears Holdings, the high street giant that had some 13,000 shops under the umbrella of its British Shoe Corporation subsidiary, was preparing to close 200 outlets, with the loss of 1,000 jobs, while opting to drop Curtess and Trueform altogether. Meanwhile, the likes of Marks & Spencer, Tesco and other supermarkets were showing a more determined interest in shoes, with Marks & Spencer claiming 6 per cent of the market in 1989, sourcing its entire range from overseas. By the end of 1989, two-thirds of shoes sold in Britain were imported.
‘I doubt there are any such firms that would not sooner make more rather than less in the UK, if it was commercially viable to do so,’ lamented Geoffrey Marshall, president of the British Footwear Manufacturers Federation, in a letter to Shoe and Leather News. But it was evidently not commercially viable to do so.