Clarks: Made to Last

by Mark Palmer

  ‘I had been in the thick of it for seven years and I knew what was coming,’ says Clothier. ‘Some people can take the task of sacking large numbers of people lightly. I wasn’t one of those. I did not want to sack the people my father [Peter Clothier] had hired – even though I knew it was necessary. In the circumstances, it was the right time for me to go.’

  He was replaced by Malcolm Cotton on an interim basis, who was given the title of Managing Director (operations). Pedder became executive chairman.

  The search for a new CEO gained impetus when Pedder was reading a magazine on board a flight to Boston. The article was about up-and-coming British managers who were all under 40. One of these was Tim Parker, who by then had led Kenwood’s management buy-out from Thorn EMI before grooming the company for a flotation in 1992. He was described as ‘young, brash, well-educated and known to stick his neck out’.

  Contact was established and he was appointed on 29 September 1995, although he would not start until January 1996. Kenwood’s shares fell 10p on the announcement.

  ‘I met Tim in Salisbury and he said there was not going to be room for both of us at Clarks and I accepted that,’ says Cotton. ‘I realised the advantages of bringing someone in from outside.’

  Parker was still only forty when he eventually got his feet under the desk at Clarks. But he had packed those years with experience. Educated at Abingdon School and Pembroke College, Oxford, where his degree was in philosophy, politics and economics, he had toyed briefly with the idea of a career in politics, chairing the Oxford University Labour Club and later working at the Treasury as a junior economist when Denis Healey was chancellor. But it was not long before he swapped the public for the private sector, taking an MBA and moving seamlessly towards supporting the Conservatives.

  As part of the 2011 Harvard Business School case study, Parker said:

  I was looking around for a new challenge. I felt this was a really interesting opportunity, not least because I quite liked shoes and I thought, well, if I can go and work in this company and help them to make more shoes that I would actually like to buy, then that would be good.

  Regarding the task at hand, he said:

  Clarks had market share. There are two key determinants for room to manoeuvre. One is scale and the other is relative scale. So, if it’s big, it means there’s a lot you can change. If it’s bigger than its nearest competitor, it means that you’re in an even stronger position. And Clarks had both of these things in retail.

  Tim Parker, recruited from outside the company by Roger Pedder, radically restructured the business as chief executive from 1995 to 2002.

  Pedder said in the same Harvard study that Parker’s personal situation was ideally suited to a family firm such as Clarks:

  He wasn’t of the family, wasn’t of the area, didn’t come from the shoe business. He didn’t have any alliances. He didn’t have any people to protect. He wasn’t in debt to anybody. All positives, because he didn’t bring any baggage with him. What he brought was an objective mind about what needed to happen in an economic situation.

  Parker had done his homework, and within six weeks presented his first report, ‘Strategy, Structure and Management’. It was a plain-speaking, no-nonsense critique of the company with some far-reaching conclusions. And not always easy reading:

  The main reason for Clarks failure in recent years has been, frankly, management incompetence on a massive scale, leading to, at best, inertia and, at worst, bad decisions. The answers to these problems are to be found in the culture of the company and its personnel policies … the location of the business in a relatively isolated part of the West Country, with a very pleasant lifestyle for those of middle-class income, has fostered a comfortableness and a cloister-like sense of detachment reminiscent of an Oxbridge college.

  Parker railed against what he called the ‘civil service mentality’, whereby pay and benefits continued to rise and ‘incompetence’ was rarely tackled. He admonished the company for the way it had allowed parts of the business to ‘deteriorate into baronies’, fostering a culture whereby ‘high individual interests’ had ranked above those of the business. ‘Compromises over control mean that no one is really responsible for anything: marketing can always blame the factories; the factories can always blame Indian uppers and retail can always blame poor results on non-delivery,’ he said.

  What must have stung the management and the workforce most was how he used the company’s values as a stick with which to beat it.

  What is quite incredible is to hear the well-intoned mantra of ‘integrity’. What integrity is there in a management which looks after its own, fails to grapple with the key strategic issues facing the business, and, as a result, saddles the company with a huge cost burden and horrendous results?

  Parker laid out some key strategic goals and outlined what would be required to achieve them. Clarks must become a retailer for ‘middle England’ at home but a premium casual brand overseas. This would require a lot more ‘sparkle’ going into the research and design side of the company and then, once the product had improved, there would be an investment in advertising, focusing on one or two specific markets. Some ‘really original thinking’ was required to address the ‘pedestrian’ children’s business, with a view to making it a creditable international brand.

  On manufacturing, he said it was not clear how many factories were viable but he stopped short of calling for their complete closure. ‘If alternative sources are available at considerably lower cost we must consider closure. It is doubtful whether we will end up with anything other than a handful of plants in the UK.’

  Within ten years of Parker taking over as CEO, every single Clarksowned factory in the world was to be closed.

  Parker’s changes were comprehensive. He issued a decree that jackets and ties were not strictly necessary in Street and he pressed for more flexible working hours, keen that staff should not always feel duty bound to clock off at 5 pm precisely.

  Putting his new management team in place, he made Bolliger his most senior lieutenant as UK operations director. Among others in key roles were Neville Gillibrand, who became international brands director, and Royston Colman, who was made manufacturing director.

  For many long-serving managers, Parker’s withering indictment of the past was hard to swallow. Those who found it hardest were the professional shoemakers who had risen through the ranks; in many cases they had been employed by Clarks all their working lives and they took pride in the product.

  Kevin Crumplin, who, as director of personnel and a member of the main board, had been keen to recruit Parker, experienced mixed emotions. ‘I did not like Parker personally. I did not care for his arrogance and lack of respect for what the shoemakers had achieved,’ he says. ‘But I accepted that the transformation had to happen. Sadly, you sometimes need a person like him to do what is required. My position was that I had helped deliver what the board and the shareholders wanted, but I didn’t want to stick around any longer.’

  Crumplin resigned in February 1996, just days after Parker produced his damning report.

  Royston Colman’s appointment as manufacturing director effectively meant he was in charge of closing down the factories – and by the end of the process had made himself redundant.

  ‘Tim used to tell me that I had the worst job because everyone else was building while I was destroying,’ says Colman, adding:

  And the speed with which we stopped manufacturing increased as confidence in resourcing grew. It wasn’t always pleasant, but I hope I did it with as much sensitivity as possible. I suppose over the years I helped to get rid of 5,000 people, many of whom I knew personally.

  Colman was one of those who went with Parker to inspect shoe factories in China during 1997. Pedder, Bolliger and Mark McMenemy, who was hired from Marks & Spencer to succeed Alan Mackay as finance director, were among others on that trip.

  ‘We saw some state-of-the-art machinery and some very professionally made shoes produced
at a fraction of the cost,’ says Colman. ‘It was obvious to me from that moment that my role was to tick off our factories by closing them down as fast as possible.’

  Colman himself left in 2000, although Parker brought him back briefly on a part-time basis to shut one of the Portugal factories in 2001. After that, he threw himself into charity work.

  The first factory to close under the Parker regime was in Bridgwater, followed by those in Shepton Mallet, Plymouth and Askam, Cumbria, in July 1996. In Australia, the factory in Preston was shut down, along with Marlinton in the USA, where profits for the year ending 31 January 1996 had ‘effectively collapsed’ due to a ‘combination of over-optimism, poor marketing and a failure to control the sales function’, as Pedder put it in the annual report.

  The situation in North America was dire. To address this, Bob Infantino, who had been recruited in 1992 from Rockport, the Boston-based footwear company, was put in charge of the whole North America operation – Clarks of England, Bostonian and Hanover – and slowly the business on that side of the Atlantic started to improve. The entire North American operation now came under the title of Clarks Companies North America (CCNA). In the USA, more so than anywhere else, consumers perceived the Clarks brand differently from their British counterparts. Parker was happy to allow this, and he gave Infantino considerable freedom to manage the North American operation in his own way.

  Encouragingly, a year later, in 1996, Clarks of England was named winner of the Company of the Year award by Footwear News, a specialist industry publication in the USA, and twelve months later the North American operation posted trading profits of $16.7 million, more than double what was achieved in the previous year. This was mainly as a result of improvements in the wholesale side of the business, and although retail was still disappointing, Parker felt the prospects in North America ‘had never been stronger’. He was proved right. From 1995 to 2001, sales increased by 57 per cent, with operating profits up five-fold, achieved in part by introducing highly competitive discounts to attract new consumers, a strategy that caused difficulties for some of Clarks’ weaker competitors.

  Back home in Street, a quarter of the Clarks workforce in the town (more than 500 people) lost their jobs, largely as a result of the brand and retailing buying teams working as one unit. Parker was unequivocal:

  If you want to make things happen in a business with problems, you have to accentuate the sense of crisis. Stress that there is no alternative. It is fear that normally drives people to take action and to change things. There was a hope [on the board and in the Council] that you might be able to retain a portion of the business in the United Kingdom, but slowly it dawned on everybody that it wasn’t commercial. Our pricing was completely wrong. But more critically, we couldn’t make the shoes the market really demanded.

  Old perceptions of Clarks persisted. In September 1996, the Independent ran a feature with the unfortunate headline: ‘Do we need Clarks shoes?’ To which the answer, some 1,500 words later, came as a resounding ‘no’. Perhaps in a spirit of mischief, the journalist, Jonathan Glancey, then the paper’s architecture and design editor, wrote:

  To my eye, most Clarks shoes are ugly, bland and unstylish. Clarks are not to be taken seriously by adults. And what about the sort of schoolteacher who used to wear Clarks Polyveldts? How could any schoolboy aspiring to zip-up leather boots from Elliots, Toppers or Kensington Market take seriously a teacher who wore omelettes for shoes?

  He had some ammunition left strictly for Parker:

  Clarks may well survive and even prosper with new professional, business-school-educated management, and good luck to it. But, if you are a grown up, save up for a decent pair of leather shoes (wear bin-liners tied with string if you have to whilst doing so), learn to polish them and enjoy their patina and comforting natural smell.

  His advice went largely unheeded, as results for 1997 across the whole group finally began to reflect Parker’s restructuring of the business. Profits were up to £39.4 million from £33.6 million the previous year, the best figures since 1987.

  Parker called it a turning point, and said a crucial difference was that Clarks was making shoes its customers wanted to buy rather than the shoes ‘we wanted to make them’. It was also abundantly clear that Clarks shoes were too expensive to make in England. Cost-cutting not only affected the production process but meant there was less money to create new styles. This cemented Parker’s objective to change the company from being a manufacturer and wholesaler with some retailing to becoming a retail-led business with some wholesaling. Never knowingly understated, Parker told shareholders at the start of 1998:

  We have three very clear objectives: to be the No. 1 shoe retailer in the UK; to be the No. 1 children’s shoe brand in the UK by a factor of at least two over our nearest competitor; and to be the world’s No. 1 shoe brand outside the athletics arena.

  His cause was helped by the collapse of the British Shoe Corporation. Ten years earlier, one in four pairs of shoes bought in Britain was sold in a BSC store. By 1997, that figure was less than one in ten as the late Sir Charles Clore’s chain of high street shops began to unravel. Freeman, Hardy & Willis, Mansfield and Saxone were all no more. In fact, the only recognised BSC names still trading were Dolcis and Stead & Simpson.

  Parker’s commitment to increased advertising paid dividends – despite a tricky episode in April 1997 when the company was forced to abandon a campaign showing children walking on a railway track and then sitting on the lines. There had been several recent deaths involving children and trains, and the Royal Society for the Prevention of Accidents took a dim view of the posters. Clarks claimed that the line in question was disused because weeds were growing through the sleepers, but admitted an ‘error of judgement’ and withdrew them.

  In the autumn of 1997, Clarks’ cutting-edge advertising agency, St Luke’s, came up with the strapline ‘Act your shoe size, not your age’ for a series of TV ads that ran for six weeks. Sections of the media immediately picked up on Clarks’ efforts to shed its old-fashioned image, with the Financial Times making the point, correctly, that Clarks was regarded as considerably smarter and more fashionable overseas than it was in the UK.

  Parker told the paper:

  If you go for a conventional campaign attempting to look younger, you’re in danger of losing a large chunk of people at the older end of the market. We wanted something with broader appeal that says you can buy our products without any residual feeling of buying into something institutional.

  A stroke of good fortune came Clarks’ way when Richard Ashcroft, frontman of The Verve and not exactly the institutional type, wore a pair of Wallabees – first launched in 1966 – on the cover of the band’s massiveselling 1997 album, Urban Hymns. And it could have done no harm that Parker, with his shock of curly hair and propensity for wearing jeans and no tie – and who played the flute in his spare time, and drove a Porsche – was something of a dashing figure.

  Profits rose and factories closed. By the end of 1999, there were only four UK manufacturing plants left – Ilminster, Barnstaple and Weston-super-Mare in the West Country, and one in Kendal in the Lake District. By 2005, there would be none.

  Re-organisation continued apace. Ravel, which had been struggling, was incorporated into the main retailing division based in Street, and more than 40 per cent of Clarks and K Shoes stores were fitted out in new designs aimed at dealing with what Parker called the ‘dowdy image’. He felt there was too much green associated with the Clarks logo and its shops. The idea was to introduce white and beige, a brighter, cleaner and sharper presence in the High Street.

  At board level, Harriet Hall, who had been central in establishing the new governance structure following the Berisford bid fall-out, became a non-executive director of the board in 1999, replacing Caroline Gould. Lance Clark, meanwhile, one of the longest-serving C. & J. Clark Ltd board members, was replaced as the second family director by Ben Lovell, Roger Clark’s grandson. William Johnston, a former dir
ector and family member, took over from Hall as STFC chairman.

  A year later, in 2000, it was announced that all K shops would close, marking another end of an era. On some high streets, K and Clarks were practically neighbours and, more to the point, were selling almost the same kinds of footwear. This duplication clearly was absurd, involving two separate advertising campaigns, two sets of accounts and two similar shop fronts. But for K to cease trading in its own right was still a blow for a brand with such an illustrious history. Some K shops became Clarks, others were sold off, and the K Women’s shoe range was incorporated into the Clarks shops.

  During 2000, the issue of whether Clarks should be floated was discussed once more. The board had held consultations a year earlier with Dresdner Kleinwort Benson, resulting in the strong advice that it was not in the best interests of the company to float. It was thought that stock market conditions weren’t right and that the company would not command its true value. This recommendation was duly passed on to the shareholder council, which had already agreed that in the event of the board opting to float the council would vote on it. No such ballot was required – and as of 2012 the flotation issue has not been aired again.

  Parker produced another of his strategy documents in 2000, this time for general circulation among the workforce. Although it was called ‘The Road Ahead’, much of it concentrated on the changes that had already been made both culturally and commercially. It stressed how 75 per cent of the 38.6 million pairs of Clarks shoes sold each year were now sourced rather than manufactured by the company, and he predicted that turnover would reach £1.1 billion by 2004, with profits in excess of £100 million. In fact, this landmark wasn’t achieved until 2010.

  ‘The key in the long term is product,’ he said. And he continued:

  The shoes that we create for our customers are what will make or break our business … globalisation is the force that shapes the shoe industry and we must make the transition from what is essentially still a British company, to a global business … in order to succeed we must search relentlessly for the best creative and technical skills around the world … change is not just part of life these days. Change is life.