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HEADLINE: Aldo to close three chains in streamlining: Keying on core brands
BYLINE: Hollie Shaw, Financial Post
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Aldo Group Inc., Canada's largest fashion footwear retailer, is shaking up the industry with the closure of three of its shoe chains -- Pegabo, Calderone and Simard.
The Montreal-based retailer, which has 700 stores worldwide and 450 in Canada, has confirmed it will make the closures during the next year to concentrate primarily on the development of its core Aldo and Transit brands and Feet First, a burgeoning chain that sells 'comfort-fit' shoes to older customers.
The three exiting chains, which have been operating in Canada for about 20 years, are being jettisoned as Aldo executives work to streamline their quickly expanding business.
Aldo operates shoe stores under its namesake banner in 21 countries including the United Kingdom and the United States, where it just opened its 200th store. The footwear empire plans to open 100 new stores in 2005.
The closures also come amid increasing competition in the segment of moderately priced fashion footwear.
Several specialty retailers, such as Zara, sell shoes alongside their proprietary clothing lines and other brands have become so successful they have opened their own standalone boutiques in recent years, such as Ecco, Aerosoles and Nine West. In addition, a host of apparel retailers are considering adding house-branded footwear and accessories to their current lineup as a way to increase sales.
" Aldo is cutting around the fringe -- this is a refinement of the business," said David Howell, a consultant with market researcher NPD Group Canada.
" Aldo is a very aggressive retailer and it evolves as necessary. [Company founder] Aldo Bensadoun has a real eye for trends. A lot of people will hang on and beat an old concept to death, and he won't."
While Aldo has laid off a number of employees in the closing divisions, the company will have a net loss of just 15 to 20 stores overall as it converts most of the empty outlets to one of the retailer's three key brands, according to real estate sources.
In Canada, Aldo also operates the casual footwear chain Stone Ridge and Globo, a family footwear chain based in suburban big-box malls. Industry sources said Aldo may also fold those stores into one of its primary concepts, which include Aldo Outlet stores, in time.
"It's strategically brilliant, and if anything, it's been a year or two late in coming," said retail and marketing consultant Anthony Stokan of Toronto-based Anthony Russell and Associates. "Many retailers are realizing that you cannot operate half a dozen banners under a single corporate structure and pay enough attention to all of them to carve out several distinct identities.
"With hundreds of stores, it makes sense to have two or three banners at most -- it's much easier to operate a couple of very distinct banners rather than spreading marketing dollars over a half-dozen banners."
Aldo, founded by Moroccan-born Bensadoun in 1980, is the retailer's biggest banner, selling fashion footwear to men and women aged 18-34 at mid-market prices ($59 to $89 per pair).
All of the chains sell private-label shoes designed by and made for the company. Transit took hold in the 1990s and targeted a slightly younger customer at slightly lower prices ($39 to $59). Feet First is skewed toward Baby Boomers, offering a variety of casual and dress shoe styles with comfortable soles.
"The whole orthotics market has exploded," Mr. Howell said, saying orthopedic shoe inserts are becoming popular among an ageing population. "Based on that demographic, comfortable footwear is going to be a huge market."
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Photo: Stan Honda for National Post; An Aldo store in New York: Canada's largest fashion footwear retailer plans to close three of its chains.
