How Shoes Are Made: Licensing and Private Label

You have no way of knowing who designed and developed almost any shoe you see at a store.


Brands spend a lot of their resources on marketing, merchandising and branding, sometimes even more than on the products themselves. This strategy makes perfect sense for two reasons. One, we are completely inundated with information and rely on cognitive shortcuts such as brand recognition to combat decision fatigue. Two, emotions are the primary reason consumers prefer brand name products to their generic counterparts.

Once the brand has earned recognition, the next step is to use it to generate additional income, usually by figuring out how to make the brand accessible to more people. You do that either by expanding into new products or by adding new lines of the same product, but at a different price point.

Expanding into new products lets the brand reach more people without diluting the value of the core product. There are some exceptions (see: Pierre Cardin; toilets), but generally this strategy works well. When a clothing brand adds a shoe line, the customer who bought their clothes may also buy their shoes – or a new customer who couldn’t afford a $3,000 dress may splurge on $300 shoes.

The challenge of this approach for the brand is that you have to develop a whole new business behind the scenes. You have to hire a whole new team: design, technical, production, sourcing. This is especially tough because you don’t necessarily have the industry knowledge to know if you’re hiring the right people. You need to find factories and suppliers, possibly in a whole new area of the world. You have to establish new relationships and figure out the way things are done in this industry, which may be very different from what you’re used to.

Adding new lines of the same product avoids some of these issues, but has its own set of difficulties. Creating a bridge line using the same materials and factories as your main line is cost-prohibitive. If your signature line is made in Italy, your bridge line will have to come from at least Portugal or Spain, if not China, depending on how low you want to go. Which again means you have to find new factories and establish new relationships and possibly hire more people. In addition, your bridge line will draw some of your customers away from your signature product and may dilute the perceived value of the brand. If you can buy shoes with XYZ brand name on them for $98, why would you buy them for $500? For some companies, this is a nonstarter. Manolo Blahnik doesn’t have a bridge line for the same reason Apple doesn’t make a cheap iPhone.

Expansion is a big hassle either way you go, which is why many brands enlist third party companies to take care of their related products or bridge lines for them. This means that someone else takes care of all the work, but the product will still bear the brand’s label so you, the consumer, will buy it based on that brand.

There are two ways of doing this: licensing and private label.

Licensing

Licensing means the original brand sells the right to use their name for a specific product to another company. You probably have something in your closet made by a company you’ve never heard of. For instance, does the name Jimlar ring a bell? They are “the licensee for brands such as Coach, Calvin Klein, Rachel Zoe and Zumba Fitness” (quote from the Jimlar website). I did not research the other brands for this article, but the Calvin Klein shoe line also has an in-house design team (based on the fact that they’re hiring for it). So the Calvin Klein shoes in your closet may have been designed in-house, or they may have been designed by Jimlar and you have no way of knowing which one it is.

Private label

Private label means that the brand is buying someone else’s services to create their product, but without selling the right to use their name. There is a wide range of ways this gets done, from the brand picking existing styles from a factory’s offerings and slapping their label on it  to hiring a company to do the work under a stringent approval process from the brand, to just enlisting help with some aspects of product development such as sourcing. Many brands outsource their bridge lines and discount outlet lines to third parties so their in-house teams can focus on their signature product line. LOTS of shoe companies do this for other brands, including some that have brands of their own. Because they don’t own a license and can’t use their client’s brand name, finding out who does what shoes under these arrangements is pretty much impossible unless you work there. Oh, and the people who work there can’t tell you because everyone works (and even interviews!) under non-disclosure agreements.

Note: Not all shoe companies work with third parties to make their shoes. Some brands control the design and production process from start to finish. Some even tell their customers about their development and production process with stories and videos.

None of this is to say that the shoes made under license are bad and shoes done in-house are good. Licensee companies and private label service providers tend to focus on their product and do it for a long time. They have established relationships with tested factories and suppliers, extensive teams and many combined years of experience doing shoes and only shoes – so they don’t have to reinvent the wheel to add another shoe line to their stable. However, if you are buying a brand name shoe because you have come to expect a certain level of quality and attention to detail from that particular brand, you might not get it because the shoes will be done to the third party company’s level of quality instead. Which may be just as good – or not. You can’t rely on the brand name alone to make the decision for you. Ultimately, it’s up to you to choose the right shoes for your feet.

So what does this all mean for you?

  • Do not assume that brand name = brand quality.
  • Whenever possible, pick shoes made by companies that primarily make shoes. So Manolo > Gucci, Cole Haan > Banana Republic and so on down the price point line.
  • If you are shopping at a discount store like DSW or an outlet mall, the chances that your impressive label shoe is made by someone else are much higher than at the brand’s flagship boutique.
  • Check where the shoe is made. If the label is high end, but the shoes are made in China, you know the drill.
  • Learn what a quality shoe looks and feels like. Do not compromise just to own something by XYZ brand.

Above all else, listen to your feet. If the shoes are uncomfortable, it doesn’t matter what they say on the inside. It doesn’t matter what color soles they have. Even if Christian Louboutin himself personally makes you a pair – ok, you can have them on the second you are sitting down and brag about it for the rest of your life – but if your feet hate them, please don’t walk in them.