VF Corp – Consumer Shift to Lifestyle Brands – 30 June
2021
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Specialist:
Title:
Alexandra van der Stap (AvdS)
Former Chief Strategy Officer & Global Head, Strategy & Go-to-market, The North Face at VF
Corp
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Agenda:
1. Portfolio update across Vans (NYSE: VFC), The North Face, Timberland and Dickies
2. Outdoor, Active and Work category consumer trends
3. E-commerce penetration and D2C approach
4. Whole distribution strategy and retailer dynamics
5. Market share and profitability outlook
Contents
Q: Could you give an overview of the outdoor and action sports industry? Where do lifestyle brands fit in?
What are some industry drivers and who are the top competitors?
Q: You said the lines between sports and lifestyle are blurring. How is this trend developing globally,
especially in the markets that The North Face or VF Corp as a whole play in? Do you think this trend will
develop in other regions?
Q: Could you outline VF Corp and the main brands driving growth for the company? What are some of the
brands’ strengths and weaknesses?
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Q: How might The North Face’s consumer engagement and distribution strategies differ from other brands
in the portfolio? Have you noticed differences in The North Face’s D2C growth rates vs Timberland or Vans?
How successful do you think VF’s December 2020 acquisition of Supreme
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Q: How would you assess VF’s dependence on wholesale, so whether the main brands are heavily wholesale
across channels? How does that compare to companies that want to pivot away from wholesale entirely or
keep that portion very small vs other distribution channels?
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Q: Do you think Timberland is still reliant on wholesale in the Americas due to the weight of the heavy boots
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or is the target consumer demographic more likely to go in store than utilise online channels?
Q: How has The North Face maintained brand affinity over the years and reinvented itself? It’s an older
brand, but it can connect with younger consumers, which many brands don’t know how to do. What were the
strategic decisions around reinventing the brand to connect and keep up with the mature younger
consumer?
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Q: You mentioned The North Face reinventing its brand by collaborating with Supreme. I assume this
happened pre-merger, but do you think The North Face can manage Supreme as a brand, rather than just
collaborate with it to improve brand scarcity? Supreme knows how to increase brand awareness and it’s very
sought after, but if it’s under new management, it could be easy to dilute what’s been paid for. What do you
think is The North Face’s ability to keep Supreme Supreme while improving it, rather than just scaling it and
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perhaps diluting some of the brand equity the company had hoped to purchase?
Q: Supreme focuses on the streetwear market and you mentioned one of The North Face’s segments is
lifestyle. Does it make strategic sense for The North Face to have a line just for streetwear, given its
seemingly complementary collaborations with Supreme? Why not have two brands going after the same
market but in different categories, given that Supreme talked about a USD 50bn market opportunity within
streetwear
Q: VF plays in many different channels – D2C stores, D2C digital, a large wholesale presence and a decent
international wholesale presence and many different brands in many regions. Do you think the company is
spread too thin? Are there some markets where the volume is not worth the added cost and resource drain,
and that could be better used if VF were to strategically focus on just three regions and three distribution
channels and really scale those markets, rather than playing in every market it can find?
Q: Could you discuss VF’s missed opportunities or weaknesses around appealing to more women across its
brands and categories? What’s the dynamic of the demographic the company offers products to? Is there an
opportunity it could focus on more?
Q: Is VF Corp progressing quickly with making The North Face less dependent on seasonal revenues by
targeting the athleisure or activewear category? Is the company innovating in athletic leisure? Is there a
blurred line between wearing a workout shirt to work out and wearing one to hang out? How successfully
have The North Face or any other VF brands penetrated this category?
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VF Corp – Consumer Shift to Lifestyle Brands
Transcription begins at 00:00:02 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled VF Corp – Consumer Shift to Lifestyle Brands. I am
Nyree Hinton and I will be facilitating today’s Interview with Alexandra van der Stap, former Chief Strategy
Officer and Global Head of Strategy and Go-to-market for The North Face at VF Corp.
Alexandra, before we start today’s Interview, please state I agree or I disagree to the following statement: You
understand the definition of material non-public information and agree not to disclose any such information,
or any other information which is confidential, during this Interview.
AvdS: I agree.
NH: Could you give an introduction to your background and the roles you’ve held in the industry?
AvdS: I spent about six years at VF Corporation, first starting in the EMEA organisation and later in the
global organisation for The North Face, working on strategy, business operations and go-to-market. Also
working within VF strategy leadership group, so my expertise comes from a North Face lens, but I do have a
view on VF and the other main brands there as well.
[00:01:21]
Q: Could you give an overview of the outdoor and action sports industry? Where do lifestyle brands fit in?
What are some industry drivers and who are the top competitors?
AvdS: If you look at these segments, you can see that outdoor is definitely shifting a bit away from core
outdoor and top-of-the-mountain activities towards more lifestyle focus, also driven by big brands, and
clearly, brands active in this space are (audio cuts out 02.03) by VF, Patagonia and Columbia, who are the
main global brands here, then supported by more specialised brands such as an Arc’teryx or a Mammut or a
Jack Wolfskin in EMEA. Key trends there are consumers moving towards more versatility and (audio cuts out
02.34) boundaries between different activities, so where we previously had really strong division into
categories from mountaineering and climbing and hiking, and all these things, and running, you start to see
these boundaries blurring a bit, different types of consumer groups now moving outside, which has been
accelerated by COVID, as many other ways of exercise and entertainment were closed for (audio cuts out
03.11) a bit of a surge in outdoor activities after the first lockdown in Q2 last year.
In action sports, where VF is active with the Vans brand, the market is a bit more fragmented, with quite a lot
of small brands competing for space. VF is active there. Obviously, also Boardriders, a company specifically
focusing on board and other sports, is active, and a variety of other areas, and obviously related into more the
Nike and the Adidas and the other apparel giants in active categories. The boundaries here between sports and
lifestyle are blurring rapidly, with all brands projecting lifestyle (audio distorts 04.16), if you’d like to dive into
something further than this.
[00:04:25]
Q: You said the lines between sports and lifestyle are blurring. How is this trend developing globally,
especially in the markets that The North Face or VF Corp as a whole play in? Do you think this trend will
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develop in other regions?
AvdS: Yes, this is definitely happening around the world. I think it’s driven by the brands realising that it’s
(audio distorts 05.02) in an outdoor segment where obviously VF is (audio cuts out 05.05) Timberland, that
market, as such, it’s growing a little bit but not spectacularly, whereas there’s a big opportunity to move into a
lifestyle category, and following the examples of big sporting goods brands such as Nike and (audio cuts out
05.24) definitely extrapolated their brands there. The growth rates are a little bit different, and also the
essence of the market as well. In the US, (audio cuts out 05.44) is more on mountain lifestyle casual wear
that’s driving this. If you look into Europe, that’s happening as well, but you also see a focus on city wear with
more premium lifestyle gear and positioning that the outdoor brands are moving into.
If you look into Asia, then a lot of growth in the outdoor market was actually not really done in outdoor as such
in terms of the sports activities, but it was more driven by (audio cuts out 06.20) in Asia and the aspirational
pull that outdoor brands have. Slowly, consumers are starting to move outside more in China, for example, as
well, and you see a little bit of a reverse trend actually, that the outdoor brands that were positioned in the
cities now start to actually become real outdoor brands, and consumers are increasing their participation in
outdoor activities. (Audio cuts out 06.55) all around the globe, but in general, pre-COVID, we could see that
the majority of growth for outdoor brands did not actually come from the outdoor activities, a lot of it was
driven by extrapolating the brands into lifestyle settings. All outdoor brands seem to be experimenting with
this now.
[00:07:28]
Q: Could you outline VF Corp and the main brands driving growth for the company? What are some of the
brands’ strengths and weaknesses?
AvdS: VF Corporation has grown both organically and through acquisitions, ever since it was founded. It
organises its business in basically three pillars. One is the outdoor pillar, where The North Face and
Timberland are in, but also smaller brands such as Altra if you’re running, Icebreaker and Smartwool. Then
there is the work segment, which now just consists of Dickies, as VF has just diversified their business there
and completed the sale of the majority of the work brands, particularly more professional work brands there,
and they’ve kept Dickies in their portfolio. Then, the active segment, which is led by Vans as the main brand
there, but also has brands such as Supreme, which has been acquired at the end of 2020, Napapijri and
Eastpak, Eagle Creek and so on. Both the active and the outdoor segments are the majority of the revenue, and
they balance each other out quite well, so they’re roughly the same size, at around the USD 4bn mark it seems,
and then there’s the work segment which is smaller, following the divestiture of the majority of brands.
How VF is organised is VF is the portfolio company. Underneath it, the big brands, so those are The North
Face, Vans, Timberland and Dickies, I guess, and then there are regions and supporting functions as well.
With the appointment of Steve Rendle as the CEO in 2017, the company initiated a shift towards being really a
purpose-driven business, an organisation, and away from a bit more of a financial holding structure that they
had before, so really uniting the brands under a common purpose, which is advancing active lifestyles and also
driving sustainability across their business model. How VF is organised is a lot of VF’s functions are old
enabling functions that exist. Our supply chain is a really big part of that, so the VF supply chain organisation
is a backbone of the organisations that they plug the brands, put the brands in. Obviously, IT, finance, HR and
all these things are shared among the brands, and then the brands themselves are responsible for product
development, for marketing, for sales, merchandising, and e-commerce and the retail functions, so everything
that happens on the front.
The North Face was bought around 1999-2000. Vans was added to the portfolio in 2004, and then Timberland
in 2011, and particularly The North Face and Vans, they came in as much smaller brands than they are today.
VF has been able to really grow these brands rapidly to a significant scale, and build expertise in how to scale
these brands to the next level. That said, Timberland was much larger already than either The North Face or
Vans were when acquired by VF, and hasn’t scaled as much as the other brands have.
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[00:15:57]
Q: How might The North Face’s consumer engagement and distribution strategies differ from other brands in
the portfolio? Have you noticed differences in The North Face’s D2C growth rates vs Timberland or Vans?
How successful do you think VF’s December 2020 acquisition of Supreme has been?
AvdS: The brands each have their own identity and they sit on different growth trajectories. It’s also related to
their target consumer and audience, so whereas The North Face is targeting outdoor participants and people
in that space, Vans is targeting a bit of a younger crowd, but also a more lifestyle-oriented crowd, and
Timberland sitting in active outdoor segment, it kind of sits between outdoor and lifestyle. In terms of growth
rates, Vans has been leading the charge overall on the brand level over the last years, outgrowing The North
Face and definitely Timberland, and North Face was second and Timberland was third out of these big three
brands. The Vans growth and success story has really been driven through uptake of their shoes in big lifestyle
markets worldwide, and driven by a marketing machine behind it, whereas North Face’s growth has been
driven quite a bit by international expansions, particularly growth in Europe, which has been quite significant
for The North Face. If you, for example, look into the Q1 2021 figures, which are Q4 2021 for VF’s reporting
cycle, you can see that the European region is now as big as the US is for The North Face. This is quite a
significant shift from where this business was five years ago, when the US was definitely dominating this
space. Still, Europe is growing fast, so this balance might shift a bit more.
Interestingly, if you look into the channel mix, the whole of VF has been working on a shift towards more
direct-to-consumer and e-comm-driven, and building on their direct-to-consumer business, but there are
differences between brands and regions. For example, the direct-to-consumer business in Asia in Q1 just about
grew at about 70% or so, whereas in Europe it grew about 26%, and in America it was more or less flat. If you
look into what Timberland was doing, their direct-to-consumer business in Asia only grew by about 19% in Q1,
so there are definitely differences between the three brands here. I think it has to do with a couple of factors in
terms of how the business is composed overall, who the target consumers and audiences are, and how well the
brands are able to really drive pull on a direct-to-consumer level. That obviously has to do with brand strength
as well. VF is investing in its infrastructure there, both in e-comm and in D2C, so one of the things that the
company has done is keep all the stores open and alive through the COVID shutdowns, continued to pay their
staff, so they were able to hit the ground running when lockdowns eased, also driving that digital model, both
internal e-comm and also its key compartments.
Your second question was on Supreme. VF only just started to include Supreme in its portfolio. I think it will
take a little bit of time before we can see the real impact and the real change. Supreme did have a really good
Q1, and it seems to be absorbed well within the organisation, sitting in the active segment with Vans, as a more
premium lifestyle-oriented offer there. Those brands might complement each other well and go hand in hand
in this area.
[00:22:19]
Q: How would you assess VF’s dependence on wholesale, so whether the main brands are heavily wholesale
across channels? How does that compare to companies that want to pivot away from wholesale entirely or
keep that portion very small vs other distribution channels?
AvdS: I think all these brands, they grew out of wholesale models, so they were not D2C-native brands, let
alone digitally-native brands, so there’s quite a bit of legacy in the wholesale business for all three brands.
What we are seeing is that the direct-to-consumer channel, on average, is outgrowing the wholesale channel,
and on average, that balance is shifting towards a more D2C-driven business, but it does take time to get there.
I think what the brands have been focusing on is identifying, within the wholesale channel, those customers
that they believe in most, that can really work with the brand and have the biggest growth potential, and work
on partnering there and refocusing the activities on the most promising wholesale partners.
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There are some sectors there, I think, that can impact this. Obviously, the whole COVID situation has led to an
increase in digital, and if you look into the recent figures, you can see that the digital business of VF has really
grown exponentially, I would say, over the last year, while the wholesale business has been shrinking. Those
are highlights, I think, that come out, but there are differences between the regions. The Americas business is
maybe even a bit more wholesale-dependent than, for example, in Asia, where D2C is already the majority of
the segment. For The North Face, it’s about 50%. For Vans and Timberland, it’s also a little bit less than 50%.
These kinds of trends seem to even up. Overall, The North Face seems to have made the most progress in
moving to D2C, and Timberland, the least. The Timberland business specifically in the Americas is still really
reliant on wholesale, and that is definitely a key factor of attention.
[00:26:23]
Q: Do you think Timberland is still reliant on wholesale in the Americas due to the weight of the heavy boots
or is the target consumer demographic more likely to go in store than utilise online channels?
AvdS: I think it’s a bit of a combination of the brand itself, so Timberland is, in terms of brand recognition
and pull, not at the same level as Vans or The North Face are, so they generally attract more consumers to
their platforms and their website and are able to convert more consumers into sales. It also has to do with the
target audience of the brand, where Timberland’s target audience tends to be a bit older in age. It tends to be a
bit more rural, and these consumers, as you rightly said, tend to favour more the wholesale business. The third
point is the history of the brands and the pace at which brands have been moving towards digital, where
Timberland has started this transition later than North Face and Vans, so you can see that they still have quite
a bit of catch-up to do there and build out the business as well, and just the coverage in D2C in terms of store
exposure, there are just more North Face and Vans retail outlets than there are for Timberland. That
combination explains this dynamic, yes.
[00:28:33]
Q: How has The North Face maintained brand affinity over the years and reinvented itself? It’s an older
brand, but it can connect with younger consumers, which many brands don’t know how to do. What were the
strategic decisions around reinventing the brand to connect and keep up with the mature younger consumer?
AvdS: The North Face, ever since its acquisition by VF in the year 2000, has grown really rapidly throughout
the 2000s, but it had reached a point where growth had stalled a little bit or stabilised in the mid 2010s. It
realised that in order to accelerate this again, it needed to continuously connect to younger audiences. At that
point in time, The North Face was perhaps not as successful as the brand is today, as it lost a little bit of its
premiumness in the high-end segment and had lost also a bit of its brand positioning in the core outdoor
market that the brand was active in. The North Face did a couple of things. They really revised the strategy and
said, “We’re in the business of making outdoor cool again. How are we going to do this? We want to achieve
leadership in outdoor, but we also want to expand our brand into lifestyle, because that’s where we see the
growth, and we also see that activities are starting to blur, that versatility is on the rise, and our brand
currently is not really up to speed to take advantage of this.”
A couple of things happened. The North Face took a step back and said, “What is the real core of our brand,
our 50 years of exploration that we have inherited of The North Face, and how can we make that really count
again?” going back to owning the Never Stop Exploring platform and aligning all brand messaging there.
Then, what the brand also did was looking into both the premium outdoor segment as well as the more
commercial part under that, and relaunching innovation programmes, the Summit Series and other top-of-
the-range activities, to really own the premium space and from there, generate a licence to play in the more
commercial areas and develop a specific strategy for lifestyle. Whereas North Face before this was basically
just organised along outdoor and that was what the brand was doing, and any lifestyle presence was basically
outdoor products put into lifestyle channels or maybe at some different price points and these kinds of things.
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The North Face reorganised themselves into four distinct customer segments, which were outdoor, training
and running, a segment called mountain lifestyle and a segment called urban exploration. From outdoor
towards urban exploration, the focus on lifestyle increased, moving from segment to segment. There were
specific teams that were set up to drive this that were doing product development and merchandising and
marketing and a sales segmentation for each of those areas, so really treating this as separate businesses that
needed to be brought back to life, a strong focus on that Never Stop Exploring platform and how to take back
ownership of that and expand it from just outdoor towards those adjacent categories. Also, really using the
lifestyle activities and products there to drive connections with younger audiences through product design and
development, making the products a lot more stylish, younger, better silhouette, different kinds of materials,
focusing on city-based use cases and streetwear to the marketing stories behind it, including much more
lifestyle-based marketing, influencers and so on, rather than the athlete team that is used in outdoor.
Also, partnering with key customers that could help drive this forward, including retailers or wholesale
partners that were already in this mid-market segment. For example, in the UK, the brand partnered with JD
Sports Group, which previously didn’t carry North Face at all. They’re focused on sneakers and young
consumers in cities, carrying Nike and Adidas and so on, and The North Face came in as a new brand there,
partnering on brand developments, specific product development, marketing and so on, to do this and help
accelerate growth in the UK by a lot. Another thing that obviously North Face did was partnering with others,
and then collaboration, so the Supreme collaboration is an important example of this. The North Face
collaborated with Supreme on special editions and limited editions and drops that were aimed at bringing new
energy into the brand, and related to younger audiences based in cities, and created scarcity there as well.
I think also, clear segmentation, a move to online and brand storytelling, focusing on an experiential
programme rather than just transactional activities helped to drive the brand forward, so it really was a
combination of strategic revision, channel analysis and new partnering, building out direct-to-consumer
channels, revitalising product development and innovation, and really focusing on lifestyle segments through
that mountain lifestyle as well as urban exploration to create new brand heat there, and then partnering with
lifestyle platforms and influencers to do this as well. Still, they’re rooted in The North Face heritage, and
actually turning that fact that the brand is over 50 years old into an advantage, also turning around some of
the real classic products that North Face was known for, and giving them a bit of a new look and feel, and
relaunching those in the market and going broad there.
[00:37:09]
Q: You mentioned The North Face reinventing its brand by collaborating with Supreme. I assume this
happened pre-merger, but do you think The North Face can manage Supreme as a brand, rather than just
collaborate with it to improve brand scarcity? Supreme knows how to increase brand awareness and it’s very
sought after, but if it’s under new management, it could be easy to dilute what’s been paid for. What do you
think is The North Face’s ability to keep Supreme Supreme while improving it, rather than just scaling it and
perhaps diluting some of the brand equity the company had hoped to purchase?
AvdS: Obviously, Supreme sits in the VF portfolio, so it’s a kind of separate brand to North Face. There are
some interesting thoughts on that acquisition with Supreme. Clearly, Supreme added quite a bit to the VF
brand portfolio through those collaborations, and having this premium streetwear brand that was more or less
digitally native, I think, was an attractive addition to the VF portfolio. At the same time, the Supreme brand is
a bit of a different beast than what we have as in store, so it’s mostly digital. It doesn’t have a significant
wholesale presence. It doesn’t have a large store network, and it’s driven through a lot of word of mouth and
just being at the right place at the right time. VF is a bit of a machine, and I think VF, there might be a watch-
out in how the uniqueness of that brand can be preserved in the VF world.
VF has done quite well on larger brands, so The North Face, Vans, Timberland, Dickies, and building those
out. In terms of some smaller brands that were acquired like, for example, 7 For All Mankind that was part of
the VF portfolio at some point, it was premium jeans wear, that acquisition hasn’t played out that well within
VF, as the brand was probably a bit too small to get enough attention and support to be nurtured into
something bigger. The caveat will be if VF is able to divert enough resources to Supreme to really keep on
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boosting the brand there, and if it’s able to keep quite an independent position from VF and its own identity.
At the same time, what we can see with the Vans brand is it is part of the VF portfolio, but it has also been
allowed to grow pretty much as a standalone business out of southern California, and has really kept its own
face and audience, and has been able rejuvenate throughout time. VF does have credible expertise, I would
say, in keeping distinct brands with distinct brand identities while leveraging VF’s scale, but Supreme is a little
bit of an odd one out, so it will be, I think, interesting to watch how that gets approached.
[00:41:39]
Q: Supreme focuses on the streetwear market and you mentioned one of The North Face’s segments is
lifestyle. Does it make strategic sense for The North Face to have a line just for streetwear, given its seemingly
complementary collaborations with Supreme? Why not have two brands going after the same market but in
different categories, given that Supreme talked about a USD 50bn market opportunity within streetwear?
AvdS: That’s an interesting question, because North Face does have a premium streetwear collection. It sits in
the Black Series globally, and then there is Purple Label in Japan, which targets high-end city-based
consumers in that streetwear. Then you could argue that Supreme is in that space already. I don’t think
Supreme will become a part of North Face. I think it will stay as a standalone business and a standalone brand,
and continue to develop from there, just the same as how VF acquired Altra, which is a running brand, and
North Face also has running shoes in the trail running space, and they haven’t combined these, or Icebreaker,
which is also an outdoor brand but has been kept separately from North Face. What I think VF is doing is to
cover the market, looking into key high-growth segments, and see how the brand portfolio fits there, and
probably, with The North Face coming from that more outdoorsy lens and Supreme coming from really being
a streetwear-native brand and digital first, I guess they feel that overlap is not so much, and that those brands
together can really be very efficient there in those areas. If the brand identity of Supreme stays intact or is even
strengthened after this acquisition, then those collaborations can definitely still go forward and be successful. I
think that’s what VF will do, and look for synergies there.
[00:44:50]
Q: VF plays in many different channels – D2C stores, D2C digital, a large wholesale presence and a decent
international wholesale presence and many different brands in many regions. Do you think the company is
spread too thin? Are there some markets where the volume is not worth the added cost and resource drain,
and that could be better used if VF were to strategically focus on just three regions and three distribution
channels and really scale those markets, rather than playing in every market it can find?
AvdS: I think what VF has done over the last five years, with Rendle at the head, is actually critically looking
at the portfolio mix-up and the channel structure, and also how to support the brands. You will see that they’ve
divested quite a bit in the business, so they’ve divested the entire jeans wear business and spun that off into a
separate company. I know the Lee and Wrangler brands are no longer part of VF. They have condensed the
workwear segment to just Dickies, so it’s just a big brand there, and they’ve also spun off some other smaller
brands. At the same time, we also see some acquisitions coming in, but they seem to be sitting under these
three pillars, under two pillars really, so on the outdoor segment and on the active lifestyle segment. That
seems to be the focus, going forward, for VF, whereas Dickies still sits there, maybe it’s a bit of an odd one out,
but also I guess because it’s a pretty profitable brand for VF to own.
I do think that the company is naturally evolving towards a big-brand focus, so the company talks about Vans,
North Face, Timberland and Dickies in their reports. They call out specific growth rates and specific issues for
these four brands, and the smaller ones are usually grouped together in buckets. There are brand presidents
reporting now directly into Rendle for the big brands, which previously wasn’t the case, so previously there
was a layer in between with someone managing a portfolio of brands, which could be larger and smaller, and
they were reporting into Rendle. Now, the lines have been cut shorter and those big brands have been elevated
to a higher state, so there seems to be an increased focus there. In terms of strategic choices in channels, VF is
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definitely calling out a focus on digital and direct-to-consumer, so elevating direct channels and a focus on
distortion to Asia. Obviously, the US market is the backbone of VF, or has been historically, and that is where a
lot of the investments continue to go into, but in terms of distorting focus and investments, there’s a clear
choice to focus on Asia. It looks like the company is on that transition to do exactly that, to be more focused, to
have a clearer, cleaner portfolio, has been divesting some brands that were not in there, has been also
elevating VF as a company more and communicating more on a VF level, and also working on that purpose
there.
[00:49:20]
Q: Could you discuss VF’s missed opportunities or weaknesses around appealing to more women across its
brands and categories? What’s the dynamic of the demographic the company offers products to? Is there an
opportunity it could focus on more?
AvdS: VF doesn’t really call out that at a VF level, focusing on specific demographics or things like that. They
do talk about targeting consumers who have active lifestyles, and that’s the VF focus and how the portfolio is
being structured, and how acquisitions or divestitures are being decided. If you look at a brand level, there are
definitely opportunities to make the brands more diversified, so in terms of gender, North Face and Vans and
Timberland tend to be a bit more male-dominated. In terms of moving that more to female consumers, there’s
definitely opportunity and there are initiatives in the brands to do that, but progress seems to be quite slow.
For example, in North Face, also be less dependent on winter seasons, so North Face being one of the anchor
points of VF and also recently one of the bigger growth drivers, having taken over that position now from
Vans, who seems to be slowing down a little bit while North Face is accelerating a bit more, The North Face
has traditionally been a winter business, and the business is heavily impacted by whether there’s a cold winter
or not. Clearly, that’s a risk, certainly in the area of climate change, where winters start to tend to be milder.
One of the reasons also for driving through more lifestyle products or diversifying into training and running is
actually to also become less dependent on the winter season, and have a more four-season type of business
that runs all throughout the year and is less weather-dependent. Also, in lifestyle segments, you can be
weather-dependent, because heavy jackets are the most expensive products also in lifestyle, but it tends to be a
bit less than in outdoor. Obviously, also moving into more sportswear and footwear activities helps to become
less seasonally dependent, but that is something that The North Face brand is definitely focused on. I think
that one of the attention points that VF might have in the future is to look at the supply chain overall, which
has traditionally been a really good capability of VF. The supply chain organisation, the strength of the supply
chain has been a key strength, and there are quite a lot of investments and staff tied up in that capability. If
you look into recent trends in supply chain, moving towards more local production or distribution, reducing
CO2 footprints, customisation and flexibility and things like that, VF might be a little bit slow to move there,
because of historic trends. I think this could be a watch-out but also a potential opportunity to change the
approach there, and also move the whole supply chain sourcing and distribution function closer to market,
both for efficiency but also sustainability reasons.
[00:54:16]
Q: Is VF Corp progressing quickly with making The North Face less dependent on seasonal revenues by
targeting the athleisure or activewear category? Is the company innovating in athletic leisure? Is there a
blurred line between wearing a workout shirt to work out and wearing one to hang out? How successfully have
The North Face or any other VF brands penetrated this category?
AvdS: I think there are key distinctions between the three brands. Vans is obviously quite lifestyle native, so
yes, the brand comes out of the skateboarding heritage and uses that all through the communications, but
really it is a lifestyle brand and proposition, and it’s a lifestyle kind of consumer that buys Vans. They are
much less impacted by that seasonal business. That said, they are impacted by consumer trends, maybe more
directly than North Face and Timberland, who have also core consumers who use the products as part of
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activities that they’re doing. We see that now, so in Vans, there seems to be a bit of a slowing in the growth
rates. Maybe this is because the brand is losing a bit of the connection with the audiences, or there are some
other hip and upcoming lifestyle brands that are taking some of its share. Usually, this rotates again, so it
might pick up again as well.
If you look at Timberland, they have been maybe not so successful to bring rejuvenation into the brand and
connect to younger audiences, and also reduce their dependency on the heavy boots and other winter products
into more versatile and lighter streetwear or city wear activities. You can see that in the growth rates of the
brands over the last couple of years, which has not been as spectacular as either Vans or North Face. North
Face, coming from that outdoor world, has successfully initiated a transition into streetwear and lifestyle,
while still staying true to the core of the brand and the brand values. Obviously, that’s a watch-out, so how far
can you stretch the brand before you start losing your outdoor consumers? So far, this doesn’t seem to have
happened yet, because of the investments that the brand continues to do in product and innovation and
storytelling in the outdoor space and working in the athlete space and Never Stop Exploring platform there.
[00:57:53]
NH: Thank you, Alexandra. A really great Interview. Let me close by thanking you for your input and your
time today. Thank you, clients, for joining Third Bridge Forum’s Interview. If you’d like to speak with
Alexandra in a private call or meeting, please let your relationship manager know.
AvdS: Thank you, everyone. Bye-bye.
Transcription ends at 00:58:10 of the recorded material
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