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BRAVE NEW WORLD

 
AUGUST 1ST, 2005

No inventory, no problem: Preschoolians is challenging the industry to reconsider how best to manage a retail/e-tail hybrid.

By Jennifer Carofano

Jeffrey Silverman is out to change the way people think about running a children's footwear business.
As CEO and founder of Preschoolians, he has created a company that offers consumers an unusual, made-to-order product line as well as a direct line of communication to Silverman himself.

Silverman, 42, launched preschoolians in November 2002 with a small retail store and a Website. Today, the site is the primary source of income for the company - offering more than 2,000 styles of soft-sole shoes for kids, up to age 5, priced from $28 to $42. It features a chat room for constant real-time dialog with mothers: In fact, Silverman says he spends six to eight hours a week communicating with consumers via the Web.

"That's what Preschoolians is about," he said. "It's about listening and putting together and enterprise that can react to listening. That's what I think is special about what we're doing."

Preschoolians is made of two components: retail stores---the original, in Westport, CT, one in Vienna, Austria; and its latest outpost, in Cleveland, which opened in July---as well as the Internet site, Preschoolians.com.

The retail stores and website offer only Preschoolians footwear and the company does not have inventory. Each pair of Preschoolians is made to order and delivered in seven days to the consumer.

Silverman built the Preschoolians brand on belief that for a child's developing foot, barefoot is best. But when foot covering is needed, the shoe should be as flexible as possible. Additionally, Preschoolians is dedicated to listening to their core consumer: moms.

"I am certain I spend more time, bar none, with customers than any other executive shoe business," said Silverman. "I don't regard the customer as a pain in the neck. I want to talk to them. There's a button on our website that says, 'Are you happy or are you sad? Send a note to the CEO.' It comes to me. And that's how you improve your company."

Jeffrey Silverman's Preschoolians brand creates made-to-order products for busy moms.

Silverman also wants to grow the Preschoolians brand beyond the Web and stores with a new wholesale strategy, targeting shoe and apparel boutiques, beginning this year. Additionally, the company now employs a unique group of loyal customers, dubbed Ambassadors, who actually sell shoes to wholesale clients.

Silverman arrived at the idea of Preschoolians after more than 19 years of experience in the footwear industry. In 1986, at the tender age of 22, Silverman created Toddler University, a line of toddler shoes for preschoolers. The brand was bought in 1992 by Nashville-based Genesco, which then sold it to Lexington, Mass.-based Stride Rite.

Silverman started a new retail concept, The Custom Foot, in 1996. Consumers would visit the Custom Foot store to see the styles offered, have their foot measured, place an order and receive a pair of custom-made Italian shoes within three weeks.

In 1998, Silverman returned to the children's industry to head the new kid's division of Londonderry, N.H.-based Ecco. Two years later, Silverman had become a consultant for Ecco Kids as well as the children's division of Stratham, N.H.-based Timberland, while simultaneously working on Preschoolians.

Here, Silverman talks about the power of the internet, while inventory is the biggest peril in the business and how listening to your consumer directly affects your bottom line.

FN: Tell us about the Preschoolians retail store.

JS: When we opened the store, we had three shoes in the product line. We really opened it as a laboratory. I always wanted that ability to go on the floor and talk to moms. Moms wanted something for their child to start walking in that was going to allow the child to walk like they were barefoot. Every person that walked in wanted our [most flexible style] because you could put it on the kid and they would just start walking. And mothers loved it.

FN: What part does the Website play in the Preschoolians business?

JS: Right now, that is the primary revenue source for our company. The Website is about 80 percent of our business. We get about 30,000 hits a month on our site. But that 30,000 is 15 times [what it was] a year ago. And we are still growing, month by month.

We have had the live chat function for almost two years. There are all these mothers on the Website and I can dialog with them. [The Internet gives mothers] access to information and, much more important, other mothers. Previously, [a mother's information about children's shoes came from] her mother-in-law or the guy at the shoe store. Now, all of a sudden, mothers have the Internet and they have power.

FN: How else do you interact with your consumer?

JS: I have a staff of 12 people and we answer the phones five days a week. In addition, we respond to e-mails seven days a week and we get back to everyone within four hours. Our No. 1 message is "Barefoot is best" and we are there to give them thoughtful answers to the questions they might have. And we have a 100-percent-satisfaction guarantee. If a consumer buys Preschoolians and they don't live up to expectations, they can send them back.

FN: You have an unusual approach to product. Can you explain it?

JS: We have no inventory to speak of. Our manufacturing is now set up in such a way that shoes are made every night after somebody orders them from a picture on the Internet. Basically, when the mother clicks 'buy,' the first thing the program does is to tell the mother when the shoe will be shipped. Roughly, the shoes will be in a mother's hands in seven days. Then, the order goes out to our factories in China, where they have all the raw material. When we started, we made 24 pairs a day. It's now in the high hundreds of pairs a day, six days a week.

FN: Why don't you carry inventory?

JS: No. 1, selection: We have 2,000 styles of shoes. You don't have to bet like a retailer or a wholesaler, on what someone is going to want until they want it. NO 2, we are nimble. My favorite story starts with a phone call from a mother. She wanted a pair of snow boots and, at the time, we didn't offer them. She described to me the boot she wanted--- a flexible, waterproof boot for kids--- and I had it made up for her in seven days. This was Thanksgiving 2004. By the time we had the shoe finished for sale on the Website, it was December. And we sold thousands and thousands of the boots after that, well into the season, when everybody else was on sale.

FN: Typically, how far in advance do you plan your product selection?

JS: At Preschoolians, we develop product much, much closer to market [than is traditional]. And, our consumer base is involved. In fact, the best-selling style we had for spring' 05, the Peek-a-Boo, was not in our line until June 1. And it was suggested by a consumer.

The original Preschoolians retail store is in Westport, CT.

FN: Are you exploring more retail options?

JS: The Website is our central point of communication and marketing. The number of people searching for baby product on the Internet is big. But for most of them, their first choice is to buy at a store. So what we are saying is to a retailer is, 'Look, we can convert these hits to customers for you because they are going to want to know where to buy Preschoolians, and we are going to direct them to your store.'

Additionally, in terms of product, we have a proposition to a retailer now that is really second to none. They don't have to have a big inventory. They can fill it in when they need it. And the same way a mother [designs and exclusive shoe], a store can, too.

FN: What retail stores will you target?

JS: There are two kinds of important distribution. One is the retailers (such as clothing boutiques) that sell the suede-bottom shoes such as Robeez, and the second is traditional shoe stores.

FN: What is you recently launched Ambassador program about?

JS: There were four or five customers who wanted to [sell Preschoolians], so four months ago I decided to develop a program of Ambassadors. The Ambassadors pay us $395 to join the program. They spread the word to other moms and now they will be targeting retail stores. They get a percent of wholesale as well as all the Internet sales within their 60-mile radius. The biggest children's shoe company has maybe 20 kids' reps. We have may have 150 ambassadors. Ina 60-mile radius, the ambassador has a 12-store limit. And they are not allowed to open up more than one person within a 15-mile radius of each other. They are also required to have one party every season at a retail store. So the ambassador program is truly unique in the sense that these people are mothers and they discovered Preschoolians while looking for the best shoe for their child.

 
 
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