There are certainly plenty of places where you can get a pair of shoes these days for $10 or less. Indeed, they all seem to be competing for how much cheaper they can offer a pair of shoes.
So, how can someone that charges $4,800 for a pair of shoes even exist today, let alone be prospering?
I met Tod’s of Italy in an article in the online edition of the New York Times (“A Shoemaker That Walks but Never Runs,” October 8, 2010).
According to the article, Diego Della Valle, the company’s current chief executive and the son of the founder, “does things the old-fashioned way: by instinct. To find out if a new style of shoes will work in the marketplace, he doesn’t need focus groups or poll testing — he wears them. After a few days, if they’re not to his liking, he renders his verdict: ‘These won’t go into production.’
“Despite running Tod’s like a traditional, Old World family business, Mr. Della Valle has turned it into a successful multinational, multibillion-dollar company, whose buttery leather moccasins adorn the feet of Princess Stéphanie of Monaco, Gwyneth Paltrow and thousands of other loyalists around the world,” the article explained.
“A men’s crocodile loafer, which retails for 3,500 euros, or about $4,850, costs 1,590 euros for Tod’s to produce in Italy. Making it in China would reduce the cost by half. But while ‘Made in Italy’ may cost more, Mr. Della Valle says he still thinks it is worth the price,” the article said.
The article went on to quote Davide Vimercati, the chief analyst for luxury goods at UniCredit in Milan: “For true luxury brands, lowering prices by outsourcing is not something they could really ever consider as a strategy for growth. Tod’s is proof that if you manage your brand consistently and you build brand equity over the years, you reach a stage where demand remains strong, even in tough times.”
And that brings me to what small businesses might learn from Tod’s:
First, no, it isn’t that you have to find a way to sell things to celebrities or royalty, although that would be cool if you can pull it off. Rather, it’s that a small business needs to find a way to NOT compete on price, which, as I suggest above, is pretty much a race to the bottom that the little guy can’t win.
And second, to find that differentiator (from the cheap commodity versions of your product) pay attention to your gut --- Diego Della Valle “does things the old-fashioned way: by instinct.” He uses his own product and thinks of himself as his own customer --- if it’s not good enough for him, it won’t be good enough for his customer.
(Dave Ramacitti is co-founder and chief content developer for Marketing Over Easy, a website dedicated to helping small businesses be smarter marketers.
(To receive a free copy of our information-packed special report “58 Free & Low Cost Tricks to Effectively Promote Your New Small Business” visit us at www.marketingovereasy.com/signup .
© 2010 by David F. Ramacitti)