Saturday, March 07, 2015

Shinola's Detroit story a successful sell

Shinola's Detroit story a successful sell 


Devin Kaltenbach hasn't worn a watch in 10 years.

But the 31-year-old Michigan native recently found himself in Chicago's Shinola boutique, wearing a baseball cap that shouted "Detroit" across the front, buying a timepiece designed to tell a story as much as the time of day.

"Welcome to the family, man," a store associate said as he tucked the $600 watch into a cedar box alongside a tub of balm for oiling the leather strap.

The Shinola family has been growing swiftly since the company's founding four years ago, propelled by the drumbeat of its Detroit pride and made-in-America ethos, a striking example of the power of savvy storytelling.

The details of its story have caused some backlash — namely, that most of its products are not actually made in Detroit but assembled there using parts mostly made in America and some from Asia. And that the idea for the luxury brand, out of reach for many in the poverty-stricken city, was the brainchild of a Texas entrepreneur who partnered with a Swiss provider of watch parts for the quartz movements.

Despite the footnotes, the heart of the lush tale Shinola has woven about the hardscrabble city rising from the ashes has gained a devoted following.

"The underdog nature (of the story) makes people pull for it," said Mick McCabe, chief strategy officer at ad agency Leo Burnett.

Kaltenbach, whose cellphone long ago made watch-wearing anything but a necessity, said Shinola's story was compelling enough to make an investment he otherwise might have skipped.

"I like to support Detroit, especially because everyone hates on it," said Kaltenbach, who grew up in Lansing, Mich., and now lives in Chicago's Ukrainian Village neighborhood.

"You're buying into something as opposed to just buying a tangible product," said Keith Black, store manager at Shinola's Chicago shop, a den of leather and wood that opened in late November at 1619 N. Damen Ave.

Storytelling has been an integral part of branding for decades. What's notable about Detroit-based Shinola is that the story it is telling — a "living" narrative about working people in a struggling city rather than the mythology of luxury brands — has resonated so deeply, said Ken Nisch, chairman of JGA, a retail design and branding firm headquartered in Michigan.

Shinola belongs to what Nisch calls the "new luxury" concept, alongside resurgent heritage brands such as Carhartt and Allen Edmonds, which despite their premium price points, have an appealing anti-status undercurrent.

"I think this (millennial) generation watched the news of the factories closing and have sort of built a reaction against things that they believe are inauthentic or that take away the dignity of the people that make things," Nisch said. "Shinola fits very well into that psychology."

The 4-year-old company's watches, bicycles, leather goods, journals, pet accessories and a broadening array of other products generated $80 million in revenue during its first 18 months after production started in mid-2013.

Shinola has opened seven brand stores, including one in London, and aims to open five to six more annually, marketing director Bridget Russo said. It sold 170,000 watches last year, triple the number from the year before. Its plant has the capacity to assemble 500,000 watches annually.

The wind at its back is its story of making Detroit, a city some left for dead, as "the new watchmaking capital of America," reviving an industry that hasn't existed at scale in the U.S. for 40 years.

Shinola employs more than 350 people with nearly 300 based in Detroit. More than 150 of them work designing leather goods, constructing leather watch straps, assembling watches or manufacturing watch dials in a new factory inside the Detroit flagship store, so shoppers can see how it's done.

The company grounds its brand in the faces and processes that create its products, tapping into the same cultural zeitgeist that has fueled the rise of craft beer and food trucks. Ads feature its Detroit workers as models. Videos demonstrate the tanning of leather at Chicago's Horween Leather Co. or stitching of watch straps at a Florida factory.

Its "craftspeople" aren't the only stars. Shinola had famed photographer Bruce Weber shoot a series of portraits capturing Detroit life. In a video to promote its $1,500 Black Blizzard titanium wristwatch, which was "inspired by the Dust Bowl of the 1930s and the homesteaders who weathered the storm," vintage footage and audio from the era show farmers toiling in windy fields, a metaphor for overcoming adversity.

That it can tell the story across digital platforms is "so much more immersive and intimate and participatory, richer and more textured and two-way in its emphasis," McCabe said.

"All of it is about differentiation," said Tim Calkins, clinical professor of marketing at Northwestern University's Kellogg School of Management. "Shinola isn't selling products that are fundamentally different. The products are nice but not remarkable. The thing that makes them remarkable is their story."

A well-crafted story, often with a social mission, is behind the appeal of many brands targeting young consumers.

At Chicago-based BucketFeet, which recently scored $7.5 million in funding to help it expand, highlighting the background of the artists behind each shoe's whimsical design is what makes it coveted by shoppers who have many shoe-buying options.

"People sort of equate high-end things with value because they're exclusive, only certain people can afford them," said CEO Raaja Nemani. "I think we give people that same feeling of very significant value in our products because there is that deeper story there."

At Toms, which last fall opened its first Chicago store a few doors down from Shinola, the shoe brand's one-for-one giving mission was "the biggest focus of our training," said Erik Larkin, an event planner and employee at the shop.

To be sure, "some people just need a wedge for tonight," Larkin said, but Toms is selling an identity.

Inside Toms coffee shop, where customers can sip on Toms-branded coffee — buy a bag and they give clean water for a week to someone in need — a newsletter exhorts people to join the "global discoverist movement," which Toms explains like this: "We're a varied bunch of explorers, 
adventurers, do-gooders, concerned citizens, wayward travelers, curiosity seekers and philanthropists.  
If you're reading this, you likely are too."

Similarly, the brand masters at Shinola "understand the power that brands say something about you," Calkins said. As the poster child of Detroit's renaissance, "Shinola is a brand people are happy to wear, to show off, to talk about."

And because not everyone who aspires to reflect its values can afford its watches ($475 to $1,500) or its bikes ($1,950 to $2,950), Shinola sells small tokens. A leather toothpick holder costs $6.

Shinola has gotten heat for so heavily marketing Detroit when its leadership parachuted in from outside and most of its products are made elsewhere before assembly.

The company that spawned it is Texas-based Bedrock Manufacturing, a venture capital firm helmed by Tom Kartsotis, founder and former CEO of the accessories brand Fossil.

Kartsotis was interested in reviving American-made watches. Detroit was chosen as the home base because of its manufacturing history and rich talent base, Russo said.

In a now-famous story, the company commissioned a focus group and asked if people preferred a $5 pen from China, a $10 pen made in the USA or a $15 pen made in Detroit and discovered people were willing to pay the higher premium for one made in Detroit.

The name Shinola caught on during conference room banter, inspired by the World War I-era colloquialism, "You don't know (blank) from Shinola," which refers to an old shoe polish brand whose color bore a certain resemblance. In a nod to the heritage, Shinola sells shoe polish, made in Chicago by C.A. Zoes Manufacturing.

Bedrock also owns Filson, a strong heritage brand making rugged luggage and apparel in Seattle for more than a century.

Shinola — which is headquartered on the fifth floor of Detroit's College of Creative Studies, a building that used to be a General Motors research lab — says it is transparent.

"We don't claim to be born and raised here (in Detroit)," said Russo. "But we do genuinely want to be a part of its future and success story and shine a light on the city."

The FAQ page on Shinola's website lists the provenance of its wares — canvas from New Jersey, wheels from California, bike frames from Wisconsin, shoe care tins from China.
Still, Shinola's story rings hollow to some.

Zak Pashak, president of Detroit Bikes, calls Shinola "a really good marketing company" but is frustrated that its "Built in Detroit" mantra can mislead people to believe it manufactures bikes in the city.

"It's infuriating in some regards because I have put the time and money into walking the walk," said Pashak, a Canadian transplant who invested $2.5 million to build a 50,000-square-foot Detroit factory where former car engineers manufacture steel bike frames.

Even so, he said, Shinola's popular brand story is good for the city and his business.

"If its brand is that stuff from Detroit is cool," Pashak said, "then that's great for everyone in Detroit."

Jim Devine, 43, a Michigan native who stopped into the Chicago store recently to buy a watch as a gift for his best man at his wedding, said the company's origin story drove his purchase.

"I'd probably look at that watch differently if it wasn't made in Detroit," he said.

Brothers Alejandro and Daniel Ramirez were drawn into the store by their efforts to buy more U.S.-made products.

"I think we're really aware of the fact that part of it is marketing, but we'll take it," said Alejandro Ramirez, 32.

Nisch, from brand consulting firm JGA, said most consumers "give Shinola credit for trying."

"I think authenticity isn't an exact science," Nisch said. "In this case it's more heart than brain. It's kind of made up. But I don't think you have to cross all the T's."

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