Earlier this month, Vancouver-based e-commerce company Shoes.com acquired Richer Poorer at an undisclosed amount. The California brand, best known for their socks, has expanded into the underwear category, and will soon add basic tees to its inventory. "The acquisition is in line with [Shoes.com's] strategy to bring fast-growing brands into the fold," said CEO of Shoes.com, Roger Hardy in an interview. As of May 2015, the sock category has seen a huge upward trajectory in the market, growing at about 3 percent year-over-year in sales to $7.4B, according to the NPD Group Inc.
Richer Poorer felt this growth and began the process of raising capital in June of 2015. In addition to capital, Co-Founder of Richer Poorer Tim Morse admitted, “The biggest challenges small companies face today is how resource heavy the brand-building piece has become.” But amidst the incredible growth Morse and the team were introduced to Hardy, the CEO of Shoes.com. “It was a pretty organic process from there,” says Morse.
We sat down with Morse to talk about the acquisition and what’s to come for Richer Poorer, including expanding their team and inventory, building out local activations in key areas, and ultimately using their “marketing and merchandising horsepower” to enter 2016 with some serious momentum.
How and when did you first make the connection with Shoes.com?
We began the process of looking at raising some significant capital back in June. The business was growing incredibly fast and we had identified opportunities and areas of our distribution that we felt could really be accelerated fairly quickly. While having positive discussions with different groups we were introduced to the Shoes.com team through a mutual friend. It was a pretty organic process from there.
Why do you feel like it's a good fit for Richer Poorer?
The Shoes.com team is a really impressive group with their sites squarely set on driving innovation in the world of e-commerce. After spending some time with Roger Hardy, co-founder and CEO of Shoes.com, and getting an understanding of how they approach their business, we knew it was something very special and something we wanted Richer Poorer to be a part of. The biggest challenges small companies face today is how resource heavy the brand-building piece has become, especially in action sports. We have spent the past five years organically building a strong business and developing an authentic connection to the consumer through hard work and honest hustle. You couple our vision and voice with the scale and smart minds that Shoes.com has, and I believe we can create lightning in a bottle.
What are some of the opportunities partnering with this company will present to the brand?
The Shoes.com team is made up of some incredibly bright minds coming from some of the strongest brands – Patagonia, lululemon, Nike, etc. – in a whole array of departments that are now our resources to use. We have already been spending time with the team to see where we will leverage their expertise, and it's incredibly exciting.
What are some of the immediate areas of the business that you are looking to strengthen with this new partnership?
We will be adding key hires in positions of operations, marketing, merchandising, and production in the next few weeks with a large focus on action sports. We already have an extremely talented regional rep sales force, and we'll be arming them with resources to support their territories through in-store events, local activations, and targeted marketing initiatives. We'll also be putting a large focus on expanding the RP Athletics Club, our ambassador program. We're in active conversations with some amazing and talented humans who represent our brand ethos of honest hustle and elevating everyday in surf and skate. We're excited to leverage the Richer Poorer platform to amplify their stories.
How will this change your overall distribution strategy? What does Shoes.com‘s distribution look like in terms of domestic v. International? How much business is done in the U.S.?
The wholesale distribution strategy for Richer Poorer will not change, just be improved. Our plans have always been to invest heavily in the action sports market for 2016 along with continuing to grow our distribution in the contemporary market on both the men's and women's side. We will continue to expand our boxer brief category with some new products, and are launching an incredible basic T-shirt program for Holiday. What will change is our ability to support our distribution with more marketing and merchandising horsepower.
Shoes.com will be a $300M business this year, with the majority of that being done in the US, and their customer base reaching nearly 10 million. Introducing our brand, products, and messaging to those customers will be game changing in growing general brand awareness.
We’re a California-born company and will remain here in San Juan Capistrano. Roger and his team see a lot of value in the culture and identity we have worked so hard to create, and are entirely supportive of us keeping our roots where they are. We're excited to be expanding our footprint here in SJC to accommodate our growing team.
Any staffing changes or additions as part of this new deal?
We're ramping up to grow quickly. In the last few weeks our team has increased from 12 to 15, and another six employees are expected to come on board by the end of the year. We think that will put us in a great spot for 2016, and from there we will see where our brand's needs are.
Thoughts on the future of the sock market, and what untapped opportunities you see?
We have our sights set on continuing to execute our wholesale strategy in the men’s and women’s contemporary and action sports markets. Within those markets there are areas where we can elevate the product experience through design and innovation. We will be offering a premium collection for Fall 16, along with a technical outdoor product to properly support Snow. With that being said, our plan was never to stay in a single category, but rather expand the lifestyle piece and focus on the essentials – socks, underwear, T-shirts. We're acutely focused on those categories firing together across all our markets.
Do you think the market is becoming oversaturated with more companies trying to grab a piece of the pie? What is RP’s strategy to rise above the noise?
We've seen a significant amount of smaller companies jump into the category in the last couple years. However, most of them are either direct-to-consumer with not a whole lot of brand identity, or fairly specifically street wear focused. We believe by staying true to our brand message, continuing to deliver quality product, and making sure that we are supporting the independent retailers by listening to their needs and reacting accordingly, we'll continue to see success.
We're really stoked on what the future holds for Richer Poorer. Our goal is to continue to tell great stories and deliver well-designed, quality product into the market and be a great partner for the independent wholesalers. Partnering with the Shoes.com team empowers us to do this on a much larger scale while staying true to our honest hustle ethos. Humble beginnings do make for great stories. Stay tuned because the best is yet to come from us.