Taking care of business
By Leslie Shiers
Years ago, Raymond J. Margiano, Ph.D., established a shoe-repair franchise named Heel Quik. Unfortunately, his timing was a bit off. Thanks to the availability of cheaper footwear due to manufacturing moving overseas, not to mention the casualization of American style, he notes the repair business was at the end of its lifecycle. (He compares the experience to what blacksmiths must have faced when horse-drawn buggies began disappearing in favour of modern-day cars.) Yet despite the challenges of the market, the chain has grown to more than 700 stores in at least 30 countries.
Margiano has since moved on, however, and is now CEO of Foot Solutions, the franchised wellness chain he founded in August 2000. 'I'm much happier in this niche,' he laughs, noting that this time around, he's in a business that is just beginning to take off.
A self-defined entrepreneur, Margiano views himself as an outsider to the world of footwear retailing - despite the fact that Foot Solutions has 255 locations worldwide and is adding 40 to 50 new stores per year. Regardless, he knows feet, having been involved in pedorthics since 1985 when he worked closely with the medical community. The need was growing back then, but there weren't many places to find shoes that would suit specific injuries, special needs or hard-to-fit feet. The retailers that did answer those needs, Margiano notes, carried 'medical-looking shoes'. With Foot Solutions, his idea was to bridge the pedorthic and comfort segments with product that fit properly but still managed to look good.
Margiano spent five years developing the Foot Solutions concept before making a go at it. 'When I went to my first WSA show and started meeting [with vendors], I told them what I wanted to do and they laughed. Now, I'm their biggest customer,' he says. 'I think it's good for outsiders to get into any industry; they're not pre-focused on all the negative things [or what] they've heard can't work.'
This time, his timing was spot-on. 'He has created a model which provides [franchisees] with an opportunity to engage in a business that serves one of the most burgeoning markets in the country - the baby boomers and aging population,' notes Glenn Strickman, vice president of sales for Aetrex. 'That's just smart business.'
TIME COMMITMENT
Margiano stresses that his business model is very different than a typical footwear retailer's strategy, and attributes the chain's success thus far to growing the franchise smartly rather than overextending its resources, and to an entrepreneurial approach that isn't hindered by traditional ideas of how footwear sales should be done.
The major differentiating factor? Providing a thoroughly attentive customer experience that typically takes 30 minutes minimum. 'The service level they provide us a big component of what they do,' says Rick Wilhelm, Brooks Sports' vice president of sales. It's not about fast turns: 'People want to be listened to more than anything else,' Margiano muses. 'There's plenty of room for self-service [shops], but for those who want to be pampered, we're the place.'
As more stores go up, Margiano says Foot Solutions' interior aesthetic has become increasingly spa-like to reflect that desire. Customers will find few products on the walls, and the emphasis is on making each person comfortable. Foot Solutions requires each location to have a certified pedorthist on staff within six months of opening, and employees are thoroughly trained to recognise various foot issues. Each store also has foot and gait analysis technology systems to help determine appropriate shoe styles and further enhance the experience. 'They have this astounding knowledge base, yet are able to regurgitate it in a way that's not overwhelming to their customer,' Wilhelm notes. 'We have some loyal customers because of the way Foot Solutions takes time in fitting them right.'
With all the comfort and wellness styles on the market now, it can be a lot to take in, so having a knowledgeable staff is key. Foot Solutions stores carry everything from running shoes to sandals and work shoes to clogs. Buying is overseen from the corporate office in Marietta, GA, and some of the top brands include MBT, Aetrex, Brooks, Spira, To the Point and Mephisto, to name just a few. Yet there's a rhyme and reason to each style that sits on the shelves. 'We carry every product for a reason,' Margiano says, noting customers come to Foot Solutions specifically to solve problems.
While the chain mostly attracts women age 35 and older, customers seek the store out for a number of reasons. Margiano says they may have a hard-to-fit foot or medical problem, want an innovative style for a certain sport or need a shoe they can wear comfortably al day long while on the job. Overall, 'our focus is really people who want to take care of themselves,' he notes.
To ensure they have the best footwear to suit their needs, a team of three product consultants, led by David Winchell, vice president of product development, is constantly scouting new products and technologies and even working with manufacturers to come up with fresh innovations. (Margiano notes Foot Solutions was an early partner of MBT.) Further establishing its cornerstone in comfort, the chain has centralised labs that construct inserts for the perfect fit. On average, they can turn orthotics around in three days - 24 hours if the customer has a medical issue. (Margiano says orthotics usually take from two to six weeks to produce.)
FULL-PRICE PHILOSOPHY
Another difference in Foot Solutions' strategy is that the company avoids discounting and carries less inventory than most other stores. As such, the CEO emphasises the importance of 'buying right,' as sell-off sales do not factor into his philosophy. In order to save money on overhead, the chain keeps backup stock in a warehouse. If a shoe isn't selling in one region, the company might ship it to another geographical area where it has performed better. Margiano says his margins and profit are higher than other retailers as a result of these practices. 'In this business, there are two areas you can make money in: labour and inventory. Those are two areas we put a lot of control on and make that [goal] reachable.'
Selling wellness shoes is likely getting easier as the product's aesthetics catch up to their technology. Margiano admits a shoe has to look right and 'have a little pizzazz,' but quality is the utmost factor. He's excited to see rocker-bottom footwear evolve, and predicts forthcoming styles will become more stable while offering different ranges of motion to challenge the body in new ways. 'That technology has led the way for other innovative products to build off that base, and they've come out with something really unique and different,' he reports, noting that rocker-bottom shoes are not for everyone.
Despite the buzz surrounding the latest wellness product advancements and the industry's increasing attention to the category, Margiano isn't convinced the segment will ever surpass the athletic category's scope, nor does he believe his franchise could ever match the size of, say, Foot Locker. '[Our] model doesn't really support that type of size and volume and amount of time spent with the customer,' he says, noting that although it is a smaller market niche, it holds tremendous growth opportunity.
Foot Solutions is focused on growing its US and Canadian foothold, and will soon open stores in England, South Africa and Dubai. Due to the current economic situation, Margiano expects growth this year will be a little off (new franchisees may not be able to secure loans, he surmises), but reports success in some regions will likely offset revenue decreases in others. 'This [financial situation] is not going to end quickly,' he predicts. 'But successful business people don't just ride it out; they have to work harder and smarter to make up the difference.' Five years from now, Margiano expects to have at least 500 US stores and perhaps another 400 abroad. 'Even in a down economy, we continue to grow and move forward. This is just a small speed bump.' And Foot Solutions has a prime position in a wide playing field - 'At this point,' he notes, 'we clearly have dominated our market niche.'
Keeping that success rolling means playing it smart. Margiano built his footwear retail franchise without the help of stockholders or investors. 'I left the corporate world to not have to answer to anybody,' he explains, noting that working seven-day weeks at a service station when he was young established his strong work ethic. 'The most exciting thing is to continue to dig for the concept and add to it,' he adds. 'The excitement of climbing that mountain is what drives most entrepreneurs.'
Opportunity World Magazine Calls Foot Solutions An Appealing and Unique Franchise Opportunity
Foot Solutions founder Ray Margiano, has become somewhat of a franchise pioneer in his 20 years working with pedorthics and footwear. During that time, he's been more than happy to take up the flag for better podiatric health. In fact, Margiano has dedicated his career to availing a variety of health products that are allowing people to live more active, comfortable lives. His first franchise, HeelQuik, eventually grew to over 700 stores in 34 countries. Now he's turning his sights to Foot Solutions.Margiano's new concept, still being offered to franchisees as a "ground floor" opportunity, is already up to 250 locations in its seventh year of operation. "We're recognized by all the major players from both footwear and franchising," says Margiano, "and we're still at the beginning of our business life cycle." Conceptualized in 1995 and finally introduced at the end of 2000, Foot Solutions focuses on the health and wellness of baby boomers who, are currently growing exponentially as a market across the United States.
As you'd imagine, Foot Solutions is primarily centered on proactive footwear and assistance for knee, hip and back pain. Although the focus is on fit and support, having attractive and stylish footwear is also important. As franchisees, entrepreneurs would follow a proven business system and run their own Foot Solutions locations, providing products that are beneficial to a number of people. Also, because the business is medically-based, it's virtually unaffected by the rise and fall of the economy.
"We're dealing with the fastest-growing target market in the country," says Margiano. "I wanted to get my business out there to offer the products to those who needed them and put a successful business into the right people's hands." Margiano feels that these "right people" can come from practically any walk of life, since the major qualities needed for success in Foot Solutions are dedication and drive, but he is always excited to grab up franchisees with at least a little business experience. "It's for people that want out of the rat race," he says. "It's a great mix, too. We have a large number of female franchisees, as well as husband and wife teams. It's for anyone who wants the sense of fulfillment that comes from working in the health industry."
As a franchise, there are a couple of points that make the Foot Solutions opportunity both appealing and unique. For one, there is little or no competition in the market of specialized and customized pedorthic footwear - it's a "cottage industry" with no major force. This simple fact illustrates the potential for a franchisee to more or less own the market for these types of products. The second point, which Margiano is eager to make known, is that there is little place for this company to go but up. "Even at the ground floor level, we're increasing at the rate of about 50 franchise stores a year." Margiano goes on to say that agreements have already been signed for franchising in 18 countries, with plans for more global expansion already in the works.
As you would expect from an opportunity boasting such impressive particulars, becoming a Foot Solutions franchisee does take a serious level of commitment. "You're working with people's health," says Margiano. "You don't have to be a doctor or a podiatrist, but you and your employees are required to be certified pedorthists. It's this kind of training that allows us our impeccable reputation and our ability to own the market." In order to provide franchisees and their employees the best possible training, Foot Solutions has created one of only 12 schools certified to teach pedorthics, and the only one of these operating in the Southeast.
When you sign on to become a Foot Solutions franchisee, you're introduced with a two-and-a-half week seminar at the Foot Solutions Pedorthic Training Center. There, new franchisees learn terminology, concepts and, most importantly, the techniques that will allow them to make modifications and adjustments to shoes and orthotics to insure a proper fit. Along with the more medical-related training, the seminar covers marketing, customer service, inventory control and other business basics.
After this initial training, the new franchisee is assigned a board-certified consultant to spend the first week of operation in the store, showing the franchisee how to apply his or her new knowledge and properly approach day-to-day operation of the location. Additional support is available from various field representatives and associates on an as-needed basis. There are also supplemental instruction materials, monthly portal calls and regional training seminars. "In order to make sure that our franchisees operate to the best of their ability, it's our job to make sure they are prepared, updated and enthusiastic," says Margiano.
Because of the uniquely profitable nature of the Foot Solutions opportunity, hundreds of interested entrepreneurs from all over the world are eager to join the Foot Solutions family. In order to get started, Margiano advises around $225,000 be available. "Most franchisees use about $50,000 of their own money," he says, "loans and financing are becoming more frequent as people of all income levels learn about the opportunity's benefits." Margiano has seen a lot of success come out of his opportunity, and he's proud to report a cost-to-sales rate that, based on their buying group and fulfillment company is averaging around 35 percent.
Besides eager franchisees, Foot Solutions has grabbed the attention of some other pretty important people, too. "We just won the regional Small Business of the Year Award last week," says Margiano. "After this, we move on to states and nationals. It's a very exciting time for us and our opportunity."
For entrepreneurs, the excitement is just a few short steps away.
