What small business owners can learn from the demise of Shoes of Prey

What small business owners can learn from the demise of Shoes of Prey

Launched in 2009 by then-couple Michael and Jodie Fox and friend Mick Knapp, Shoes of Prey allowed consumers to create bespoke shoes at a fraction of the cost of their designer counterparts.

Initially operating in the online space, the niche brand slowly expanded its presence with a number of popups stores at high-end retailer David Jones before opting to open their own bricks and mortar stores.

A capital raise in 2015, saw the founders give over one half of the company and a board position to boot, to their new investors. The move resulted in Shoes of Prey signing off on a deal to expand into the US. They opened a slew of ‘design kiosks in Nordstrum before setting their sights on a local flagship store at Westfield Bondi Junction. Further expansion plans were floated with rumours of seven additional stores touted.

According to founder Michael Fox, the business was prepped to “scale to the $100 millions in revenue”.

It seemed like this golden child of retail could do no wrong. Yet it wasn’t long before warning bells began to sound.

With the ink barely dry on their recent deal, Shoes of Prey shut down its design kiosks in both Nordstrom and David Jones in 2016. At the time Jodie Fox told the Australian Financial Review the most profitable and biggest opportunity for the business was in pure play online.

Now less than three years later, the brand is in tatters. In August of 2018, the custom footwear startup announced it had stopped taking orders as it looked to “actively assess” its options.

Co-founder Jodie Fox tearfully expressed her regret at the demise of the beloved brand on Instagram, saying: “Today is a sad moment. And I have to admit, writing this note is not where I wanted to be. It breaks my heart”.

This week’s announcement brought more heart-wrenching news for the co-founder with the brand being placed in the hands of liquidators, FTI Consulting. The move puts an end to Fox and Knapp’s dreams of taking their custom footwear brand mass market.

Cofounder Michael Fox announced the news in a Medium post on Sunday writing that “while the destination isn’t what we wished, the journey has been incredible”.

Business insiders believe where Fox and Knapp went wrong is in misunderstanding the needs of their mass market customers, who failed to embrace the customisation trend.

Fox has agreed with the sentiment. He explained despite research suggesting all the right trends pointed towards consumers embracing personalisation, the market “just didn’t respond as we expected”.

“The customisation niche are creative people who enjoy spending the time to create something unique which they can wear. We learnt the hard way that mass market customers don’t want to create, they want to be inspired and shown what to wear. They want to see the latest trends, what celebrities and Instagram influencers are wearing and they want to wear exactly that — both the style and the brand,” Fox explained.

“They don’t want to invest time in creating a product themselves, and attempts to have them do this, even in small ways, leads to the paradox of choice kicking in causing decision paralysis, in turn lowering conversion rates.”

According to Fox, the startup tried to pivot to two ideas: “serving customers who have small, large, wide, or narrow feet, and manufacturing for other brands and retailers. However, it was hard to cover costs with these models.”

Fox rationalised if he found himself in a position where he again hoped to change consumer behaviour, he would to ensure he has “peeled back the layers to truly understand the psychology of my target customer”.

“If we’d been able to understand that the mass market customer didn’t want to customise, we shouldn’t have gone down the path of raising venture capital and instead focused on building a strong but smaller business serving our niche of women who wanted to customise, as we did for the first 2.5 years of the business,” he wrote.

 

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