How Shinola is emphasizing its American design and manufacturing roots

0:05Hello, and welcome to the Modern Retail Podcast. I'm your co-host, executive editor, Anna Hensel, and today I'm excited to be here with my other co-host, senior reporter, Melissa Daniels. Melissa, how's it going? It's going okay, Anna. Thank you so much for joining me today. I'm excited to kick off our podcasting journey. Yes, it will be a journey for sure. So we're going to start doing something a little different at the beginning of each episode. Melissa and I are going to be having a conversation to tee up this week's guest. And so to set the tone for this conversation, I have a question for you, Melissa.

0:45Do you remember the last time you bought something that was made in America? You know, I think I actually have an answer for this. And it was a recent purchase inspired by the devastating wildfires in Los Angeles. It made me take stock of my family's emergency kit and preparedness. And I wound up finding some fire blankets through a company that is sourcing out of the USA. Okay. Yeah, that's really interesting. I also was thinking about this question for myself, and I'm sure I have bought something more recently, but the only thing I can think of is two years ago, I bought some t-shirts from the brand American Giant.

1:28And the reason why I know this is because obviously I'm a retail reporter. I know what that company is. I know that their value prop is that they're made in America, and I wanted to check out their t-shirts. But the reason why I asked is because there's this bigger conversation around made in America right now, right? And the thought being that, you know, maybe because President Donald Trump is starting to impose tariffs on more foreign-made goods, that maybe we'll see a made in America resurgence. But, you know, the question I have in my head is how much do people actually pay attention to where a product is made?

2:09And it sounds like for you, using your most recent example, something happened that made you want to support local brands and also, of course, prepare your family for wildfires, other emergencies. But how often do people actually pay attention to where products are made? That's kind of a question I'm grappling with right now as a reporter. Yeah, I think it's the key question in, you know, the supply chain to consumer marketing connection, right? I mean, there is a certain sector of consumer who's extremely conscious of how their products that they purchase are made, where they're made, how ethical and environmentally friendly they are.

2:51And there's a lot of customers out there who really just want whatever's cheapest. And I have, yeah, I have deep empathy for both of these consumers. I have been both of these consumers depending on the product, right? And depending on my situation. Absolutely. So this week on the podcast, I had Kevin Wertz, who is the chief marketing officer of Bedrock. And Bedrock is a holding company that owns a few brands, Filson and then also Shinola, which is a watch brand. And the conversation focused largely on Shinola. And how familiar are you with Shinola, Melissa? Somewhat familiar. I've never owned one of their products, but I remember walking into one of their stores in Los Angeles and seeing these watches that really rivaled some of the more legacy brands out there.

3:43Yeah. Well, they're trying to make more people aware of their retail stores. So that's good that you noticed one of their stores. But we had a great conversation. So for people who aren't familiar with Shinola, they've been around for almost 10 years now, I think. And it's been really interesting how they've communicated their value prop over the years, because the other layer of complexity here is that Shinola has a watch factory in Detroit, right? But because of the regulations around what you can say is made in America and what is not, the FTC issued a ruling in 2016 that said that Shinola could not say built in Detroit.

4:28And that's because their products use parts that are imported from, of course, Switzerland, which is big for watch brands. So they now say that their watches are built in Detroit using Swiss and imported parts, which is a bit of a mouthful. And so we had a conversation around how do you market Shinola? How do you make clear to the consumers the different intricacies involved here? And overall, how do you tell the story of a brand with American manufacturing and design roots. It was a really interesting conversation. I think it's very topical right now, but it also really got at the heart of how do you communicate to customers what makes your brand different.

5:16Sounds like a fascinating conversation. I'm excited to dive in and hear what y 'all have to say. Absolutely. And here's my interview with Kevin.

5:29Kevin, welcome to the podcast. Thanks for being here. Thank you for having me. So first of all, tell us a little bit more about yourself, what you do at Bedrock. Right. So I am the chief marketing officer of Bedrock. So I oversee all marketing function from advertising to social media to e-commerce platform, all of our CRM efforts for both Filson as well as Shinola. And new here, I started this full-time role in May of last year. So learning the two incredible brands and having a great time so far. What attracted you to working at Bedrock? Well, really just two incredible brands. When I was presented this opportunity, I knew both Filson and Shinola, obviously, growing up in Michigan.

6:18It's hard to not be aware of Shinola. But as I looked at them, I just saw, you know, two incredible companies with amazing origin stories that are very unique to each other, but I feel necessary in the world. You know, they existed for a reason. I mean, Filson started because they wanted to outfit people going to Alaska so they literally don't die in the Alaskan wilderness during the gold rush. And then the origin story of Shinola, to me, is one of revitalization of American manufacturing and bringing jobs to America. And in this case, a city that was hit hard after bankruptcy and, you know, and getting a manufacturing wage and job for people and making something beautiful in one of America's most iconic cities.

7:05And what's not to like about those stories as a marketer? Right. Right. What would you say is your biggest priority right now in your job? It's definitely growing awareness of the brand. So if you think about Shinola, our roots in Michigan are deep, even though we've only been around for a little over a decade. But as you travel out of the geography outside of the Detroit area in Michigan, you have a lot of people that have come to love and learn about the brand, but it's just not top of mind for most people. We are really working right now in terms of growing awareness and brand love for Shinola all across the country, as opposed to just having such an amazing reputation in the Michigan area.

7:56So one funny anecdote I will share is that actually the very first story I wrote as a professional journalist was about Shinola. This was in 2014, I believe, and I interviewed the design director at the time. And so I am familiar with Shinola. I'm also from the Midwest, so I feel like I've heard about it more. But I understand what you're saying. So how are you thinking about trying to grow awareness right now? To me, it's refocusing on our story. You know, we make a lot of things now at Shinola, which is incredible. We started in watches and then we made bikes and beautiful leather products. And we launched a hotel in 2018, which is stunning.

8:38And we make board games and we make a lot of things. And I think what we need to do now is own something in consumers' mind. It's like, what's the first thing you think of when you think of Shandala? And I think we lost that for a little while. And that thing is for us, it's watches. We are a watch company that, and if we can make beautiful timepieces by hand in downtown Detroit, we can do anything exceptionally well. But having that focus on watches. So we have to go win somewhere across this country as opposed to competing in three very competitive categories of watches, leather, and jewelry.

9:17Let's just go compete in watches for new customers. And when they come into the world of Shinola, they will see the beauty that surrounds and all the things that we do and all the things that we make. But we have to go win somewhere first, and that's going to be watches. Yeah, I feel like that gets at what I hear a lot from CEOs and marketers. As you, I think, expand into more categories, that's important to driving sales, but also you need that one thing. What do people think of when they hear of your company's name? So how are you trying to establish that? How are you trying to hone in on what makes Shinola different?

9:55We are going to be leaning heavily into the American manufacturing story. We had initially a tagline, Where America is Made, and had a little bit of trouble with that a handful of years ago. And the challenge is that we actually are making watches by hand in downtown Detroit. Now, the regulations of what we can say and not say around that based on the FTC is a different story. but I think we actually gave up that story too early. And so we are working right now, you know, around designed and assembled in Detroit. I mean, we're designing these beautiful things in Detroit and we're assembling them in Detroit.

10:36And we're just trying to get back to the idea that I don't know how people think watches are made, but I think they think it's robots. You know, where in reality, these are real humans really trained at a high level to put 120 microscopic pieces of little movements into a watch to make it tick and be beautiful. And I think that people would resonate if they heard that from us. And so we're going back to the idea that we are designing and assembling watches in downtown Detroit. Yeah. So I wanted to get into that a little bit. Also because I recently edited a story on the intricacies involved in regards to when you can say something is made in America.

11:23So you mentioned the FTC. And to get into the history of this a little bit, Shinola has a factory in Detroit, obviously. You assemble watches there. I think the average consumer would understand that to say Shinola's watches are made in America. But the FTC has these guidelines. Basically, in 2016, there was a ruling that said Shinola did not meet the criteria to include a label on its watches that said built in Detroit. And that all boils down to whether or not the raw materials and components are made in America. There's a lot to dig into there. And I'll note that that happened before you joined the company.

12:04But like, can you just explain this further. And as a marketer, like what complications does that create for you? And like, kind of how do you describe then the fact that, you know, we have this factory in Detroit, but like how you say made in America, there's a lot of intricacies there. Absolutely. Right now, and in the past couple of years, what we've ended up on saying, if you look at the back of all of our watches, they say built in Detroit with Swiss and imported parts. And that level of transparency was okay. The challenge that I have, if I put my consumer hat on for a moment, is that it sounds like you're sort of disclaiming or hiding something.

12:48Like those are a lot of words. When in reality, to your point, I don't, I think the average consumer, if you say we built this in Detroit or built in America, would assume what we're doing is right. We're getting movements from our watches from Switzerland, because that's where the beautiful movements are made and we're getting some component parts from all over the world, but they're just pieces of metal. And then we're taking them and making them a beautiful watch in Detroit. And so I just, again, I think that your initial observation of consumers believing that when we said made in America or made in Detroit, their actual assumption is correct of what we actually are doing.

13:24It's just that we needed to find our footing and our way to say that, that still resonated without just sounding like you're not quite saying what you mean. And I'm a little confused by that. You know, the tag on an item is one thing, right? But in your product pages, on website copy, in marketing campaigns, what are other ways that you try to emphasize your Detroit roots? How do you try to communicate that to customers in a digestible, interesting way? Great question. So we have produced a good amount of content that shows our factory and shows the people actually making the watches and hand sewing the leather strap on our watch where we have tanned leather coming into Detroit and we're cutting and sewing and staining and stitching.

14:22You can talk about that or you can show it. So we've been showing more of that recently. And what we've realized is that the more real and the more raw, the better. So we most recently, we strapped a GoPro camera onto one of our workers and it just filmed from their chest what they're doing for a while. And it was one of our most highly engaged social posts because, you know, people would say, I don't know what watches being made looks like, but I didn't think it was this. And it was really just a way to just shine a light on these artisans that are working for us that are making watches in Detroit.

14:57And that sight, sound and motion of that is very powerful and more powerful than any kind of headline we could write. So it starts with highlighting our factory and our workers and what they're doing, which is amazing. But then also finding our right line and how do we communicate that more broadly. So the line that I told you a moment ago, designed and assembled in Detroit, is not a tagline, but it's a line that we just started using recently. And it seems to be resonating well with people. They get the sort of end-to-end nature of it. Conceptually to building, it's done in America. And that's the point we're trying to communicate.

15:37Right. And I think the part you brought up, I don't know, a lot of this just kind of boils down to basic storytelling. principles is about showing, not telling. Yes, you can say it's assembled in Detroit, but almost and probably what is more powerful is like showing how it's actually made. For sure. There's obviously a lot of conversation right now around where products are made. Tariffs are on the mind of every retail CEO I talk to. Do you see this as like a moment for Shinola, given the fact that you have your factory in Detroit? Do you think there could be more interest in your products as more tariffs potentially get slapped on more products?

16:24Are you seeing an increase in interest right now? How are you thinking about that? Yeah, I do think that the focus of the American consumer around where things are made is an interesting time. And having a factory in America, it's an interesting time for us to, to your point, capitalize on this and make sure people know that we are making this here. The tariff thing is an interesting one. We do get our parts from different parts of the world, and some of those countries are countries that have historically been tariffed. But in the last Trump administration, we had an exemption because if we finally assemble the products in America, the imported parts don't get tariffed.

17:07So we haven't had that conversation with the new administration, but in the past that hasn't affected us, which is great because we haven't had to struggle with do we pass that cost along to the consumer. But that's behind the scenes. I think to your original point around this moment in time around country of origin and where things are made, I think it's just a nice time for we walked away from that language for a while and chose to go back to that, you know, last year. And then now with this focus, it really is a perfect storm of moments happening that I think we could capitalize on. Yeah. And like, how much are you thinking right now of like, kind of aggressively leaning into that?

17:50Are you going to roll out any new splashy campaigns encouraging people to buy American assembled products or like hold some rally? I don't know. What are you thinking about right now? Probably not a rally. Yeah, but I think, you know, you'll see from us messaging, headlines, PR that communicates this. Because, again, we have walked away from that message for some number of years. And so we haven't communicated that recently to consumers. And so as you think about it, that will be a part of the storytelling. Now, what's important to remember is when you're selling a product like a watch or a woman's handbag, that country of origin or your origin story is your company is important.

18:35But they also have to love what it looks like. So while, take watches, while we can lean into the American manufacturing and hand-assembled in Detroit, that's a great part of the story. But it still has to look beautiful, right? People have to still just want that object, right? So it can't be the totality of our messaging, but it needs to play a much bigger role than it has the past five to seven years. Yeah. I also just would be curious to hear, how do you feel like your core consumer is feeling right now? I've had a lot of conversations with executives about, you know, are you notice any pullback in spend or consumers being pickier because of inflation?

19:18How do you feel like your core customer is feeling economically right now? Yes, it's an interesting question because we definitely know who our customers are. They are very affluent. You know, we are highest disposable spend decile in the country, highest household income if you look at, you know, per capita. So we have a very affluent customer base, but they are value conscious. They don't spend money just because they want to spend money. They pick and choose where they want to spend their considerable wealth. And those choices, you know, they make trade-offs, right? And you do see a lot of our competitors going heavily into discounting where we've never seen that before.

20:04this past holiday season specifically. There were site-wide, store-wide, 25%, 30 % off for luxury retailers that never go on sale. And it's just a tough environment to compete in, you know, because that's obviously not something that we want to do, to train our customers to buy a discount. And so you find that moment of like connecting with our best customers, making sure they know what we are doing that's new, making sure they know what we are doing that's beautiful, and almost taking a little bit of a dip in sales if needed to not have to play the game of going on sale during a time where people's dollars aren't stretching as far as they used to.

20:50Right. I mean, we've talked about how you're leaning into kind of your origin story more. In theory, it makes sense. Like, you know, you got to communicate your value to customers. is you have to really nail your value proposition, but it's so hard to do in practice. So just what other advice would you have or what have you learned about how to do that? We definitely need new customers coming into our brand. Everyone does, right? You just can't keep selling more things to your current customers. And with the media weight that we have, which is small in comparison to a lot of our big, big competitors, what we had been doing is, in my opinion, is spreading that media weight too thin across the country.

21:36You know, we were competing in watches and leather and jewelry, and we were competing nationally in all three of those categories. And the problem is that we weren't really winning in any one of those areas. And so what we've done over the past six, seven months is focus primarily on acquiring new customers to our brand through watches as the category of entry. And then we're really focusing our media spend in the cities where we have owned retail locations. So we know that if we have an owned Shinola store in a city, e-commerce sales are actually better in that city. And our wholesale, like a wholesale doors do better in that city as well, just because, you know, the rising tide lifts all boats.

22:23And so we went and we refocused our money into those handful of cities around watches. And our goal now is to go in and stand for something and win with people in those areas versus coming in second or third all across the country, which doesn't really help you when you're looking to sell one thing. Right. Where roughly how many stores do you have? We have 21 stores across the country. Okay. And so with focusing media spend on those markets, are you talking about Facebook, advertising, Google, I'm assuming? Are you doing any billboards or more physical activations? Yeah, we did a pretty major shift in the middle of last year to put more money into upper funnel broad reach.

23:09So think like connected television, where the targeting capability is very, very high. We're doing some digital out-of-home boards where we can, again, target very tightly around our store locations. Some audio like in podcast. Obviously, some lower funnel and paid search as well. But we're doing more brand activations than before. We're doing a great event this weekend. We are going to be sponsoring the Detroit Pistons. Player Kate Cunningham made the all-star event. And so we're having an event in our Shinola store in San Francisco where the All-Star event is happening to make sure we show up in real life.

23:47And so we're doing more things like that, as well as that broad reach media, which we really hadn't done in quite some time. So trying to stand for who we are, tell our story beautifully through Sight, Sound, and Motion at a broad reach level to hopefully pull some of those sales through organically versus to having to always be on the Facebook or always be on the Google cycle. What else have you learned about just what type of marketing or branding efforts have been really helpful in driving retail sales? I mean, it just sounds like it's one of those things where you have to be kind of always on and like doing multiple things at once.

24:26Yeah, for sure. The retail sales thing is interesting because a lot of companies that I've seen fall into the trap of just because I can measure performance of it means I should do more of that. And that gets you into the cycle of I love Google and I love the reps at Google and we spend money with Google for sure. But if too much of your budget ends up in paid search, you can optimize the heck out of that. But it's still only optimizing the in-market shoppers at the time. You know, so 5 % to 7 % of the people that live in the country, even in the market for that at that moment. And so you're spending your extra money against the same audience that all of our competitors are.

25:07And it gets more expensive over time. And so what we look at in terms of what success looks like is what part of our revenue comes from channels that don't cost us any money. Direct website traffic, organic search, email, SMS. Those things happen without us spending any money. And what's our ratio of revenue coming in from owned channels compared to paid channels over time? And that's how we measure the overall health and success of our brand. Right. I would love to end with a question, which is just one of my perennial favorites for people. What do you feel like is the biggest challenge you face in your job as a marketer right now?

25:50Boy, narrowing down to one is difficult. Yeah. I would say it is the macro economy right now. The macro environment, the economy is just very challenging. And it confounds me. And I read all the reports from all the retail experts and it confounds a lot of people. If you look at what is going on with the economy and why is spending down in so many cases and is it just inflation? But the macroeconomic environment is a very challenging one. And to be a brand that doesn't just rely on lowering your price point, either through cheaper product and less quality or lowering your price through discounting, you have to find ways to weather this storm.

26:38Otherwise, if you're looking to chase revenue in a tough environment, you're going to do some things that probably will come back to hurt you in the three to five to seven years following what we come out of in terms of what's going on with the economy right now. Right. I mean, I feel like I have been having the same conversation for over a year now. Just what I say is the economy is very confusing. We're in a weird time economically. and it's just kind of wild that I feel like I'm still having these conversations a year later, like no one's figured it out yet. It is true. And I will read all your articles because I want you to figure it out and I will, I will be the first one to benefit from it.

27:18I'll let you know when I figure it out. But Kevin, thank you so much for joining. This has been a great conversation. Thank you so much for having me.

27:31thank you for listening to this episode of the modern retail podcast a show by digiday media if you haven't already please subscribe and head to apple podcast to leave us a review and a rating see you next week