Dr. Martens is confident that his direct-to-consumer strategy, alongside price increases and creating a “scarcity mindset” among his consumer base, will fuel growth this year and beyond.
Saying the shoe brand is “stronger than ever”, CEO Kenny Wilson added that the company “always” wants demand to outstrip supply. The strategy appears to be working, with Dr Martens selling 14.1 million pairs of boots, shoes and sandals in the year to March 31, twice as many as four years ago.
“We did exactly what we said we would do a year ago, despite all the global challenges,” Wilson said, speaking to the media this morning (June 1) as the company announced its financial results.
Dr Martens reported an 18% increase in revenue year-on-year to £908.3m, which the brand says was driven by its DTC strategy amid a “ unprecedented Covid-19 disruption” of its supply chain.
Adjusted pre-tax profits rose 43% to £214.3m in the year to March, compared to the same period in 2021. The success is in line with teenage growth forecasts given when the brand made its stock market debut in January 2021.
In times of spending restraint, consumers turn to trusted brands, iconic brands.
Kenny Wilson, Dr. Martens
Direct-to-consumer continues to grow ahead of wholesale – in line with the brand’s strategy – and e-commerce revenue is up 11%. Retail revenues have “recovered very strongly”, with UK and US customers returning to shop in-store. Full-year retail turnover rose 86% to £185.6m, from £99.7m in 2021 when the impact of Covid was more acute.
Although the cost of living crisis has the potential to impact consumer spending habits, Wilson is confident that Dr. Martens will weather the storm.
“In times of tight budgets, consumers turn to brands they trust, iconic brands,” Wilson said, pointing to the “durability” of a pair of Dr. Martens as an “investment purchase.” .
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At the same time, the brand is confident that price increases of 6% globally on an annualized basis will not have a negative impact on consumers. The brand conducted a price study in its priority markets last summer to calculate perceived value for money and elasticity of demand, which informed the increase. Dr. Martens does not foresee any impact on demand as a result of the price increase.
The company reports “strong” demand from wholesale partners despite price increases, with Dr. Martens’ wholesale order book already full for the fall/winter 2022 season.
Wilson added that the brand “hasn’t suffered the full magnitude of price increases” it might have had to retain its breathing room. The plan is to conduct research again this summer to dictate 2023 pricing, with the brand having implemented no price increases in the past two years.
Build “brand energy”
Driving brand equity is always the first priority when it comes to keeping the “iconic” product highly relevant and driving growth for the future, Wilson said.
The recent Dr. Martens brand survey found brand awareness at 72%, up four points, and familiarity up six points at 47%. The company describes employees as acting as “brand stewards”, protecting and enhancing the brand for future generations.
This approach is detailed in the four pillars of the “refined” DOCS strategy. These pillars consist of direct consumer focus, organizational and operational excellence, connecting with the consumer, and supporting brand expansion with B2B.
To continue DTC’s growth, Dr. Martens is increasing its own stores and expanding its digital platforms and omnichannel capabilities, while creating a “profitable” resale, repair and end-of-life business model.
To drive consumer connection, the company is prioritizing innovation in its “icon” lineup and improving marketing effectiveness by “harnessing knowledge and a digital mindset of on board”.
The brand pledged to increase its marketing investments, noting its strong social media presence, which grew 8% year-over-year. Wilson confirmed that the “vast majority” of marketing spend is on digital channels, with some money on outdoor advertising to create a “proximity effect” with stores.
Dr. Martens explains why every client thinks they’re the CMO
The theory behind digital spending is that many consumers buy their first Dr. Martens when they are in the 15-25 age bracket.
“This demographic typically has a cell phone pinned to their hand,” Wilson added.
The brand plans to invest in process and IT to “unlock value” and transform its use of technology, as well as build customer loyalty through product innovation and “everyday consumer relevance.” throughout the year”. Dr. Martens also intends to partner with “fewer and better” B2B partners.
Speaking about the brand’s recent collaborations, Wilson explained that the goal is to provide “the warmth and energy of the brand,” with the pairings being less about volume and more about the scarcity factor of the products. He says consumers shouldn’t expect to see a “massive increase” in collaborations.
Dr Martens recruited his “first-ever” CMO in April this year, Meg Johnson, after chief product and marketing officer Darren Campbell left in December. While still in the “beginning” of her tenure, Wilson said Johnson was traveling and “soaking up” the organization in its various markets.