Price war on felted wool shoes!
How the price of a pair of wool shoes has fallen by 30% in 20 years!
It's now over 20 years since I established Glerups AS with my parents.
Before that, in the years my mother spent developing Glerups wool shoes, I helped her sell them to shoe retailers. It wasn't an easy task. Slippers were not a major item among the leading shoe retailers of the time. They didn't even know about felted wool shoes and thought they were something strange, and as usual, they thought they were far too expensive.
We knew nothing about the shoe industry and had only just learned that the shoe retailer needed to multiply our price by 2.5 to cover their costs for inventory, marketing, staff, and not least, rent. Therefore, our hand-felted wool shoes from Himmerland ended up costing DKK 500.
They thought this was completely unreasonable and impossible to sell, because, as they said, "A slipper shouldn't cost more than DKK 200."
Back then, a slipper was something old people wore. It was a plaid slipper with a woven wool/polyester upper and a sole of cheap synthetic material. But all our good arguments about the quality and comfort of our wool boots were a beautiful waste of effort. They were too expensive! Period! Until I started telling the shoe retailers that it was surely better to make 2.5 times the money on a shoe that cost 200 kroner wholesale, than it was to make 2.5 times on a shoe that cost 80 kroner. The difference is exactly 200 kroner - 80 kroner = 120 kroner per sale. (You can do the math yourself, but remember to deduct VAT from the shoe retailer's gross profit.)
We slowly got into shoe stores, and after a few years, about half of the stores in Denmark's largest shoe chain were customers of Glerups A/S. In all the other Danish market towns where they were not customers, Glerups' new salesperson and current co-owner Allan made sure that the competitor became a customer. Slippers might still be only for old people, but felted wool shoes were for everyone who slowly discovered how lovely they were to wear and how long they lasted for the DKK 500 they cost.
How we had calculated that we could sell a Danish-produced felt shoe of 100% pure wool with a leather sole for 200 kroner, I can no longer remember, but the calculation certainly didn't hold, because even though our sales increased sharply, we still had a resounding deficit in our third year. We could already see which way the wind was blowing the year before, and therefore moved production to Romania, where it has been ever since. We simply had to cut labor costs. We had industrialized what we could in production, and we now produced 20 pairs a day per employee compared to the 2 pairs my mother could felt by hand when she started.
More money had to be invested in the project, and during that process, my parents and I separated. It was a rather difficult experience, filled with many unpleasant feelings that I don't look back on with much joy. But we got through it, and we also started talking again after a few years, even though we were now actually competitors.
I started my own company, with a production of hand-felted shoes in Nepal. Through a Danida project, we at Glerups had come into contact with Nepalese people who also felted by hand, and it was through these contacts that, with a good bank loan and a contract with ECCO, I was able to establish my own workshop in Kathmandu. Here, the labor wages were even lower than in Romania, and even though I paid my people a relatively good wage, I could now produce at the same price as we could with our industrialized production in Glerups.
With a decent and steadily increasing sales, it was now possible to make a small profit from producing wool shoes for retail. The more shoes, the greater the profit, and there was no doubt that Glerups had a head start. Sales were good (as they are when you have a good product at the right price), and eventually, investments could be made in even more efficiencies that could lower the production price, while wages, along with all our other living costs, increased over the next 20 years. Things went quite well for Glerups, while I struggled to achieve sufficient sales to boost production in Nepal.
In the meantime, the price of a pair of wool shoes has not increased much. Five years ago, my wool shoes from Betterfelt cost DKK 600, while Glerups cost DKK 700. At the same time, we gained a lot of new competitors, almost all of whom had seen how I could produce high quality at a low price in Nepal. I refused to sell to them without a small extra gross profit for my Danish company, which resulted in them recruiting several of my former employees and buying from them instead.
For example, my former partner who once bought half of Betterfelt with the aim of boosting sales. I at least thought it was Betterfelt's sales that needed boosting, but it was my partner's own brand that was strengthened, and when I declared Betterfelt bankrupt for the first time, Green Comfort production moved to a former employee in Kathmandu.
I reconstructed Betterfelt and mortgaged my house once again. My parents also helped, and now I focused entirely on my own brand, which was primarily to be sold through the webshop. Unfortunately, like so many others, I was stopped by a small virus in 2020, where I had to declare Betterfelt bankrupt for the second time. This time as a personal bankruptcy. I never managed to sell more shoes than I produced in Nepal. I was forced to buy the minimum production in Nepal that could keep production going. Also during the half of the year when we weren't in season. Therefore, I eventually ran out of money, even though my sales actually increased nicely year by year. That it happened to be the same year as Corona was probably a bitter coincidence that only helped all my new competitors further.
Back to the price of a pair of wool shoes.
Even more competitors have emerged, and the price of a pair of wool shoes has not only remained stagnant for over 20 years. The price has now fallen!
The retailer has simply been cut out of the calculation, so the price is now set based on only selling online directly from the importer's own warehouse.
They have taken a plane to Kathmandu, shown a pair of wool shoes, and asked to buy some copies.
They have obtained them at the normal production price or perhaps even slightly below the price I can produce at in Kathmandu, because they have not contributed to the development costs of lasts, tools, etc. Nor have they taken into account that wool shoes are a seasonal item, produced only half the year if one follows the retailer's purchasing pattern. The manufacturers and their workers must figure out for themselves what they will live on during the other half of the year.
They have then put them up for sale at a lower price than the products already on the market. In this regard, I won't hesitate to mention that the quality of these new products rarely lives up to the quality that Glerups, Betterfelt, and now Wool2fit deliver.
The result is that after 20 years of hard work keeping all the wheels turning, I must choose whether to continue the fight or leave the battlefield.
I know that this can be read as one long lament. Complaining changes nothing. I get neither more nor less for my shoes by complaining. My story is not unique; on the contrary, it is a classic story that has played out for thousands of companies that have outsourced or moved their production to the East. I would like you to read this story as a positive suggestion for how we can escape our predicament in a Europe weakened in the global market, and an issue that will exist as long as we do not have uniform labor costs worldwide.
In my opinion, the new players in the market have not given us better products. Nor have more people achieved better wages and living conditions by producing and selling wool shoes; quite the opposite, in fact.
However, Danish consumers have gotten some cheaper wool shoes, and that's at least something I can be happy about, because it means more people now know why one wears wool shoes.
I believe that creative hard work and integrity pay off in the long run, and therefore I will stay and continue the fight. I'm simply lowering the price and matching my new competitors, so consumers now also get the best quality at the best price.
Therefore, you can now buy Wool2fit SlipOns and Espadrilles for DKK 350 a pair, and our classic wool boots are now just DKK 400.
You must choose which of our three newly developed lasts with more space for the forefoot best suits your foot. You can choose between the wide, medium-wide, and narrow.
You can also choose between 5 colors, and they are all available in 15 standard EU sizes from 35 to 49.
I am confident that consumers will quickly discover where they can get the best quality at the best price. After that, we'll see who can offer consumers even better wool shoes. Wool shoes that are not just for wearing as slippers or for a trip to the beach.
I'm talking about new, stylish designs of sneakers, sandals, everyday shoes, summer shoes, winter shoes, and winter boots with a whole new level of comfort. We are well underway with development, and this time, we have more allies backing us. It's going to be a tough fight, so get ready.