Correction: An earlier version of this story incorrectly stated that Shinola was projected to earn $80 million in gross sales in its first year of production. That figure is for the first 18 months of production. This version has been updated.
DETROIT — You may not know you-know-what from Shinola, but no worries. Shinola does.
No, not the World War II-era shoe polish that gave rise to that unprintable colloquialism. This Shinola is a luxury-goods producer that chose to start up in this struggling city, and less than two years later has become an innovative giant in branding, storytelling marketing and, above all, understanding the consumer zeitgeist, what people want at this very moment.
This Shinola knows watches, bikes, leather goods, pet toys and, yes, shoe polish. Perhaps what this company knows best is that a little consumer guilt — or “responsibility,” if you prefer — can translate into a lot of company dollars, a projected $80 million in gross sales for its first 18 months of production.
The Shinola story is all about marketing Detroit, selling Detroit and attempting to build the first great nonautomotive brand out of the city in decades — and watching buyers respond. And respond they have. Bill Clinton has purchased more than a dozen $550 Shinola watches, and he has hawked the company’s story in speeches, declaring: “We need more American success stories like Shinola in Detroit.”
Headquartered on the fifth floor of the former General Motors Argonaut research building, now an arts college, Shinola, in an amazing piece of marketing legerdemain, promotes this hardscrabble, poverty-pocked city as a luxury brand, selling its $475 to $1,500 watches in some very non-Detroit-like places: New York’s Tribeca, London’s Soho, suburban Saks Fifth Avenue and Neiman Marcus locations, the Abu Dhabi airport, the cult Parisian store Colette and, as of last Saturday, in a holiday pop-up shop on the gentrified corridor of 14th Street in Northwest Washington. Early next year, a permanent Washington store will open nearby.
“The Detroit piece just struck a chord. Here was the idea of Detroit as the underdog,” said Marketing Director Bridget Russo, discussing the company’s decision to locate in the Motor City. Consumers will buy the products, she said, reasoning that “I buy this company because they do good things in this world.” The company motto: “Where American is made.”
Shinola is a lifestyle brand built on a place where few of its customers live, or would choose to. The company markets the Shinola out of Detroit, printing the city name on every product, even shoe polish made in Chicago (although it continues to move more production to Michigan). Its success suggests that socially responsible consumers have moved beyond the glitter of Beverly Hills and Palm Beach to embrace Detroit’s Midwestern grit.
“Made in the U.S.A.” sells these days, but “Made in Detroit” may sell even better.
“There’s really nothing else like Shinola. It’s a brilliant thing they did, this association with Detroit, a very authentic look and this authentic story” of opening a factory in the city, said Northwestern University marketing professor Timothy Calkins. “This is a very carefully constructed brand done by very savvy brand builders.”
Marketing soul
Shinola was founded in 2011 by Tom Kartsotis, former chairman and chief executive of Fossil, a multibillion-dollar company built on inexpensive watches made in China. Based in Plano, Tex., Kartsotis wanted to produce high-quality watches in the United States at a fraction of the price of Swiss models. (Ironically, his partner in Shinola, a privately held company, is the Swiss watch giant Rondo, which supplies parts that are assembled here.)
When the company was searching for a name, someone made a crack in a strategy meeting about not knowing, ahem, from Shinola, and Kartsotis ran with that moniker. He’s quirky that way. His holding company is Bedrock Manufacturing, named after the Flintstones’ home town. Break time at the watch factory is announced by an automated “Yabba dabba do!”
Naturally, Shinola, which released its first watches in March 2013, has revived the defunct shoe-polish brand, absent from the market since the 1960s. Now, the polish sells in stores and online for far more than conventional brands. Oh, and Shinola doesn’t even sell shoes. Yet.
But Kartsotis and his group were on to something. Americans, feeling lousy after buying so many American-designed products made overseas, were in the mood to buy domestic. Several locations were considered, but once Detroit was suggested, there was uniform agreement.
“Detroit fits perfectly into the fabric. The more we talked about Detroit, the more it made sense,” said chief executive Steve Bock, who was involved in the decision to base the company here. “This is an iconic city built over decades, a brand unto itself.”
Bock, like the company’s entire executive team, was new to the city. Originally from South Africa, he lives in the Hudson River Valley in New York, commuting here for several days each month when he isn’t traveling to build the global brand.
“People keep telling us how much Shinola has done for Detroit,” Bock said o ver lunch in the Corktown neighborhood. “But it’s the absolute opposite: It’s what Detroit has done for Shinola.”
The city is undeniably key. “I don’t think the Shinola story would be so compelling if it was based in Los Angeles or Chicago,” Calkins said. “Detroit gives it tremendous credibility and makes it very real.”
And that’s part of the current consumer ethos. According to Glen Senk, former chief executive of Urban Outfitters and now an investor in retail and consumer innovation, “We either want unbelievable convenience or we want something very personalized, something that’s very soulful and authentic.”
Enter the soul. Shinola promotes itself as a homegrown Detroit company, although it’s led by a band of outsiders well aware that everyone roots for this bankrupt city. The move was as intentional as everything else about the company.
There is a certain irony in making bicycles that retail for $1,950 and $2,950 in the country’s automotive capital, a place where a reporter failed to see a single person cycling during a two-day visit. The bike parts, crafted in Wisconsin, are assembled in the back of the Detroit retail store, tapping into a current American fascination with seeing how stuff is made. Tourists, often in sightseeing buses, regularly visit the store.
There’s also a new watch-dial factory, which Shinola promotes as the only one in the United States. This is the other piece of the company’s story — the promise of bringing manufacturing back home.
The beauty of industry
Detroit isn’t the only contributor to the company’s meteoric success, however. Shinola goods are designed to look like legacy products, something a great-uncle might have bequeathed, minus the scratches. The company offices, all dark wood, vintage furniture and frosted-glass doors, resemble a 1940s movie set.
“There’s a constant balance between business and emotion,” said Design Director Daniel Caudill. “If business takes over, the products look like everything else. Meanwhile, there is this huge trend toward American heritage, to build something that would last for years.”
The company’s message is loaded with DIY language. Products are “crafted” and “hand assembled”; leather goods will “gain complexity and nuance over time.” Russo, the marketing director, spoke of “the beauty of industry” and “being analog in a digital world.”
Shinola also taps into the current trend of eschewing disposable goods. Instead, Russo said, it urges consumers “to buy less but buy better.” It’s no accident that most of the watches are large and heavy. They pack heft, the opposite of the more expendable Swatch or Timex. To create instant legacy, each Shinola watch is stamped with a serial number and comes with a lifetime guarantee. Many products are accompanied by a card stating who made it, banking on the trend of local sourcing and knowing where your goods come from, that consumer connection to artist and craftsman.
“Serial numbers add something to the ownership and the desirability of the product,” Bock said. “It tells you this is not a throwaway product.”
Shinola is not without its critics. The New York Times published a blistering takedown last year that called Kartsotis “a midprice watch mogul looking to go luxury under the cover of charitable business practices.”
And marketing the city through luxury goods has irked some residents. “It’s really heavy-handed, selling the Detroit thing,” said artist Chris Schanck, a custom-furniture designer. “Moving in does not make you historical. You don’t get the identity just by inhabiting a place. It’s all a little forced, a little sped-up. Things happen slower here. It’s like they said: ‘We need a story. We need to be a part of this place.’ It doesn’t pass the smell test.”
But for other Detroiters, the business has been a boon. Local employees, now numbering 320, are the stars of the company Web site. Willie Holley, 27, a former Argonaut building security guard and now a line supervisor in watch movement production, is a Shinola spokesman. He starred in the initial ad campaign, did the voice-over for a video and, this month, represented the company in New York, picking up an award from the Accessories Council.
Holley has moved beyond the starting salary of $11 an hour; he gets health care and paid holidays. He’s one of the reasons why people feel good about spending more to buy American, and specifically Detroit.
“Shinola is helping shape the way the city is trying to grow,” said Holley, whose father worked for GM for two decades. “I realize how important it was for something to be made here that had value.”
An optimistic company
Last year, the company produced 55,000 watches. This year, Shinola is on track to create 170,000. Next year, the plan is to sell 250,000, then eventually half a million. The company has ambitious plans for additional accessory divisions.
“This is a very optimistic company,” Bock said. “Part of the DNA is to be very unexpected. There are lots of ways to present the brand that are genuine and authentic.”
But there is also an uptown aesthetic to this Americana company, where cost seems no object in crafting the brand, hiring photography giant Bruce Weber (who long shot for Ralph Lauren) for the ad campaign and design star David Rockwell to create the Manhattan store. Oscar de la Renta — the late designer to first ladies and ladies who lunch — created a limited edition of 1,000 watches, including a $2,700 model wrapped in pave diamonds. It’s hard to think of anyone less Detroit than de la Renta.
The company recently signed Richard Lambertson and John Truex, most recently luxury design directors for Tiffany Leather Collection (and previously for Bergdorf Goodman), to revamp the leather line, which trends toward the masculine and rustic, intensely Brooklyn DIY Boho.
Toby Barlow, chief creative director of Team Detroit, which produces Ford’s advertising, equates Shinola’s vision with “the immigrant vision. They see opportunity, while people from here just see history.” But he cautioned that there are “perils to building your brand on storytelling. Shinola is trying to sell a story, and they are trying to sell hope and optimism. And they are succeeding to a great degree, but still that is a very tricky thing.”
Although Kartsotis spoke for 30 minutes about his company by phone from London, where a new store just opened, he declined to allow any of his comments, benign as they were, to be on the record. It was in keeping with his public image as the Great Oz — or, in the Flintstones rubric, the Grand Poobah. He lets other people, such as Holley — and his products — do the talking.
“Consumers want something real, something authentic. You want to feel proud about something,” said Russo, Shinola’s marketing director. “We have good timing, a good product and a good story.”
For Shinola, that feel-good story is all about Detroit.
from ffffff http://www.washingtonpost.com/lifestyle/style/the-luxury-goods-company-shinola-is-capitalizing-on-detroit/2014/11/17/638f88a4-6a8f-11e4-b053-65cea7903f2e_story.html?hpid=z1
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