Roots Canada Ltd. Business Information, Profile, and History

Company Perspectives:

Co-Founders Michael Budman and Don Green have led the extraordinary growth of Roots. Inspired by their families, the natural beauty of Canada, their passion for great style and their love of sports, Don and Michael have created a company that reflects their lifestyle and values.

History of Roots Canada Ltd.

Clothing retailer Roots Canada Ltd.—known universally simply as "Roots"—is a lifestyle marketer inspired by the northern summer camp reminiscences of founders Don Green and Michael Budman. Roots remains a family business: Green's wife, Denyse Tremblay, was one of the company's first salespersons; Budman's wife, Diane Bald, designs the company's retail stores. The vertically integrated company is unique in its ability to handle small runs of custom orders. Its leather business and the fact that nearly all of its products are made in Canada also set it apart. Roots has about 175 stores, almost 60 of them in Asia, and its famous clothing has been donned by heads of state, including former President Bill Clinton and Prince Charles, as well as numerous athletes and entertainers.

Earthy Origins

Although they became famous exploiting the essence of Canadian style, both Don Green's and Michael Budman's roots are in Detroit. Both Budman and Green had fallen in love with Canada while camping at Algonquin Park's Camp Tamakwa; they moved to Toronto in the late 1960s. In addition, both their fathers were successful Detroit entrepreneurs, giving their future business some hereditary grounding.

The two well-off boys, looking for ways to extend their idyllic existence north of the border, decided to get in on the Earth Shoe craze. Anna Kalso, a Dane, had designed the shoe with a heel lower than the toe to mirror the barefoot posture she admired in Brazilian natives. By 1970, the Earth Shoe was a counterculture footwear smash.

After some discussions about acquiring rights to distribute the Earth Shoe in Canada, Budman and Green began to design their own negative heel shoe. Theirs had a milder incline and less radical design. Geoff Pevere, the "pop culture guru" who published a book-length account of the Roots story in 1998, said the homey shoes capitalized on "anti-fashion." Desert Boot, moccasin, city, and sport variations were soon derived from the original shoe.

Bar mitzvah money and $15,000 borrowed from Green's father provided start-up capital for the venture. Methodically searching for manufacturers through the Yellow Pages, Budman and Green were turned down by footwear giant Bata but soon found a winner.

The Boa Shoe Company was run by a Polish family that had once made boots for Czar Nicholas II. Jan Kowalewski and sons Henry, Richard, Stanley, and Karl agreed to make 120 pairs of the new shoes for Budman and Green, despite the fact that the two hipsters had brought a dog to their inaugural meeting.

Budman and Green then rented an 800-square-foot store on Yonge Street in Toronto for $280 a month. They decided on the name "Roots" to emphasize the "Roots Shoe" as a connection to the earth. The trademark logo soon was created, with a beaver borrowed from the Camp Tamakwa crest. The store moved seven pairs of the shoes, priced at $35 each, on opening day, August 15, 1973.

After another few weeks of modest sales, the Roots team suddenly found people cueing up around the block and signing waiting lists to get a pair of the hot shoes. Soon People would call it "the Gucci shoe of the crunchy granola set." The firm opened 75 stores between 1973 and 1975.

In the next couple of years, Budman and Green created a firestorm of publicity that made Roots a household word in Canada. They started by sending free pairs to celebrities such as Paul McCartney, Cher, Elton John, and Canadian Prime Minister Pierre Trudeau. Roots garnered immeasurable exposure when these famous feet carried the shoes into the national press. The company founders also appeared in Roots advertising, further stretching their promotional dollars.

According to Pevere, Roots was worth a million dollars within six months. Budman and Green soon signed an exclusive agreement with their supplier that would last at least another 25 years; within a year the Kowalewski family was making 2,000 pairs of Roots footwear a week.

Unlike the Earth Shoe, advertising for the Roots Shoe was low on claims of specific therapeutic benefits regarding its negative heel. Comfort, style, and craftsmanship were its key selling points. Following the advice of an early designer, Robert Burns, the firm also had begun adding conventional heel shoes to its offerings, as well as clothes and other items made of leather. Roots began outfitting sports teams beginning with the Blue Jays in 1977, opening another enduring line of business.

All of these factors helped cushion the company after the floor fell out of the negative heel fad in 1976. Fortunately, European sales were only just beginning to boom. (Twenty years later, Japan would be the only surviving market for the company's negative heel shoes.) A Detroit doctor was credited with issuing the contravening medical opinion that signaled the end of the craze.

In 1979, a New Jersey manufacturing company also named Roots sued Budman and Green for trademark infringement. The suit kept Roots Canada products out of the United States for nine years and ultimately cost the company $1 million.

New Moves for the 1980s

After excitement over the first shoes had died down, Roots moved on to its true business—selling the nostalgia of summer camp to baby boomers. These dreams were embroidered on sweatshirts, hats, and other accessories, adorned with chenille patches touting the virtues of the great Canadian wilderness in the bonding language of athletics. Most important, Roots sold sweatshirts in the 1980s—a decade that emphasized physical fitness as never before. After a forced retreat from the American market, Roots reentered the United States in 1988.

Launched in 1975, the Roots Beaver Athletic sweatshirt—or "RBA" in company lingo—sold modestly until 1985, when it exploded. More than a million RBAs were produced by early 1990. Inspired by the uniforms of collegiate athletes, the sweatshirt appealed not only to baby boomers' health consciousness, but their desire to belong to teams, wrote Pevere. During the late 1980s, "We went from [being] a shoe company to a clothing company to a lifestyle company to a global company," Roots Vice-President Marshall Myles told a textiles industry trade magazine.

A global recession impacted the company in the early 1990s; however, profits continued to rise after 1991. Some of the ventures that did not work out for the company included a Paris-based fashion magazine and an aborted Colorado ski resort. There was still plenty of good news otherwise. Revenues approached $100 million annually in 1992.

Indian Summer in 1993

One of Don Green's buddies from Camp Tamakwa, Mike Binder, produced a movie about his reminiscences there for Disney in 1993. The film, called Indian Summer, featured Roots gear prominently, and Roots advertising made the most of the connection. As Geoff Pevere noted, the Disney/Roots collaboration was appropriate, for both companies were dedicated to the myth of never growing up.

As the movie and television industry in Toronto grew, Roots took to producing customized clothing for the industry. This ultimately extended to a variety of world-class television shows, movies, and plays produced elsewhere, including Forrest Gump, Seinfeld, Pulp Fiction, and Phantom of the Opera, as well as rock tours for the likes of Janet Jackson. The large number of Canadian actors, beginning with Dan Aykroyd and Gilda Radner (one of Green's Tamakwa camping buddies) on the cast of Saturday Night Live, already had given Roots easy access to numerous celebrities for years. For example, basketball superstar and Nike spokesman Michael Jordan wore a Roots sweatshirt while hosting the show.

By 1997, there were 95 Roots outlets across Canada, six in the United States, and 15 franchises in Asia. The company had 1,000 employees; 225 of them worked at its leather goods factory, still run by the Kowalewski family, which measured 65,000 square feet. In contrast to other lifestyle brands such as Nike and The Gap, 95 percent of the company's wares were made in Canada.

An Olympic Sensation in 1998

Roots outfitted the Canadian teams for the 1998 Winter Olympics in Nagano, Japan. The distinctive jackets they created were wildly popular, as was the poorboy hat, a kind of oversized beret. Roots also signed endorsement deals with Olympic medal athletes including skater Elvis Stojko.

It took two years for Budman and Green to secure the Olympic uniform contract, but the results were enduring. After the Nagano Olympics, a number of famous figures were seen wearing Roots duds, including Prince Charles and President Bill Clinton, singer Sarah McLachlan, and comedian Rosie O'Donnell. Actor Robin Williams even wore a poorboy cap to the Academy Awards. Green and Budman turned down an offer to sell half the company to clothing giant Dylex Limited.

Roots opened a boutique in the SoHo district of Manhattan in June 1998. Later that summer, Ford Motor Company rolled out its Roots Explorer SUV in Canada, which was equipped with a custom storage bag produced by Roots.

Marshall Myles, a Roots veteran of 25 years, was appointed president and CEO in December 2000. Three months earlier, designer Tu Ly had been picked as the company's creative director.

In 2000, the Wall Street Journal reported the firm was planning a five-year, $70 million expansion drive in the United States and Europe. In the works were 25 outlets at resorts such as Vail, Colorado. Other stores were planned as part of a joint venture with an as yet unnamed partner. An initial public offering was even being considered to help fund the expansion costs.

Airborne in 2000

Very few would have imagined the co-branding venture unveiled in June 2000. Roots agreed to take a 20 percent equity stake in Skyservice Airlines Inc., a Canadian start-up carrier that aimed to begin taking on national carrier Air Canada in Toronto, Montreal, and Ottawa. The Roots Air fleet was to feature the Roots beaver on the aircrafts' livery.

Roots was about lifestyle—or choice—ostensibly the antithesis of the airline industry. The airline planned to reach the United States (Los Angeles and New York) by the summer of 2001, bolstering Roots's presence south of the border. The new airline was marketed with the same emphasis on rural Canadian splendor as the clothing stores. "Business travelers will experience an odd feeling on March 26 (the launch date)," announced one ad. "It's called relaxation." Appropriately, Roots designed the airline's uniforms including—of course—leather bomber jackets for the pilots.

Roots vitamins were introduced in February 2001 in cooperation with pharmaceutical manufacturer Boehringer Ingelheim. Less surprising than the airline or vitamins announcements was the news that Roots was supplying clothes in support of Toronto's (unsuccessful) bid to host the 2008 Olympics.

Principal Subsidiaries: GreenBud Manufacturing Ltd.; Skyservice Airlines Inc. (20%).

Principal Divisions: Roots Air; Roots Athletics; Roots Home; Roots Baby; Roots Custom Products; Roots Kids; Roots Leathers; Roots Men & Women; Roots Passport; Roots Vision; Roots Vitamins.

Principal Competitors: Club Monaco; Banana Republic Inc.; Eddie Bauer, Inc.; The Gap, Inc.

Chronology

• Key Dates:
• 1973: Roots sprouts from Earth Shoe craze and the shared vision of Don Green and Michael Budman.
• 1975: Roots Beaver Athletic sweatshirt is launched.
• 1977: Roots begins outfitting sports teams.
• 1979: Trademark lawsuit knocks Roots Canada out of U.S. retail market for next nine years.
• 1993: Indian Summer film focuses on Camp Tamakwa, a key inspiration of the company founders.
• 1998: Roots' poorboy cap steals the show at the Nagano Winter Olympics.
• 2001: Roots Air takes wing.