Upscale Shoe Store Thrives, Thanks to Private Label

By Miguel Sobernais

Walk into Diane B. Ladies Shoes on Third Avenue on the Upper East Side in Manhattan and you see rows and rows of expensive-looking women’s shoes, much like any other shoe store in the neighborhood. But a closer look reveals that, alongside the usual designer names like Ferragamo and Jimmy Choo, are many shoes labeled Diane B.

Diane B. has been creating and selling its own private-label shoe designs since it opened in 1999.

Craig Blattberg
“I couldn’t find with other designers what my customers were looking for, so instead of saying, ‘No,’ I made it,” says Craig Blattberg, the owner of Diane B. Ladies Shoes.

Craig Blattberg, 47, the owner of Diane B., credits his private-label business with the success of his three Diane B. stores. While many shoe and apparel businesses suffered during the recession, Diane B.’s private-label shoes, which sell for less than designer brands, not only sustained the business but helped it expand, he says.

In 2010, Blattberg opened a Diane B. in Greenwich, Conn., and there’s another on Lexington Avenue. Blattberg says combined sales for his three locations totaled $5 million last year.

A native New Yorker, Blattberg started his career as a stock boy in a Manhattan shoe store when he was 18. Over 13 years, he worked his way up to partner. But a legal dispute led Blattberg to sue his partners and leave the business in 1997; he would not name the store, but said it had recently gone out of business.

Although Blattberg earned a degree in photography while working at the shoe store, he felt his true strengths were in the shoe business. “I was 30 years old with a lot of experience in this business, this was all I knew,” says Blattberg. So twelve years ago, Blattberg opened the first Diane B. Ladies Shoes, on Third Avenue, paying $16,000 a month in rent.

The store focuses on professional, fashion-minded women, ages 35 to 65. Blattberg began creating a shoe line when he realized his customers wanted stylish models that were cheaper than the designer labels sold at stores like Bergdorf Goodman, which can retail for around $500 per pair. In contrast, Blattberg’s private-label shoes sell for $265 to $315 a pair.

“I couldn’t find with other designers what my customers were looking for; so instead of saying ‘no’, I made it,” says Blattberg.

He had no background in design, so Blattberg partnered with his Italian suppliers and began creating original styles to be sold exclusively at his store. Among his private-label suppliers are the Stuart Weitzmann Company and the Pancaldi Company, two major Italian firms that have worked with Blattberg since Diane B. opened. With their help, Blattberg was able to create exclusive designs by taking pre-designed shoe molds and customizing them with unique patterns. The entire process takes about a year.

Producing and selling original products has proven to be a successful formula for Diane B., a fact highlighted during the 2008 recession. “I noticed things were changing around the time Lehman Brothers shut down,” says Blattberg. “Sales were down 20 percent. If a woman came in to buy a blue pair of shoes for an interview that’s exactly what she got and nothing else.” Customers were frightened by the economic downturn and were only making necessary purchases, he says.

Blattberg was in Italy when news broke that General Motors was considering filing for bankruptcy. That was the point when he really felt shaken by the recession, he says, so he reached out to his associates, including Stuart Weitzmann, for business advice. The overall theme of the responses was “sell cheap and sell more.” But the idea of lowering Diane B.’s standards by selling lower-priced items like flip-flops alongside more expensive shoes did not sit well with him. “They all told me the same thing; I did the exact opposite,” says Blattberg. During the recession, Diane B. began increasing its stock of private-label designs, raising prices on those shoes by $10-$20 a pair. “When department stores were marking down, we didn’t succumb to that,” says Blattberg, adding that the markup on his shoes sustained his gross margins. That’s because his private-label business provides better profit margins than do the designer labels.

Indeed, Diane B.’s biggest local competitors, none of which sell private-label shoes, fared far worse during the recession. For example, Shoe Box, another leading Upper-East-Side retailer, has shuttered two stores since the start of the recession.

In 2010, while nationwide consumer spending was still tight, Diane B. had its best year. Sales picked up tremendously, says Blattberg, noting, “Women were tired of not shopping. We provide shoes that fit well and are cheaper than the competition plus we are service-orientated.”

Blattberg who has never advertised and relies on word-of-mouth, estimates that 75 percent of his business comes from repeat customers.

“I’ve been shopping here for a very long time,” says Grace McCabe, 63, a tall and casually dressed woman, as she tried on a pair of spring shoes. “They have a very nice selection, and they always have exactly what I need.”

The same day, Blattberg helped Shirley Appleson, 54, a petite, well-dressed woman. “It’s nice to get a man’s opinion before I purchase some shoes,” she said. “He really understands what I’m looking for.”

Now Blattberg is focusing on the future, planning to open a store every five years. He is also grooming his nephew, who will soon graduate from college, to take over the business, asking, “Wouldn’t you take over your uncle’s million-dollar business” if you had the chance?”