Dr. Martens will raise its prices by an average of 6% next year after consulting with consumers to see what level of increases they would accept.
However, rather than pushing prices to the maximum threshold its customers said they would tolerate, the brand says it is pricing simply to keep up with inflation.
Dr. Martens carried out a survey between July to October this year in seven of its key markets to determine how high it could take its price before consumers were put off purchasing the brand.
“Consumers are under pressure, so we’re going to take enough pricing around the world to cover inflation, but we’re not taking all the pricing the study would suggest that we could take,” the brand’s CEO Kenny Wilson told investors today (24 November).
“Consumers around the world see that there is more value in the Dr. Martens brand than we are currently charging,” he added.
Indeed, he said the brand is “stronger than ever”, which he believes means Dr. Martens can prove its worth to consumers amid price rises.
Dr. Martens increased its marketing spend by 23% in the first half of the financial year, with the increased investment forming a key part of the brand’s plans for future growth. The brand intends to increase its marketing spend by 50 basis points of revenue each year.
The strong brand equity is a leading indicator for sales and profit growth.
Kenny Wilson, Dr. Martens
Much of Dr. Marten’s increased marketing spend was aimed at building what it terms “social media communities”. The brand reports it now has 10.3 million followers across all channels, up 15% on the same period last year.
Over the first half, it invested in two main campaigns. The first of those, ‘All Access Summer’, was focused on growing the brand’s sandals and shoes business. It highlighted key summer moments, such as the widescale return of festivals.
The campaign helped boost sandals sales by 43% in the first half, with the category now representing 8% of Dr. Marten’s revenues. Wilson identified sandals as “a great growth opportunity” for the brand.
The second campaign, ‘Unpolished’, was launched in September and was the first of the brand’s autumn/winter 2022 activity, with a return in focus to its core products.
As a company renowned for its boots, the warm autumn is not good for the brand, Wilson admitted. However, he reported it has not made a major impact on the brand, and that, as the weather turns colder, it is already experiencing an uptick in demand.
Overall, the shoe brand reported a revenue increase of 13% to £418.6m in the first half of its financial year, ending 30 September 2022. However, it saw profits drop 8% compared to the same period in 2021. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were in line with last year at £88.8m.
Brand is ‘number one priority’
Wilson told investors his “number one priority” for the business is the Dr. Martens brand. He reported that, according to its latest research, the company is seeing its brand equity measures “move forward” globally.
Its brand “familiarity”, which asks consumers whether they know of a brand, and whether they have heard from it recently, had improved by 4% by early July. Wilson said this measure is important because it indicates the brand is top of mind for consumers. The “last 24 months purchased” measure also increased by 1%. The brand also reports improvement in global unprompted awareness across its product categories, and is the number one boots brand based on the measure.
“The strong brand equity is a leading indicator for sales and profit growth,” said Wilson.
In order to protect its strong brand, Dr. Martens will not be participating in widespread discounting in the run up to Christmas or over Black Friday/Cyber Monday, he said, maintaining that there will “never” be discounting across its core ranges or colours while he and chief financial officer Jon Mortimore are at the business
“We think it’s absolutely the wrong thing to,” he said, adding it would represent “short-term thinking” that jeopardises the health of the brand.
Dr. Martens grew revenues for its direct to consumer business by 23% in the half. DTC has been a particular focus for the business, with Wilson stating it gives the company “increased brand control” and “very strong financial returns”.
It is still working with retailer partners and is prioritising “bricks and mortar retail”, with a focus on try-on and brand expansion.