During a tough economic climate, consumers tend to become very conscious about their spending and tend to go with brands they know and trust. That's the opinion of Eric Wiseman, CEO of VF Corp., a $7 billion global apparel manufacturer and retailer. While VF Corp.'s revenue dipped about five percent during 2009, the company has managed to hold its own, capping off 2008 as a banner year with $7.6 billion in revenues.

VF Corp. sells its well-known brands, such as Lee, Nautica, The North Face, Wrangler, and Vans, through more than 67,000 retailers in about 150 countries. The company owns and operates more than 700 retail stores, including about 60 outlet stores.

Prior to 1998, VF Corp. derived most of its revenues from manufacturing brands such as such as Lee, Rider, and Wrangler, and selling them wholesale to large retail stores.  In 1998, VF Corp. aggressively began acquiring well-known active wear and contemporary brands, such as Nautica, The North Face, Eagle Creek, Eastpak, lucy, Vans, and several others. The company divested itself of unprofitable brands. In 2004, VF Corp., which had revenues of $6 billion, launched a bold growth strategy to transform itself into a global lifestyle apparel manufacturer and retailer. "We Fit Your Life" became the mantra for the company's growth strategy.

Enterpriseleadership.org sat down with Wiseman to discuss the company's business transformation, and the role technology has played in it. Here is what he had to say:

EL. How did you categorize your different brands and how do they contribute to revenues?

EW. We group our brands under coalitions such as outdoor and action sports (Vans and The North Face), jeanswear (Lee, Rider, and Wrangler) , sportswear (Nautica), and contemporary and imagewear (For All Mankind and lucy). We further group the coalitions into lifestyle and heritage. Lifestyle includes outdoor and action sports, and sportswear and contemporary brands. Heritage includes jeanswear and imagewear. We acquired most of our contemporary brands during out growth period. These brands contribute to revenue as follows:  about 36 percent from outdoor and action sports, 36 percent from jeanswear, 13 percent from imagewear, about 8 sports from sportswear, and five percent from contemporary brands.

EL. What was your vision statement for the 2004 transformation?

EW. Our vision statement was to become more growth oriented by investing and building leading lifestyle clothing brands. Our transformation called for us to redirect our business from being a wholesaler to becoming more international and a more direct-to-consumer business. Our six tenets or growth drivers include the following: build more global, growing, lifestyle brands: expand our share with winning customers; stretch our brands to new geographies; expand our direct-to-consumer business; fuel the growth; and build new growth enablers.

Ten years ago, we had the reputation of being a rock-solid apparel manufacturer that built first-in-class programs for big box stores such as Wal-Mart and Kmart. That was most of our business. The good news is that we still exist. In 2007, many of those stores selected us as vendor of the year. We do a good job of marketing through mass and chain store channels. By changing our brand portfolio, we now reach more diverse customers than any other apparel company.

Up until 1995, everything we sold we made in a U.S. factory. We became the last apparel company to move offshore. You can argue that we moved too late. Because we stayed here that long, we developed a culture and a skill around incredible skills and execution. We could not survive making products in this country unless we were really good at engineering and operations plans and engineering in the factory.  It is part of our DNA. The ability to execute complex things terrifically well is part of who we are and we have not lost that.

EL. How did you know your transformation strategy would work?

EW. We were confident it would work. In 2007, we went through a robust bottom to top reconsideration of our strategy. We asked every business unit everywhere in the world to think about the six items we identified as our core strategy and to reassess their relevancy with an open mind. What came out of that was a revised growth plan we announced in 2008. The six fundamental tenets of our strategy remained unchanged. We made a minor revision to make sure we were still relevant for the environment we are in today. We still think we have the right six core tenets for our growth strategy.

EL. Can you explain your integration process?

EW. Our integration process began with our 2004 transformation. We developed a repeatable process for the 10 brands we acquired at the time. We continue to refine this process.

Here is how it works. Say we love your brand and your management team, and think your brand would help us get to a new consumer, a new geography, or to a new channel of distribution. We want to acquire you.  In essence, we would like to take your brand to the next level. We would like to have you and your team join us. You will run the front end of the business.  You and your team will design the products you want, pick the customers you want to sell to, and continue to brand development. We will give you permission to do that. It is non-negotiable. We will run your distribution centers, which is also non-negotiable. We will decide where you will source. We will put you on our IT systems. You will use our financial system and our HR practices. The kicker is that we will take your brand, you team, and your products anywhere in the world, especially where we have a platform and where we think it has opportunity. We will build a sidecar under that platform to enable your growth globally. If you would like to open retail stores, we have much expertise in that now and we will enable that.

As a result, the seller gets to keep the front end of the business with the passion and genuine pieces of the brand. All of the operating functions come to us because we get a great return for our shareholders. We reinvest some of those savings back in the company to drive growth. That's why our growth has been what it has been. It does not always work perfectly. That is the basic structure. Sometimes we leave the business standalone in its own building. Sometimes it makes sense to move it into adjacent VF buildings for business reasons. These discussions happen over time.

EL. How has the economic downturn affected you business?

EW. Our revenues decreased by about five percent. We did not anticipate much improvement in the economy during 2009. Although it has been a tough couple of years, we have taken some even tougher actions. We have been controlling expenses, investments, and lowering inventory and capital expenditures. We focused on our liquidity, our core strategy around lifestyle brands, taking in the new geographies, building our direct to consumer business, and leveraging our scale and size in the supply chain are the right strategies.

Since we changed our strategy in 2004, we have shown that it is working. Our revenues grew on a compounded basis more than 10 percent over a five-year period. Our earnings grew by 11 percent. Our gross margin had expanded by 230 basis points through 2007. We gave some back in the last quarter of 2008 as the economy shifted.

In 2008, we reported an all-time record for revenue and an all-time record for earnings per share. We delivered $679 million in cash flow, which was above the five-year average and the second highest number in five years. I was proud of this team for pulling that off in a turbulent environment.  Also, 2008 was the 36th year in a row that we increased our dividend to our shareholders. It is a good part of why we are a good investment. We ended that year with more cash than we started. We ended the year with less debt than we started.

EL. How do you allocate your capital budget expenditures?

EW. The bulk of our capital budget goes to acquisitions first, retail second, and distribution centers third. We have aligned out capital budget to support our growth strategy to invest in acquisitions, retail stores, ecommerce, and distribution centers.

EL. How did you build out the infrastructure from technology perspective as you began the transformation?

EW. Because we did 10 acquisitions in five years, the integration of the technology has been hard. Our technology has worked hard to keep up with it, which is fine. We have a suite of systems that are potentially relevant to all businesses. If we are going to put in a demand forecasting system for a brand, we will use this one if the brand needs one. Not all of our brands need all of our systems. Some of the systems have no trouble serving a brand that generates a half billion in revenues. A similar system, however, would be overkill for a $70 million brand.  Over time, everyone ultimately gets on board on our IT systems.

EL. Several years ago, you folks hired your first global CIO. Why didn't you do that sooner?

EW. Over time, we had a head of IT and a relatively stable portfolio of brands. As we began adding all of these new companies and divesting  all of the others, we said we needed to make additional investments in many areas, especially in mergers and acquisitions, corporate strategy, marketing and brand development, and global business technology. To carry out these activities, we needed a stronger IT leader.

EL. How do you work with the CIO?

EW. Martin Schneider, our CIO, is an important part of our 12-person operating committee. This committee guides the corporation. Like the other executives on the committee, Martin has an excellent point of view about how to keep the corporation moving forward. That is the best way I can describe how I work with Martin.

EL. What have you learned from your CIO that you didn't know?

EW.  Because of his Gillette background, he brought a more sophisticated global perspective than we had at that time. He had added much value. We were pursing at all-or-nothing portfolio of technology. Martin introduced the thinking of not all of it is helpful to all of these businesses. We are better off to let them select the tools that they need. As a result, we function as more of a service provider and an enabler of their success rather than as a corporate censor requiring them to use everything we have to offer.

EL. How do you run the technology organization?

EW. Each business, such as NorthFace and Wrangler, has a person who reports to Martin, but sits at the management table of the brand. That person helps the brand leaders to run that business every day.  That is our version of the hybrid matrix organization.  We use this same model for human resources, finance, distribution, and our supply chain. The majority of their incentive compensation depends on how well the business unit does.  Originally, we paid them on how the corporation did. We found that this new structure helps them to be more a part of the team. The entire team gets paid together.

EL. How do you go about making technology investment decisions?

EW. We have a typical budgeting and review process for the company. At the beginning of the year, we sit and review the global technology budget. Expenses of certain sizes require different approval levels. Martin can approve some of the investment. Some of them go to the CFO. I approve investments above a certain level. The board needs to improve capital investments.  Each quarter, Martin will give the operating committee his update on the status of everything going on in his world. We keep the fall moving forward this way.

EL. What is your methodology for looking at the success of technology investments?

EW. We look at a retail store investment differently than we do a technology investment. With technology, we look at the ROI and a payback time. We look at the rationale for the investment, such as strategic, cost reduction, or productivity. There are many metrics In fact, we are very metrics oriented.

EL.  What is the major challenge that retailers face during a tough economy?

EW.  It is consumer confidence more so than consumer spending.

EL. Where do you think your competitors are falling short?

EW.  Why are we doing better than others in this environment? We have a portfolio of relevant brands. Consumers trust brands. When consumers are being very conscious with their spending, they will go with brands they know and trust. Second, we are good at delivering innovative products that are relevant to the consumer and also offer great value. It is not just about price. We hear loud and clear from customers that are happy to pay top price for something if they perceive it has having great value. We execute very well. Because of our discipline and focus on execution, we can minimize the mistakes we make. This capability has helped us to get through this environment.

EL. Some companies, such as Procter & Gamble, spend much time on social media and collaboration trying to plug in what certain consumers say. What are doing to get closer to your customers so that you design your products?

EW. We are as good as any apparel company at marketing sciences that help us to understand consumer. We are pretty close to Procter& Gamble in what they do. In fact, some of their executives visit us to share their ideas. We understand as well as anyone how to make relevant products for consumers. We test everything we do. We use various methodologies from online testing to where you can go look at our products and tell us what you like about them. We do that with 10s of 1,000s of people. It helps get us from making 20 shirts to five we should make. We go into people's homes and talk with them. We spend millions of dollars doing these things.

Most of our research is proprietary that we built for a specific purpose. We are in so many different brands and markets. If we want to understand what Italians want in active wear, we have to narrow that down and speak to Italians about ski outerwear. Some of our other brands use social media as part of their marketing effort.

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.