Brand Extensions, Market Niches, Internships and Other Notes from the Agenda Show

Agenda did its usual good job of putting on what I’ll call its youth culture show in Long Beach last Thursday and Friday. I don’t really like that term, but I like “action sports” less at this point in our industry’s evolution and I really hate “fashion.” And not everything is “urban” or “street” wear so it’s youth culture until somebody comes up with something better. I’m waiting for your suggestions. 

My request to Agenda is that they keep the booths small and low, the food trucks coming, the signage easy to follow, that they never move out of Long Beach (because the airport is easy for me) and that they flee into the night whenever somebody tells them they are “the new ASR.” They’ve replaced ASR, but they need to fight not to become it. I know they are.
 
Beware Product Extensions and Know Your Niche
 
Nikita contacted me a couple of weeks ago and asked me to stop by their booth at Agenda. I told them I wasn’t so much interested in reviewing their product line (in spite of all that I obviously know about women’s fashion) as in talking about their business history and strategy. Strangely enough, they wanted to talk to me anyway.
 
Nikita, you may recall, came out of Iceland about ten years ago with the tag line, “for girls who ride.” As I wrote at the time, it was simply the best, most succinct definition of a market niche I’d ever heard. It gave the company direction and focus and it was a niche nobody else was focused on.
 
Things, I guess, went well for a couple of years. And then they extended, trying to come out with a line of clothing for guys and I went, “Oh shit.” Brand extensions are hard enough, but when you’re defined as “for girls who ride” and then try to make clothing for guys, well, I was concerned.
 
Seems I was right to be. To make a long story short, about a year ago they were acquired by Amer Sports. Under the tutelage of the group at Bonfire (owned by Salomon, which is owned by Amer) they’ve spent a year revamping, rethinking, restructuring and now relaunching the brand. They’ve done something I think is really smart; they’ve hired somebody from outside the industry to help them evaluate the brand and it’s positioning. We all talk to each other way too much. Having somebody without a bundle of preconceptions and no fear of stupid questions should produce some interesting results.
 
Of course street clothing for girls who ride was a pretty small niche and Amer is a public company interested in growth. That’s the danger of niches. You can own yours, but it doesn’t leave you with any place to go if you’re a smaller, thinly capitalized company. Happily, Amer isn’t.
 
The group at Nikita is trying to figure out where they can take the brand. I think I can say with certainty it won’t include a guy’s line, but there’s some street wear as well as their snow line in their current offering. “Girls who ride” do more than snowboard and if pursued cautiously and consistently, there should be an opportunity.
 
Meanwhile, over at what apparently continues to be the very well received Stance sock brand that is now, what, four years old there are definitely no brand extensions on the horizon. I was sitting chatting with somebody when I saw Stance CEO John Wilson walk by and, fresh from Nikita and having noticed that it was easier to list the brands that weren’t making shoes than those that were, I yelled out, “Wilson! No brand extensions!” I got a smile, a thumbs up, and a high five. The trouble is when you’re sitting down and high five the not exactly short Wilson, you can damage your shoulder. Mine should be fine in a couple of days.
 
I didn’t ask him, but I’ll bet anything he’s been asked when he’s going to move into shoes. I mean, shoes to go with socks- what could be more natural (note extreme sarcasm). I’m sure there will come a time- someday- when there will be another Stance product. But I predict it won’t be shoes and it won’t be for a while. Four years is not a long time to build and position a brand that can support product extensions.
 
Meanwhile, I walked by Wolfgang Man and Beast and found a new market niche for upscale dog collars and leashes (think of an $80 collar). I also found industry veteran Luke Edgar who, along with four other dog lovers, started the brand. This is what Luke does when he’s on vacation from Skullcandy. I kind of smiled, but then I reminded myself of just how much money people are now willing to spend on their pets, so maybe there’s a market there. I’m told the initial reception is positive.
 
If you’re in the private equity business, you go around collecting cards from new brands that might have found a market to exploit. Then in a year or two you check back to see if they’re still around and are succeeding. I ran into one private equity guy I know and, sure enough, he already had a card from that business. So we’ll all check back in a year or so.
 
Consumers seem to trust new brands a lot faster these days. Maybe it’s more accurate to say they don’t distrust them. Anyway, finding a niche that’s derivative of the whole youth culture market is a good thing. You know, I’m wondering if first movers are at the same disadvantage they often were in the past.
 
Child Labor
 
A conversation with somebody in the core skate industry lead to the usual bemoaning about how there were fewer skaters, the old business model didn’t work anymore, there was nothing new product wise, and it was getting harder and harder to figure out what was relevant to young skaters.
 
The last point led to an offhand comment about skate brands needing to hire 12 year olds. When somebody made a point that it would violate child labor laws, we were immediately off and laughing, imagining the head of some skate company explaining to a judge that they only had a bunch of kids working at their company because they were trying to find out what was cool again. I can see the prosecutor holding up a deck with the graphics the 12 year old created, and “contributing to the delinquency of a minor” being added to the charges.
 
Skate companies will say with some justification that they already do that with team riders (find out what’s cool- not the illegal part). But team riders are the top 2% or so of skaters and besides, they get free product. I have never been quite sure just how relevant their input was to the broader skate market.
 
Well, maybe 12 is too young, but I’m wondering if anybody has ever hired some kids as interns (paid or unpaid) in the marketing and/or design departments. They should be kids who skate, but are not necessarily great skaters. Maybe some of them should even be long boarders.
 
Have a contest with some retailers to select a couple of kids who’ll be paid to work for you during the summer or a few afternoons a week after school. Have them occasionally bring in a few of their friends. Pay them a few bucks, teach them something about business, and get them to create and react to new product ideas. Then take a chance with what they come up with. Put whatever graphics they come up with on a deck and let that deck be sold at the shop they hang out at.
 
Maybe this is already happening, but as business risks go it’s pretty low and who knows what might come out of it.
 
And kind of related, I found out about the Next Up Foundation. It “…provides after-school and summer mentoring programs that teach today’s youth life skills through skateboarding.” I heard good things. I have a kid who was sort of drifting and unhappy until he found something he loved that gave him some focus, self-respect and friends. In his case, it was music. But if it had been skateboarding, that would have been just fine too, and that seems to be at least part of what Next Up does.
 
I don’t have the list, but obviously some brands are involved in and contributing to Next Up. I’m wondering if any of those brands are using that involvement to get a sense of new cool stuff while at the same time helping the foundation meet its goals.
 
See you at the next show.
 
    
 
 
 
 
             
 
 
 
   
 
 
 
    
 
 
 
 
 
 
 
 
    
 
 
 
              
 
 
 
 
 
 
 

Brand Extensions, Market Niches, Internships and Other Notes from the Agenda Show

 
Agenda did its usual good job of putting on what I’ll call its youth culture show in Long Beach last Thursday and Friday. I don’t really like that term, but I like “action sports” less at this point in our industry’s evolution and I really hate “fashion.” And not everything is “urban” or “street” wear so it’s youth culture until somebody comes up with something better. I’m waiting for your suggestions.
 
My request to Agenda is that they keep the booths small and low, the food trucks coming, the signage easy to follow, that they never move out of Long Beach (because the airport is easy for me) and that they flee into the night whenever somebody tells them they are “the new ASR.” They’ve replaced ASR, but they need to fight not to become it. I know they are.
 
Beware Product Extensions and Know Your Niche
 
Nikita contacted me a couple of weeks ago and asked me to stop by their booth at Agenda. I told them I wasn’t so much interested in reviewing their product line (in spite of all that I obviously know about women’s fashion) as in talking about their business history and strategy. Strangely enough, they wanted to talk to me anyway.
 
Nikita, you may recall, came out of Iceland about ten years ago with the tag line, “for girls who ride.” As I wrote at the time, it was simply the best, most succinct definition of a market niche I’d ever heard. It gave the company direction and focus and it was a niche nobody else was focused on.
 
Things, I guess, went well for a couple of years. And then they extended, trying to come out with a line of clothing for guys and I went, “Oh shit.” Brand extensions are hard enough, but when you’re defined as “for girls who ride” and then try to make clothing for guys, well, I was concerned.
 
Seems I was right to be. To make a long story short, about a year ago they were acquired by Amer Sports. Under the tutelage of the group at Bonfire (owned by Salomon, which is owned by Amer) they’ve spent a year revamping, rethinking, restructuring and now relaunching the brand. They’ve done something I think is really smart; they’ve hired somebody from outside the industry to help them evaluate the brand and it’s positioning. We all talk to each other way too much. Having somebody without a bundle of preconceptions and no fear of stupid questions should produce some interesting results.
 
Of course street clothing for girls who ride was a pretty small niche and Amer is a public company interested in growth. That’s the danger of niches. You can own yours, but it doesn’t leave you with any place to go if you’re a smaller, thinly capitalized company. Happily, Amer isn’t.
 
The group at Nikita is trying to figure out where they can take the brand. I think I can say with certainty it won’t include a guy’s line, but there’s some street wear as well as their snow line in their current offering. “Girls who ride” do more than snowboard and if pursued cautiously and consistently, there should be an opportunity.
 
Meanwhile, over at what apparently continues to be the very well received Stance sock brand that is now, what, four years old there are definitely no brand extensions on the horizon. I was sitting chatting with somebody when I saw Stance CEO John Wilson walk by and, fresh from Nikita and having noticed that it was easier to list the brands that weren’t making shoes than those that were, I yelled out, “Wilson! No brand extensions!” I got a smile, a thumbs up, and a high five. The trouble is when you’re sitting down and high five the not exactly short Wilson, you can damage your shoulder. Mine should be fine in a couple of days.
 
I didn’t ask him, but I’ll bet anything he’s been asked when he’s going to move into shoes. I mean, shoes to go with socks- what could be more natural (note extreme sarcasm). I’m sure there will come a time- someday- when there will be another Stance product. But I predict it won’t be shoes and it won’t be for a while. Four years is not a long time to build and position a brand that can support product extensions.
 
Meanwhile, I walked by Wolfgang Man and Beast and found a new market niche for upscale dog collars and leashes (think of an $80 collar). I also found industry veteran Luke Edgar who, along with four other dog lovers, started the brand. This is what Luke does when he’s on vacation from Skullcandy. I kind of smiled, but then I reminded myself of just how much money people are now willing to spend on their pets, so maybe there’s a market there. I’m told the initial reception is positive.
 
If you’re in the private equity business, you go around collecting cards from new brands that might have found a market to exploit. Then in a year or two you check back to see if they’re still around and are succeeding. I ran into one private equity guy I know and, sure enough, he already had a card from that business. So we’ll all check back in a year or so.
 
Consumers seem to trust new brands a lot faster these days. Maybe it’s more accurate to say they don’t distrust them. Anyway, finding a niche that’s derivative of the whole youth culture market is a good thing. You know, I’m wondering if first movers are at the same disadvantage they often were in the past.
 
Child Labor
 
A conversation with somebody in the core skate industry lead to the usual bemoaning about how there were fewer skaters, the old business model didn’t work anymore, there was nothing new product wise, and it was getting harder and harder to figure out what was relevant to young skaters.
 
The last point led to an offhand comment about skate brands needing to hire 12 year olds. When somebody made a point that it would violate child labor laws, we were immediately off and laughing, imagining the head of some skate company explaining to a judge that they only had a bunch of kids working at their company because they were trying to find out what was cool again. I can see the prosecutor holding up a deck with the graphics the 12 year old created, and “contributing to the delinquency of a minor” being added to the charges.
 
Skate companies will say with some justification that they already do that with team riders (find out what’s cool- not the illegal part). But team riders are the top 2% or so of skaters and besides, they get free product. I have never been quite sure just how relevant their input was to the broader skate market.
 
Well, maybe 12 is too young, but I’m wondering if anybody has ever hired some kids as interns (paid or unpaid) in the marketing and/or design departments. They should be kids who skate, but are not necessarily great skaters. Maybe some of them should even be long boarders.
 
Have a contest with some retailers to select a couple of kids who’ll be paid to work for you during the summer or a few afternoons a week after school. Have them occasionally bring in a few of their friends. Pay them a few bucks, teach them something about business, and get them to create and react to new product ideas. Then take a chance with what they come up with. Put whatever graphics they come up with on a deck and let that deck be sold at the shop they hang out at.
 
Maybe this is already happening, but as business risks go it’s pretty low and who knows what might come out of it.
 
And kind of related, I found out about the Next Up Foundation. It “…provides after-school and summer mentoring programs that teach today’s youth life skills through skateboarding.” I heard good things. I have a kid who was sort of drifting and unhappy until he found something he loved that gave him some focus, self-respect and friends. In his case, it was music. But if it had been skateboarding, that would have been just fine too, and that seems to be at least part of what Next Up does.
 
I don’t have the list, but obviously some brands are involved in and contributing to Next Up. I’m wondering if any of those brands are using that involvement to get a sense of new cool stuff while at the same time helping the foundation meet its goals.
 
See you at the next show.
 
    
 
 
 
 
             
 
 
 
   
 
 
 
    
 
 
 
 
 
 
 
 
    
 
 
 
              
 
 
 
 
 
 
 
 
 
   

 

 
 
   

 

 

8 replies
  1. Bud Stratford
    Bud Stratford says:

    “Youth Culture Show”… I like that one, Jeff.

    On a related note, when I had my company, we actually ran with the “kids as interns” idea, and let the neighborhood kids dictate shape and graphics ideas for a few seasons. It actually went over pretty well…! Especially considering that maybe a 6’5″ [adult] skater isn’t the most adept at designing little kids’ boards. As a result, the sales of little kids’ boards (for my brand) went up precipitously. Maybe the “bigger core skate brands” could follow suit, and get similar results. After all, anything’s worth a try these days… right?

    • jeff
      jeff says:

      Hi Bud,

      As I may have said a time or two, the biggest risk is taking no risk at all. But I really see this as a low cost experiment that at worse generates some good publicity. I mean, what is there to lose?

      Thanks for the comment,
      J.

  2. michael
    michael says:

    Jeff, I second that emotion…
    also, Laura Ries says DEATH to brand extension…
    http://ries.typepad.com/ries_blog/crazy_lineextensions/
    The management mantra at most companies is “more.” How do we dream up more items to sell to more customers? And especially how can we take advantage of our powerful brand name to sell those new items to those new customers.

    Line extension is the most over-utilized strategy in business today. That’s true in spite of the fact that 90 percent or so of line extensions fail in the market place.

    Line extension is a much-loved strategy because it’s logical. The more you have to sell, the more you sell. So almost every company is busy trying to figure out what new products to slap its brand name on.

    • jeff
      jeff says:

      Hi Michael,
      Well, it sounds logical. But careful analysis often shows it not to be. Unfortunately in a lousy economy with high unemployment, sales growth is hard to find and line extensions are a way you think you can find it. And if you’re a public company, what choice do you have but to try it?

      Thanks. Sorry you didn’t make it to Agenda.

      J.

  3. Glenn Brumage
    Glenn Brumage says:

    Jeff,
    You need to start with the following disclaimer;
    Don’t ask the young demographic what they want unless you are ready to have them blow up your preconceived notion of why you exist. Especially if your brand is more relevant to 30 yr olds that reminisce about the old days of punk rock and bad tattoos than the upcoming generation skating, surfing, snowboarding and yes, free skiing with the exact same “F— you old man” attitude you had at that age.

    Even at 30, we’re old and out of touch in their eyes.

    I hope that more visionaries in our industry not only ask, but listen to the current teens and embrace change.

    On the other hand, we could stick with the customer base that still cherishes our taste in music and “extend” our brands by adding back braces, topical analgesics and soluble fiber specially made for the aging participant.

    Sincerely,
    Glenn

    • jeff
      jeff says:

      Glenn,
      I had no idea you were only 30.

      I could extend your list of product ideas, but it just wouldn’t be very uplifting I’m afraid. Shit, that might be another product idea!

      Love your disclaimer. By the way, there’s not necessarily anything wrong with sticking with your existing customer base as long as you understand what that means for the evolution of your business. Most, I’m afraid, are just continuing to continue. Nobody likes to change.

      Thanks,
      J.

      • Glenn Brumage
        Glenn Brumage says:

        Jeff,
        Yeah, if they consider 30 old, where does that put you and I…….?

        I’m astounded by the brand owners who were once “Rad and Counterculture” but claim not to have become their parents.
        Denial is an ugly mistress. She demands your soul. 🙂

        See you soon,
        Glenn

        • jeff
          jeff says:

          Glenn,
          I literally can not figure out why the denial is this strong. After all this time, how can it not have been bludgeoned into submission?

          J.

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