Market Evolution; Things to Think About from Quik CEO Mooney and My Spin on Them

I wrote about Quiksilver’s quarter maybe a month ago. In the conference call, CEO Andy Mooney had some really interesting things to say about how the market is changing. I set them aside to think about. I felt they were comments that were appropriate to a general discussion of market evolution, rather than the particulars of Quik’s situation, though obviously they apply there as well.

The first thing he says, talking about Europe, is that we’re seeing “…a transition from smaller independent operators to larger big-box formats.” He went on to explain that their management team in Europe saw the decline in the number of independent specialty retailers as normal during a down economy, and that they expected a recovery in their numbers as the economy improves.
But CEO Mooney doesn’t share that expectation. “I’m a little less optimistic than they are because of the impact of – largely of e-comm because I think e-comm in some ways is creating systemic pressure on those smaller independent retailers, which for us is actually somewhat of a blessing because it’s actually less expensive for us to service e-comm retailers – pure play e-comm retailers – than it is to service remote onesie, twosies sub-specialty shops, particularly ones that by definition are kind of undercapitalized, have problems paying their bills, et cetera, et cetera.”
He expects some rebound in the number of specialty shops, but not as much as in past cycles. I also think his analysis for Europe is relevant in much of the rest of the world as well and certainly in the U.S.
However, I don’t think pressure on specialty shops has come only from ecommerce, though certainly that’s a big issue. I’d remind you all of the (apparent) strength of the economy up to 2007 and of the length and depth of the (continuing) recession that followed. Because the good times were as good as we’ve ever seen them, a lot of independent specialty retailers opened that would probably never have gotten off the ground in less favorable economic conditions. That they’ve closed in historically bad economic times and won’t reopen unless things get fabulous again is hardly a surprise and isn’t only about the internet.
One analyst asks if he thinks the action sports market is shrinking globally. Mooney responds, “…It’s not necessarily a contracting market; it’s a transitioning market.” He talks about the impact of ecommerce again, and then goes on to discuss another piece of the transition.
“You’re seeing,” he says, “…fewer more professional players who are allocating their open-to-buy to fewer more professional brands…my viewpoint is that there will be consolidation both in the retail theater, but I think there’ll also be consolidation in the branded theater. It’s that the stronger, more professionally-run companies will continue to gain share in what has historically been a very fragmented industry…what occurs when you’re going through this type of phase is you’ll end up with 4 to 5 major players who will have significant footprints in the specialty channel, and we absolutely intend to be one of those players.”
I assume if he thought it was a contracting market and that Quik wasn’t capable of being one of those four or five major players, he wouldn’t have taken the job in the first place. And, of course, what else is he going to say?
Still, I find his answer incomplete as it ignores a couple of elephant in the room issues that impact all the larger brands in our industry.
First, as I’ve written, the real action sports market is a pretty small market and has always been a pretty small market. Right now, judging from the evidence I have in terms of participation, it is shrinking. So Quiksilver, and any other brand with its roots in action sports of any size, is already competing way outside of action sports in fashion, youth culture, urban or whatever we want to label it as.
The second is that I don’t know what he means by specialty channel. Can‘t believe some analyst didn’t ask that. My assumption is that it includes not just independent specialty shops, but chains up to and including Intersport, Zumiez, Journeys, Tilly’s, etc. It used to be so clear and now it’s not. Is Intersport really “specialty?” I am not sure PacSun is with its new positioning. Maybe it’s correct to say it’s specialty, but in a much broader market. How broad does a market have to get before retailers who serve it are no longer “specialty” retailers?
Andy doesn’t seem to be that concerned about the independent specialty retailers and I don’t entirely blame him from a strict operating and revenue point of view. But some of those shops would say, “Right back at you, Andy.” Quik’s brands are widely enough distributed that I’m not sure shops can really compete with them and certainly they won’t help differentiate shops.
But Quiksilver is certainly a surf based brand. Can you be a “surf based brand” and not be in core surf shops? Can DC not be in core skate shops? Maybe they need to have product in those channels even if they aren’t the fastest growing, most profitable, easiest to work with accounts in the world. It’s not, of course, that Quiksilver isn’t in those shops, but it doesn’t feel like an area of emphasis and it’s fewer than it used to be.
Meanwhile, even if a big action sports brand kills it in the specialty market up to and including the chains I’ve mentioned and their ilk, it’s not going to be enough- especially as a public company. Macy’s, Nordstrom’s, Dick’s, Sports Authority- you can’t decide not to be in them. You can only decide when, with what product, and try to make sure they present you well.
I think Quiksilver, Billabong, and Skullcandy, just to name three, would be much better off if they were private. They’d be able to be more discriminating in their distribution in ways that would benefit their brands and, as a result, I think they’d be more profitable.
From their public discussions, we already know that these three companies are taking steps to improve their operations and become more efficient. Good for them. I have no doubt it will improve their bottom lines. But that doesn’t impact brand positioning (unless it changes distribution?) and leads us to the next elephant in the room.
Who’s the customer? It wasn’t discussed in the conference call.   Brands, we all know, have life cycles. As they grow and succeed, they resonate with a group of customers. If they are lucky enough to be around long enough – not an easy thing to accomplish – they age right along with that customer group. The customers’ lifestyle, shopping habits, priorities and lifestyle evolves. The company evolves with them.
As those customers shop differently, the brand distributes differently. I won’t bore you with specifics you already know, but distribution tends to become broader as brands age. And broader. And broader.
How do you accommodate those customers but be relevant and “cool” enough to attract new ones? Look at the winter resort business. They’ve built facilities and created experiences that appeal to their older, aging customers. But that customer group is only one who can afford that experience. Given the economy and existing resort cost/price structure, who do they replace current customers with as they age out?
When Andy Mooney says it’s “something of a blessing” that they don’t have to deal with so many small shops, I knows what he means. But if a brand doesn’t have product that those stores want to carry and can sell for margin, what does that say about its ability to attract new customers as the old ones “age out?” How, in short, do you follow your customers along their lifestyle curve while still attracting new ones?
CEO Mooney also talks about the product review the company is undergoing and how they are trying to focus on those products where they can differentiate and be a leader. We won’t see the results until 2014, which I’d say is about as fast as we could see the results. I’d expect that is part of their answer to my question.
At some level Vans is the poster child for a brand that seems to be accomplishing this transition. They’ve made their heritage a foundation of growth with new customer groups without, as far as I can tell, alienating the old ones.
It’s important to remember, however, that Vans didn’t manage that without some bumps in the road. They were a $400 million public company in trouble before they were acquired by VF in 2004.
Having the kind of success Vans is now having requires a steady hand, objectivity, and money. The “who’s the customer?” issue has to be addressed early and realistically before pressures from the inevitable market evolution lead to product and distribution decisions that compound the difficulty of making the required changes. This is particularly difficult in public companies, where the correct decisions don’t typically contribute to immediately improving quarterly results. This is why I’m such a fan of what Skullcandy is doing. I think they are doing the right things in spite of the short term impact on quarterly results.
Then there’s the whole ecommerce thing which is changing the playing field in ways we don’t understand yet. At least I don’t. I’ll just say here that I wonder if ecommerce accelerates the traditional brand life cycle- or, alternatively, maybe makes it irrelevant? Can it be that distribution will become less important, replaced by how you connect with your customers at all your touch points with them? Will it still matter if you’re in “specialty” distribution? We’ll all be finding out.
Finally, and still on the issue of who the customer is, Andy Mooney talked, as I noted above, about consolidation in the brands and ending up “with 4 to 5 major players who will have significant footprints in the specialty channel, and we absolutely intend to be one of those players.”
We’ve had a few conversations about consolidation over the years and the path he describes is certainly a familiar one. Snowboarding comes to mind when you think about consolidation. How’s that worked out as far as keeping customers and attracting new ones goes?
Operationally, I understand why CEO Mooney would expect the kind of consolidation he describes. But for me the strategic issue is how a company like Quiksilver, if it becomes one of four or five major players with broad and broadening distribution, positions its brands so that many of the specialty retailers want and need to carry them.
I don’t perceive that has been accomplished very often in the past. I hope in future conference calls (Not just Quiksilver’s) companies explain how they are going to do it with particular attention to who their customer is.

 

 

31 replies
    • jeff
      jeff says:

      Thanks Sean. It’s not just about Quik, but Andy Mooney sure opened the door to a lot of interesting issues.

      J.

  1. RB
    RB says:

    You’ve written a lot here, and I won’t write a novel of comments but, I’d first consider Moony’s perspective. he comes from Nike & Disney, 2 market leading companies that basically could put a retailer in or out of business, I suspect his internal thinking and goal is that Quik Should be like Nike in its power in the channel. Unfortunately for him, its not and nowhere close. I think his comment about dealing with fewer specialty retailers that cost Quik less to service is an internal thought and public justification, one that normally comes from speaking with a CFO and putting a positive spin on the fact that the retailers that drove the “lifestyle” are disappearing at a rapid rate. (no comment about that?) No comment about how Quik gets out from under their debt either? I think Mooney is a smart guy and he’s been a winner so far, but right now he’s driving a car with 3 wheels and its low on gas…

    by 2014 Vans projects that 40% of its sales will come from direct to consumer i.e. Vans retail or Company eCommerce. The only way for Quik to stop the decline in sales in this shrinking and consolidating global market is to make more money selling less product, i.e. create a successful direct to consumer channel with stores that are profitable and eCommerce that makes up a significant percentage of sales. The only way for them to survive is to ramp this up and pay down the debt before it overtakes them.

    • jeff
      jeff says:

      Hi RB,

      Great comment. You write the next article on Quik. I hope to hell Andy Mooney doesn’t have some idea that what worked for Nike and Disney could work for Quik. I mean, if the stars aligned and everything went perfect he might pull it off in the “core” market. But it’s probably too late for Quik’s brands to do that and in any event he can’t stick to that market and be a public company.

      When you talk about no comments being made, do you mean by me or by Mooney? I look at their balance sheet and debt position every time I review their 10Q. I think their interest burden is a problem. As for every company that has the problem, the solution is sell more and spend less so that the interest burden as a percent is lower. But having to pay that interest takes money away from other uses that might grow sales and improve brand positioning.

      I’m completely with you in terms of their having to sell less product and make more money doing it. I think they, and lots of other brands, are moving in that direction and it’s something I’ve been preaching for years now. I might put it a little differently, however. I’d say they have to constrain their growth and be thoughtful in their distribution, and reduce dramatically the number of skus they offer. I think Quik is saying it will reduce those by 30%.

      Remember that this isn’t just about Quik. Every large (whatever that means) brand in this industry has the same issues.

      Thanks for the comment,

      J.

      • RB
        RB says:

        I meant “no comment by Mooney” as far as selling less product, I meant if Quik or anyone else sells direct to consumer at 75% or 80% margin, they can less volume in units and still achieve the same sales numbers. A SKU reduction will certainly help, and is the stock protocol during a restructure. Mooney’s consumer product experience comes from Nike and they run a tight ship, based on business metrics, much different than Quik has been run.

        • jeff
          jeff says:

          Hi RB,
          Thanks for clarifying. I don’t see anybody getting the kinds of 75% to 80% margins you’re talking about. Not even product margins. I know there are some specific products that do that, but it’s not the rule as far as I’ve seen. If you’ve got different information please share it. Running a tight ship is now a requirement just to be in business. I think it also helps with brand positioning.

          J.

          • RB
            RB says:

            Re Margin: If you go from landed cost to full retail you are at 75/80% margin. When you sell direct to consumer via company store or eCommerce, the starting margin is 75/80%. Ending margin is another story altogether.

          • jeff
            jeff says:

            RB,
            You talking about product margin or all in margin? Remember, what retailers call gross margin includes a bunch of operating expenses in addition to product cost.

            J.

  2. You Know Who
    You Know Who says:

    Oh man. This is like watching a train wreck in slow motion and it’s something we have seen before, no make that three times before. Hang Ten, Op, Gotcha. This statement “creating systemic pressure on those smaller independent retailers, which for us is actually somewhat of a blessing” is that of someone who absolutely does not understand this market or it’s customer. He goes on to add “It’s that the stronger, more professionally-run companies will continue to gain share in what has historically been a very fragmented industry” and I assume he is talking about Quiksilver and Billabong? Who last time I checked openly sell Costco and make goods to order for TJ Max and Ross? Not to mention running hundreds of their own brick & mortar stores as well as B2C businesses? All of which contribute to undermine the very foundation of what make our industry and it’s member products desirable. Now don’t get me wrong, I’m not some small minded hater. There is nothing wrong with growth and becoming “big”. I love big. But for the long term health of this admittedly small niche industry this “Big Four” fuck the little guy thinking is going to lead us to the same place Ski & Snowboarding ended up. No dealers, no sales, no profits and Big Box dealers which yes are easier to manage. But at what cost.
    What this industry actually needs is more fragmented choices at retail. Offer the specialty dealers something the customer can’t get a the local Macy’s. Bring back the “Cool” factor at retail instead of the vanilla build-outs that look the same in every store and controlled (Like SIMA) buy two companies. I can’t believe McKnight sat there while this was being said. Quik has a long history in caring for the small retailer. Maybe I am reading more into this than I should but I sense a major change in wind (hot air maybe?) direction. But again, what do I know?

    • jeff
      jeff says:

      So YKW, what are you waiting for- me to argue with you? Sorry. I will just repeat two things I’ve said forty or fifty times. 1) All companies do what they perceive to be in their own (short term?) best interest. 2) There’s a conflict between being public and being successful for action sports based brands. RB in a prior comment, like you and like me, thinks the answer is selling less and making more money. But how do you take that approach as a public company? Go Skullcandy!

      Thanks,
      J.

  3. Jay Wilson
    Jay Wilson says:

    Hi Jeff, A nice report and a lot of good information as usual!
    Yes the world is changing for large brands and those that can handle it will survive!
    Also the core shops have suffered and are always under capitalized and closing.
    But as you said in a bad economy the big brands gain share of market, the only problem is that
    large brands that are failing at major retailers is because the category is failing! But Quik has their own stores which I didn’t see factored into your discussion? Numbers or thoughts?
    Now on Vans before they sold! Tech shoes where in during the first few years I was there and Vans was failing as a low priced simple Vul shoe they really didn’t do tech shoes but we had a plan to become the leader in Action Sports! Triple Crown Events, new athletes and inclusionary marketing!
    We knew that Gen X was 35 million and Gen Y was 78 million so you could increase your business by 100% at that time if you built the market not just share of market! This required the entire market in Action sports to work together. We had stores and mass retailers buying Vans which kept the numbers up until the market changed back to the old schools. Our team manager came into my office and told me the shift was beginning to happen in San Francisco with the influence of TNT our young SK8 rider growing up and turning Pro and we where adding Jeff Growley in SK8 in OC…we continued to add fresh talent and support world famous riders like Steve Cab. Vans again is riding the perfect wave even in a storm. Today is a whole different story and a lot of the industry is trying to figure out what to do with the shifting trends and down turn in the economy!..So keep up with the analysis…Jay

    • jeff
      jeff says:

      Hi Jay,

      Great history lesson on Vans. I’d forgotten some of that. What I take away from that isn’t all that dissimilar from Quik’s situation. The market changes, they need to change, get in trouble trying, then find it’s hard to marshal the resources to do what they need to do. Not an exact analogy, but close. With regards to Quik’s stores, they’ve closed some and I think they have over 500 left worldwide. But give me a break Jay. I do this for free and can’t cover everything all the time.

      Thanks for the comment,

      J.

  4. Pete
    Pete says:

    Hi Jeff. Another excellent report and profound analysis. A couple of thoughts from Europe; I analysed the number of store closures before 2007 and since 2008 and it’s about the same each year. In other words, stores close for the same reasons they always have; lack of profit, poor cash flow, or just plain over it. The problem is that the number of new stores opening is far less than before, which I blame on the unwillingness of banks to provide start-up capital or overdraft facilities. Nonetheless, I am encouraged to see a new generation of specialty stores run by motivated, professional newcomers with a fresh outlook on retail – if they have the cash. “Specialty” in this case does not mean “core” – as in the words of one retailer I know, “there are more people surfing but less surfers”. So the product mix and brand selection is targeted at a wider (youth) audience from the outset. I agree consolidation is happening – but hasn’t it always? The big guys (almost) always get bigger (sorry Billabong). Check out the new Blue Tomato stores – thanks Zumiez! Been into a Boardriders lately? And I’m encouraged and delighted to see a bunch of fresh new labels arriving which prove that the essence which makes brands cool is still alive and well in the 21st century.

    • jeff
      jeff says:

      Hi Pete,
      Thanks for the Europe perspective. Like I said, it’s the economy and resulting conditions and not just the internet. The lack of credit certainly makes you wonder (in Europe and here) about the value of all the money that’s been printed. It will be fun to see what the “new” specialty retailers are like. I agree completely that specialty does not mean core and that the idea that more people are surfing but there are less surfers is exactly right. I’d suggest the same is true for skateboarding by the way. Those new brands will be what makes the specialty retailers successful. Always been that way.

      Great comment.

      J.

  5. Nick Carroll
    Nick Carroll says:

    Fascinating stuff Jeff.

    Most interesting to me is your point about the effects of changing distribution, especially re ecommerce. It strikes me as being quite possible that as distribution becomes more efficient, its importance in the scheme of things – ie the stuff a retail brand should be thinking about – actually lessens. Ecommerce, for example, is highly personalized: the communication between customer and company is almost frighteningly direct. Yet with that out of the way, surely it’s vital for the company to act as if its communication with the customer is equally direct?

    Those little surf shops that Andy Mooney finds so mildly irritating are vital in establishing personal communication with customers. Cast them aside at your peril.

    • jeff
      jeff says:

      Hi Nick,
      I don’t think Andy Mooney wants to cast them aside- it sounds like he just doesn’t care what happens to them. I tend to share your point of view. They may be a bit of a hassle to work with, but there’s an undefined risk, and maybe a big one, in ignoring them. I’m intrigued by the distribution issues too, but I don’t know how it’s going to play out. Interesting to think about it coming full circle, as the little shops are where the communication is most direct.

      Thanks for the comment,
      J.

  6. Bud Stratford
    Bud Stratford says:

    Good one, Jeff. Lots here to think about, and mull over. But one thing that strikes me, when you’re comparing a Vans to say, a Quiksilver, is that they are slightly different beasts.

    Vans has done a great job on a lot of fronts. First of all, they leverage their heritage in a way that continually keeps them relevant, regardless of the age demographic being targeted. How many shoe brands would openly sponsor and support a Tony Alva, AND a Jeff Grosso, AND an Elijah Berle, for example…? The marketing value is genius. It says “We support skateboarding, and skateboarders. Regardless of their age, market niche, or choice of skating style”.

    Vans always makes, a great product, at a great price point. And they do it across multiple sports- their snowboard boots are nearly as legendary as their waffle-soled skate shoes. They’re dedicated to what they do, and they’re very good at what they do. I think it’s simple traits like these that keeps them solidly in the “successful” category, year in and year out. Regardless of market demographic data, quarterly results, and sales trends. No matter where the market goes, Vans is always a player in the game.

    And then, we could talk ad nauseum about the “youth culture” impact, with things like the Warped Tour, etc.

    In short, when I think of Vans… I have a very hard time thinking of them as “Big Corporate”- even if they are, factually speaking, a part of a Big Corporation. I actually have a very hard time thinking of Vans as anything less than a Great Company. And that seems to transcend their retailer base, their e-commerce strategy, or their distribution channels. Does it really matter where, exactly, I buy a great product…? Not so much. So long as the company, and the product, remain great… isn’t that all that matters…?

    So maybe that’s the Catch-22 that Quiksilver is caught up in. Maybe instead of focusing on e-commerce trends and retailer statistics, maybe they should focus more on being the type of company that the consumer would want to loyally support, day in and day out, year after year- with a highly differentiated, innovative, quality product, at a fair and respectable price point. Just like Vans has done over the years.

    But the question is, can Quik really pull that off…? Good question, isn’t it…?

    • jeff
      jeff says:

      Hi Bud,
      I pretty much see Vans the same way you do. But remember, prior to the acquisition by VF they had issues. VF brought discipline, supply chain management, and money to Vans. Can Andy and his team do the same for Quiksilver? Maybe, but they can’t be patient for a few years while it happens and they don’t have the financial support Vans got from VF.

      Thanks for the comment.

      J.

  7. Abercromb Ian Fitch
    Abercromb Ian Fitch says:

    Spot on again, Jeff.

    I am shocked that Mooney thought the retail market was “aligning” again to give the “leading” (read: big 4) brands their market share back – retail may be consolidating but the product is stale, stagnant, derivative and generally uninspired. Add to that the distribution backwash to all tiers (especially the bottom), and I see only the same fates continuing to occur to the big 4. This is, and it’s overdue, the time again for the new upstart resource with fresh styles and a core following of new consumer youth to go take market share. Some of what I believe will be the biggest brands for 2014 haven’t even been launched yet but will cause quite a stir – and it’s ultimately a really good thing for ALL of the industry to see such freshness abound. #IndustryReboot #SurfIndustry3.0

    • jeff
      jeff says:

      Greetings Mr. Fitch,

      I can’t help but think that the big four or five, whoever they are, might be making things way too easy for Paul Naude and his new brand. What Andy Mooney seems to define as success sounds like it would take the Quiksilver brands further and further from the specialty market. As I said, that’s what’s happened historically as brands age out. What we don’t know yet, and mostly won’t know until next year, is what Quik is going to be able to do about its product. They’re working on it, but we don’t have any information. Operationally, they can do everything right but if the product remains as you describe it, it won’t matter.

      Thanks,
      J.

  8. CS
    CS says:

    Jeff, I LOVE reading your column. Thank you for sharing your insight. From what I am hearing I think one of Mooney’s biggest miss-perceptions or maybe I should say oversight of the market is that the kids who are the tastemakers want products that benefit their lifestyles for the activities they participate in. This is what starts a lot of the trends and as Jay W. Suggested above was why Tech skate shoes had it’s hey day. If Quik doesn’t continue to make state of the art products that enhance the activities of the lifestyles of their consumers i think they are in trouble, the big 4 just seem to have kind of lost their identity… IMHO that’s the single most important distinction in Action Sports. I think we have a hard time scaling our businesses because the markets are small and the activities are different. The parts make up the whole, so how do you stay culturally innovative AND fashion forward? I still don’t have the answer for how you provide products for the core while growing your business beyond and still have a good margin AND unit biz? Vans has done a good job of that. Staying invested in talent (except for CB), product innovation, and some luck that the trend of a Vans classic seems to be surprisingly stable. I am curious why are action sports participants receding? I understand the economic issues, that’s obvious but I am really curious as to why kids are less enthusiastic about participating? Where is the global growth? I know Europe is hurting, but what about these other emerging countries? I agree with Fitch. Our growth seems to be arrested, our creative innovation or at least the big 4’s is stagnant, and reactive instead of leading trend. I see the athletes still having massive progression, but less stars emerging. This opens up new opportunities for inspiration and innovation. On the other hand I have always really respected Quik, maybe even the most as the anchor and example of what and how a quality brand should represent. The mountain and the wave! Until recently they have been loyal to their staff, and talent (maybe too much at times) and I think Mcknight always knew the importance of the little retail shop. The clubhouses for the kids. We have seen a lot of non-endemic CEO’s come in and not do their homework. I really really pray that Andy knows what he is doing because it’s important that Quik survive. Bob was always down to “grow the pond” and I want to believe that means Quik can stop treading water and still get ahead.

    • jeff
      jeff says:

      Hi CS,

      The market that they need to be in as public companies inevitably costs them their identities, don’t you think? They are selling to all these customers who may be aware of their origin, but don’t understand or care all that much about it. And meanwhile, selling in all these channels alienates the lifestyle retailer and customer. Kind of a hard place to be, which is why we’ve always seen the brand evolution we see. I’d love, but don’t expect, to see good numbers on participants. Somebody made the excellent comment that people were still skating, surfing, snowboarding, but just didn’t consider themselves skaters, surfers, snowboarders from a lifestyle point of view. And, as has also been noted, if they don’t see themselves as lifestylers, then not only won’t they care about the big brands, but they may not care about the small ones. That’s why I’ve always said we need Quik, Billabong, Burton as strong brands.

      Thanks for the comment.

      J.

  9. You Know Who
    You Know Who says:

    The problem with the “Big 4” is that everything looks the same. Wanna know why? Cause everyone hires designers and merchandisers and marketing people from the competition. The designer at Billabong goes to work for Quiksilver, the Hurley designer gets hired at Billabong, the Quiksilver designer who just got replaced by the Billabong girl gets her old job and so on. There is virtually no innovation or company look as there was 20 + years ago. The best years this business had was when you could spot a pair of Op walk short from across the street, or a pair of Gotcha madras walk shorts or a Quicksilver scalloped legged board short. Those designs defined those brands and made them what they are today. That’s what’s missing. Some will say it’s because surf is a mature market. I say that most have become lazy and take the safe way out in hiring by bringing in somebody else’s re-tread.
    Then there is the retailer, who is now mostly over 50, tired, fat and overall comfortable but not necessarily happy about what’s going on. 20 years ago, these same owners, would have never given Nike the time of day. If a brand opened a department store (like Op & Gotcha did) they would have thrown the product out on the sidewalk and called the rep to come and pick it up before it got stolen. So what happened? These very same retailers made Nike cool when it wasn’t. Now the same group of guys will probably be bringing in Under Armor Surf? Let me repeat that, Under Armor Surf. Yes. Do you mean to tell me that no one else in surf makes a rash guard or board short? And to clarify, these are great brands with outstanding quality and price points. BUT, make no mistake, the only reason they are pushing into the surf and skate dealers is so that their brand will be viewed as cool now by customers who shop at Kohl’s and Penney’s Dick’s and Foot locker which is where the really big bucks are and we as an industry have totally played into their hands. And in the process, by making brands like Nike and Under Armor cool, they have killed many core (oh god I was trying not to use that word) brands that were only sold in specialty shops who offer real personalized service which no matter how good the internet gets at connecting will never match. So what happened? Wake up retailers; you are the guys who make stuff cool. Yes it takes some time and effort, but if you are tired of seeing your customer going to Costco to pay $18 for a perfectly good pair of cargo walk shorts from any of the so called “Big 4” you better be thinking of another plan. Sorry for the rant.

    • jeff
      jeff says:

      Excellent rant YKW. Seems to be a lot of agreement running through these threads, and you haven’t even seen the ones sent to my email and not available here on the web site. Cautious, risk averse, talking to each other way too much to validate what they already think/want to believe. Yep. Years ago I said, “The biggest risk is not taking any risk at all.” I’m afraid this is over, and we’re just watching it play out in inevitable evolution. Hope to be proven wrong about that.

      J.

  10. You Know Who
    You Know Who says:

    To just quickly touch on some of CS’s observations as to why participation is dropping off, I have the following (very non scientific) observation. I think there has been a cultural shift with-in the youth market. 25 years ago there was no MTV or video games. Surf skate is as much fashion as it is participation and the fact is that the taste makers today are musicians, actors and reality stars and non of them surf, skate or snowboard and more importantly none of them talk about it if they do. Remember the Beach Boys? If you look at the typical high priced NBA, NFL athlete they dress urban. Popular music is still dominated by Hip hop and so on. There just isn’t any focus on the adrenalin sports or the life style at surrounds them. Most skaters and snowboards dress urban even while participating. So I think until the next (mainstream excepted) Endless Summer or Top Gun comes out focusing on adrenalin sports we will continue to be in a slump no matter what we do. Yes innovation is needed and will help, but that is only important to the participating audience. What we need is “The Hunger Games Goes Surfing”. Until then, it’s going to be a long slog.

  11. Kel
    Kel says:

    Hi Jeff,

    Nice article. I agree with all of what you are saying for sure. The homogenisation of Quik is already in full swing. Quik stores and online still give them a direct relationship with the consumer. Many of these will be wannabee Surfers who wear the brand.

    Nick has a good point but the world is changing rapidly and many stores are moving from established surf fashion orientation to become more and more hardgoods only stores who cater for people who actually surf. They clothes they used to sell a lot of are everywhere and so they are focusing on what surfers and people who want to learn to surf actually do. Which is a good thing in my mind. These stores also get to offer ‘new’ surf brands to consumers who are surfers so the under current of surf fashion can restart.

    Cheers

    Kel

    • jeff
      jeff says:

      Hi Kel,

      I’m intrigued by your comment about stores becoming hardgoods only stores. I’m sure there are some out there, but I’d think it’s the rare store that can make a living on hard goods only. Care to clarify?

      thanks,
      J.

  12. Bob Hall
    Bob Hall says:

    You’ve given me a new favorite term, Jeff — “age out”. But I’m seeing the term applying as much to BRANDS as to consumers. Look at Budweiser (now InBev). InBev is gobbling up craft brewers as consumers “age out” on Bud. Now that’s a broad database (no shortage of beer drinkers, eh?). Anyway, what I love here is that independent B&M retailers can still thrive, at least the smarter ones. They’ll be the incubators of new brands and technologies. And yes, it’s painful for both sides, as “smalls” can be messy to deal with — small retailers and small [emerging] brands. Hail small business — retail AND supply! Think I’ll go open a new specialty shop now….but maybe I’ll pop another brew first.

    • jeff
      jeff says:

      I suppose you could also say, “age in” or “age with.” Speaking of beer, think of Pabst Blue Ribbon now calling itself PBR. I still don’t like the beer much (though I’m gratified that it’s turning up free in so many events I seem to be attending). I guess they haven’t changed the product- they just don’t want the potential new customers to know it’s Pabst.

      Thanks for the comment,

      J.

      • Bob Hall
        Bob Hall says:

        Yup, brands are “living organisms,” I say. The only sin is for a management to assume they won’t change and evolve. Live long enough, and one will even get to that “revival” stage, like PBR! Hey, I see a full lifecycle here: age in, age with, and age out. Then wait a bit, and pick some good bones for an “age revival!” Later…bh

        • jeff
          jeff says:

          Hi Bob,
          brands are made up of people so what else can we expect? As far as PBR goes, it’s just not my favorite beer no matter what they call it.

          J.

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