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Details on Industry Insight.


Tiffany Montgomery
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Sadeghi on industry distribution in the future

By Tiffany Montgomery
December 12, 2007 5:17 AM

I've been talking to people lately about industry distribution in light of the changes in the PacSun business and the manufacturers' retail initiatives.

Some interesting ideas and predictions have emerged, and I thought I would share them.

First up: Shaheen Sadeghi, who worked at Gotcha during the heydey and was president of Quiksilver before venturing into development. He and his wife, Linda, own The Camp and The Lab, and Shaheen is still involved in industry issues.


PacSun questions

Will the men's business go away? Although PacSun is doing more private label in girls and carrying less branded goods, Shaheen doesn't see it happening with the same intensity in men's.

"It's the business model that brought them here. For many years, they had it to themselves - they were pioneers to take into middle America. Now there are many head-to-head competitors and the brands are well-represented in the mall and department stores which in turn has shifted the exclusivity away from PacSun. ... Having to adjust your business after such a long run is part of the natural business cycle."

 

More men's private label at PacSun?

"Long term, I think it would be a mistake. As much as it can help margins, it can water down PacSun's core personality and ruin its strong connection with the industry. No brands can mean no image. No image, they will be lost in the retail madness out there."

 

New brands needed

Shaheen believes one problem facing the industry is the lack of new brands.

"The industry needs the next two or three Volcoms. You've got to keep feeding the engine. As the big brands get bigger, by default they become more mainstream. This industry is known for its subculture. ... Big brands are not able to maintain long term subculture. I'd like to see the core specialty retailers open up the gates. They need some fresh new brands for their own long term survival."

 

Distribution in the future

Shaheen believes some brands are running the risk of being overdistributed. To make brands less accessible, and thus more exclusive, Shaheen believes more companies will align with certain strategic retailers in the future - similar to Tommy Hilfiger's Macy's deal.

"At some point I can see the big brands making an exclusive arrangement with certain high profile department stores. That gives you a cleaner distribution strategy than having the same stuff at 15 stores in the mall."

 

Manufacturers' retail stores

Shaheen believes the brands have to open their own stores.

"They have no choice. They need to do it to control their image and have a direct connection to consumers. This can be achieved in ways that it would actually help the retailers with better sell throughs."


Feel free to share your thoughts at tiffany@shop-eat-surf.com.


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