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Tiffany Montgomery
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Manufacturers discuss economy, product segmentation and inventories at BRA Summit

By Tiffany Montgomery
April 24, 2009 9:07 AM

Surf manufacturers took part in an interesting panel Thursday at the Board Retailers Association Summit. The panel included John Wilson, president of Reef, Tom Holbrook, Quiksilver executive vice president, Paul Harvey, national sales manager at Rip Curl USA, and Tom Ruiz, Volcom vice president of sales.

The group talked about the economy, inventories, creating segmented product just for specialty stores and other topics. Here's a short summary of some of the points covered. I condensed some of the answers and grouped the discussion by topic.

Economy

John Wilson: John said there's a lot of hand-to-hand combat out there right now. He said Reef believes it has a great spot in the market and believes in surfing and the power of the lifestyle, but these are unprecedented times.

At Reef, they try to focus on things they can control. They have thrown out the playbook and are reviewing all steps in how they operate from line models through how they collect payment.

He said they are learning a ton in this environment. He said you get humble quick, you get pummeled, but you also think about doing things creatively. He said he and his team know more about their company than ever before.

Tom Holbrook: Tom talked about the changes Quiksilver has experienced in the last four months that have been difficult but necessary, he believes. He said they are reviewing everything at the company and getting "down and dirty," which is a good thing to do, and more changes may be coming.

He said there are benefits for retailers in the tough market in that they are probably seeing industry reps and brand management teams more than before.

Paul Harvey: Paul said the Rip Curl team is trying to work smarter and is listening to retailers and trying to be part of the solution. They are also trying to make long-term decisions instead of short- term decisions. He said everyone is in a tough spot and has to survive, but that Rip Curl is trying to take the long-term view with regards to distribution so no damage is done to the brand.

Tom Ruiz: At Volcom, Tom said the team is focused on three things: the brand, the retailer, and the consumer. He said they relentlessly repeat the fundamentals, and every decision goes back to those three key elements.

He said their tagline at the headquarters is "It's different now." That helps remind everyone that they can't expect things to work the same as last year.

He also said they work very hard, and there's no replacement for working hard and focusing on fundamentals. One of the biggest fundamentals they focus on is delivering quality product on time - that's the big goal.

At Volcom, they are trying to think differently and open their minds to new approaches. Tom recommended retailers do things like changing up the format of their weekly meetings, which can unleash new ideas.

Segmentation

Bobby Abdel from Jack's Surfboards asked if the brands were considering creating product just for surf shops.

Tom Ruiz: Tom talked about Volcom's Stone Age collection. He said Volcom created it 2.5 years ago because they saw the landscape was over retailed, and knew it would be a necessity to have something unique to offer core shops. He said it has taken awhile for the demand to build for it, and it's now getting a little traction.

Tom Holbrook: Tom said Quiksilver is working on some segmented products in addition to its Limited Collection. One approach may be to have limited models of different products and restrict which stores get them.

Tom expects the industry to get very innovative with product for Spring 2010. Quiksilver is focusing on product more than ever and has brought in an outside consultant to help.

The company also plans to hold more clinics for retailers on products like boardshorts, wetsuits and sandals.

John Wilson: John said Reef was able to manage through the minimums and introduced a shop series in Spring 08 just for speciality stores to add a point of difference that has been very successful. Reef is continuing the series.

Inventories: Tom Ruiz, talking about manufacturers in general, said manufacturers were not immune to what happened in the economy at large. "We were all fat and happy and it was all good," he said.

Manufacturers got hit by a 2 x 4, and are now tightening inventories, and he expects the industry in general will have super tight inventories for fall. He believes that will mean less industry product in discount channels, which will force kids to go back in specialty stores and limit the issue of discounting. But it also means manufacturers having less off price goods for core stores as well.

 


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