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Details on Industry Insight.
I talked with La Jolla Group CEO Toby Bost this morning to find out more about Rusty's new alliance with JCPenney. JCPenney will carry Rusty in 600 of its top stores around the U.S. beginning in July.
Not many industry brands have pursued a segmentation strategy, except for Vans, which operates successfully at the mass market and core levels by creating targeted products for each distribution channel. On a larger scale, Nike is a segmentation master, now that it has Nike SB.
Toby said it made sense for Rusty to partner with JCPenney for many reasons. JCPenney is making a commitment to action sports by adding exclusive lines from Ryan Sheckler and Zoo York. JCPenney is also a national retailer with a strong balance sheet that gives Rusty wide exposure - not an easy thing to find in this economy. JCPenney has upgraded its merchandise and stores in recent years and is doing a good job by carrying better brands and great products, he said.
Toby described the arrangement with JCPenney as an "alternative growth strategy" than one usually taken by action sports brands. With so many action sports brands at the specialty level creating many similar products, it became apparent that La Jolla would not be able to grow Rusty at the rate it was satisfied with without a major partner, he said.
With this new arrangement, Rusty will save the more casual mass market styles for Penney's while focusing on making and distributing products for core surfers through specialty retailers. The R dot logo will stay in the core market, while a crown logo, above, will be the exclusive mark for Penney's.
Toby said core retailers have been receptive to the idea and like the idea of having specialized Rusty product that nobody else has. At the same time, La Jolla understands Rusty will have to perform to keep their support, he said.
The new arrangement has led La Jolla to grow its design team to handle the extra work - all Rusty products for every channel will be designed in-house. Toby anticipates no logistical problems shipping large volumes to JCPenney. He said La Jolla is a distribution company in addition to a marketing and design company, and has a state-of-art warehouse and systems ready to go.
"We are pretty sophisticated when it comes to fulfillment," he said.
I had to ask Toby if this segmentation strategy is one La Jolla would pursue with its other brands.
He said in making the JCPenney decision, La Jolla evaluated all of its brands and their platforms for growth. It made the most sense for Rusty, he said.
"We have no plans at this stage to do the same with any brands currently in our portfolio," he said.