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Details on Industry Insight.
Updated Friday at 2:45 p.m. with photos of the new Billabong and Hurley stores
ZJ Boarding House debuts a new strategy this weekend with two of its three spaces converted to Billabong and Hurley stores.
I talked with ZJ partners Mikke Pierson and Todd Roberts about the changes over lunch last week in Santa Monica.
ZJ has three separate yet contiguous stores on Main Street. The original store on the corner, a core surf shop in the middle that carried boards and accessories and a junior's store.
The middle store is now a Billabong store and the junior's store is now a Hurley store. Todd and Mikke still own and operate the spaces.
The changes are similar to those happening at important surf shops such as HSS. There, Billabong products and others from brands owned by Billabong are now sold in the junior's store. Bob Hurley previously told me Hurley is working with HSS in expanding Hurley's presence in the main HSS store, and at Jack's and Surfside Sports as well. The HSS buildout opens today.
I asked the ZJ partners why they decided to make the change.
"The retail model is changing and we were getting smacked pretty hard by it," Mikke said. "This gave us a real opportunity to think outside the box. The snow business is changing and surf and skate, too."
Todd said they didn't plan on opening brand stores when they first talked separately to Billabong's Paul Naudé and Hurley's Bob Hurley. Mikke and Todd said were looking for advice and insight from the two executives about where they thought business was headed.
"We were shaking in our boots - the sky was falling on us," Todd said. "Sales were drying up. We respect them and wanted to get their perspective. ...This was a natural progression. We had this much square footage and we needed less. The discussion evolved, and we ended up saying, ‘Let's do something together.'
"Both Bob and Paul have a genuine care for surf culture and our end of the food chain," Todd said.
Mikke said having the Billabong and Hurley stores on the block gives the partners an opportunity to tell a new story.
"We now have ZJ's and two other stories," he said. "Our block now has more energy, especially with Undefeated and American Apparel across the street."
The ZJ, Billabong and Hurley stores will be different shopping experiences, Todd said, and he described the Hurley and Billabong spaces as "very contemporary."
The partners declined to discuss in detail any financial arrangements with Billabong and Hurley. But, there are some financial benefits for the business, Mikke said.
"It makes sense for us and a lot of sense for our customers, too," he said.
And, the partners expect there will be more marketing opportunities with both brands.
In July, Todd and Mikke will tackle remodeling ZJ's space. And, because of the Billabong and Hurley expansion, other brands are saying, "How can we step up our game" and help, the partners said.
Now that the three ZJ's stores are being consolidated into one, that means some categories are shrinking. Todd and Mikke are focusing their efforts on the categories with the most return on investment.
Junior's will be smaller since it doesn't have its own store and will have fewer items such as handbags and footwear.
The surfboard section will be slightly smaller with most of the focus on short boards because longboard sales have slowed.
Footwear will be smaller and more focused.
And, ZJ's is scaling way back on its snow business with a minimal commitment to hardgoods. Instead, the store will focus on the areas that make money: rentals, service, technical work and accessories.
When I visited Todd and Mikke last Wednesday afternoon, a few days after they had consolidated the three stores into one, the main store was busy and full of energy.
With business so brutal for many retailers, I asked Todd and Mikke what they have learned in the last year.
"You find out who your friends are," Todd said. "I have such a clarity now about how important relationships are throughout the industry."
"I always communicated a lot, and when times are tough I've been able to have great discussions," Mikke said. "If there's a silver lining, a big event like this makes you put fresh eyes on what you do. It's certainly been that year.
"It's not just retailers that are having a hard time. Manufacturers are going through massive changes, too," Mikke said. "I think we all realize we really need each other, and both retailers and manufacturers have a vested interested in opening a new dialogue and finding common ground."