ROTH CAPITAL PARTNERS: Hosting 27th Growth Stock Conference March 8-11 in Dana Point, Calif.
Details on Industry Insight.
I had a nice and informative talk with Rusty North America President Charlie Setzler at Surf Expo.
We talked about Rusty’s new Wired Series fleece, how Rusty is differentiating itself at the core level, and how the new relationship with JC Penney is going.
The La Jolla Group took over the Rusty license in the summer of 2007.
Charlie said 2008 and 2009 were challenging transition years, when the new Rusty team had to figure out not only how it would be different from the other surf brands in the La Jolla Group, but also from other surf brands in stores.
Now, Rusty believes it has that point of differentiation not only in North America, but also around the world.
“For the first time ever, Rusty is aligned globally – the look and feel of the brand, the direction,” he said. “It used to be everybody was doing their own thing.”
Rusty is positioning itself as the younger, edgier, hipper surf brand. It’s still a mainstream surf brand, Charlie said, but one with more of a fashion feel.
2010 is year one of a three-year plan that La Jolla has for the reinvented Rusty brand.
“We have the plan now,” Charlie said. “2010 is all about execution.”
As part of its planning, Charlie said Rusty determined what is the “big idea” for the first half of 2010 and for the second half of the year.
Rusty’s eco stretch boardshort is the big idea in the first half, and the Wired Series fleece in the second half. Both are only available to specialty retailers.
Rusty launched the Wired Series at Agenda and Surf Expo.
The fleece comes with headphones at the end of the drawstring cords and a wire for plugging in a music player in the pocket.
Charlie said the reaction from retailers so far has been fantastic. Buyers particularly like that the technology is simple without a lot of gimmicks and buttons.
Retail prices range from $49.50 to $74.50 depending on the jacket style.
Charlie said this is just the beginning for the Wired Series, and Rusty will build on the product each season. For holiday, for instance, the headphones are incorporated in a pea coat.
“We’ve really just scratched the surface with this,” he said. “There’s a lot more to come.”
Rusty is also on the verge of announcing a collaboration with a VERY large band around the Wired Series that comes with tons of marketing opportunities.
Like Vans and Nike, Rusty has embarked on a segmentation strategy where it provides different kinds of goods to different distribution channels.
Rusty’s large retailer partnership is with JC Penney, where it launched product for back to school last year.
Charlie said the relationship with JC Penney has gone well. The volume from that partnership has allowed Rusty to increase its marketing spend for the specialty market.
Before, Rusty advertised in one magazine and had no budget for online advertising. Now, it has a much broader print campaign and a full campaign on Surfline, Charlie said. It also has given Rusty more resources to invest in product development.
And 100 percent of Rusty’s marketing budget is aimed and the core and specialty market.
Charlie said the strategy appears to be working – different customers shop in different channels and Rusty product is selling in both places.
Rusty has a different design team for the JC Penney business, and Charlie handles the sales for that account.
“It’s like running two different brands under one roof,” he said.
I asked him what he’s learned from working with such a large national retailer.
“JC Penney is a very black and white business,” he said. “I’ve gotten in education in corporate retail.
“It’s not as emotional. With specialty, there’s a lot of emotion, passion, feeling – that’s what makes this business so great.”