Industry vets and others and their tips for weathering 2009

After a week of more tough economic news, we thought it would be good to hear how some key industry leaders think brands and retailers can weather what looks to be a difficult year ahead.

So we went back to recap the highlights of a seminar from ASR led by Angelo Ponzi, President of Board Trac. He asked the panel to talk about the opportunities that tough times present. On the panel: industry leaders Dick Baker, the chairman emeritus of SIMA, Doug Palladini, Vice President of Marketing at Vans, and Shaheen Sadeghi, the owner of LAB Holdings and a former Quiksilver president. Also on the panel, journalist Tiffany Montgomery, the founder of shop-eat-surf-outdoor.com

Here are some of their thoughts.

Reason for hope

Dick Baker – The world as we know it is absolutely going to change. But everybody in this room is in an authentic business. And the more authentic that action sports companies stay, the more that you differentiate yourselves, you will survive. The economy, you have no control over. You do have control over how authentic you are. You need to adapt, and reinvent.

Upside to market conditions

Tiffany Montgomery – We’ll definitely see more consolidation. We’ll see people off-loading things. But we’ll also see companies who have the money doing everything they can to support retailers and gain floor space. And for retailers, that can be good, it can help take your company to the next level.

How product segmentation can work with wide distribution

Doug Palladini – Vans is arguably the most widely distributed action sports brand in the world, yet we have product segmentation by sales channel. So if you’re a core shop, you get product that the mall guys can’t get. If you’re a mall business, you get product the big box guys can’t get. Within the segments, we have enough breadth of product to allow retailers to get the right product in your stores for your customers – something special if your shop has a skate focus, or a surf focus, or a fashion focus.

Steps to take this year

Shaheen Sadeghi – Build community. A little surf shop can’t compete with Nordstrom or PacSun, but they can’t compete with you if you connect with and build your community. As bad as the economy is, it’s the big guys who are shrinking. It’s a fantastic opportunity for the little guys. You just have to be creative, and think that your community isn’t just your neighborhood.

Doug – List everything you’re doing to drive traffic to your stores, and divide it into a must have vs. nice to have. Eliminate the nice to have. Get focused on what is driving your business. A good core shop should be a destination, a place that people pass by five or six other shops to come to you. Understand why they’re coming to you.

Retailers should challenge brands: Use my store to tell your story. And brands: choose your retailers and over-invest in those that drive your business.

Dick – If you’re a core shop, you cannot put out product that does not sell. The days of letting it sit there for a season and seeing what happens are over. Brands cannot fund non-productive inventory in core shops like they used to.

Shaheen – Look at everything in your store. Do a total retooling. Go negotiate with your landlord – every store in the country is doing it, and if you’re a good tenant, you’re hard to replace. Look at your employees, the non-performers vs. the performers. It’s time for them to step up. Manufacturers need retailers, so go back to brands because one that wouldn’t sell to you before, they might now. If merchandise doesn’t move in two weeks, flip it and put out something new.

How to make core stores community centers

Shaheen – If you’re a single store, become the main venue for your core sports in town. Work with the schools, with churches and synagogues. Be a lot more local. Put it in people’s minds that if I have an opportunity to shop, I want to support someone who supports my schools. Become really important within your territory.

Doug – REI is a good example of what Shaheen is discussing. Most people who shop in their stores have a true sense of connection beyond retailing. From the moment you walk into a store, you know that they have something for you. They bring in authors to sign books, they do product and sport demonstrations, they actually teach you how to do the sports that they sell equipment and apparel for. It’s a long-standing tradition: create a reason beyond the retail experience to come to your store. So, are you asking brands to have key atheletes come to your store? And, do not dismiss the power of a parking lot barbeque with a Tshirt and sticker give away.

One piece of advice for surviving in 2009

Shaheen – Buff out the store. Get new brands in the store. It’s massively important for the industry to keep feeding the engine by taking a chance with the little guys. And then hang on and fight like hell.

Doug – Dust off your business books from MBA-land. You need to create – or revisit – these three things: 1. A vision statement. In one or two sentences, state what your vision is for your store or brand. 2. A positioning statement. Why you’re here, and what you intend to do. 3. A meaningful point of differentiation. At Vans, we are the original footwear company that brought vulcanized product to action sports, and that’s still what everything is all about. Then, make sure all of your products and your employees are aligned around those three things.

Dick – Don’t make a bad distribution decision if you’re a brand; don’t put your brand in places it shouldn’t be just for visibility or to get that big order. Capturing the vibe is so hard in our industry. You don’t want to wake up in 2010 and have to say, OK, now we’re back to being cool again.

If I was a core shop, I’d get all the people who work for me, close up at 6, get some food and then go through the store in 10-by-10 sections. Look at every category, and presentation. Look at the validity, how it sold in 08. Does it still belong? Should it go bigger? This is really an opportunity to clarify your content. After four hours, you should be able to say you found three or four things you could significantly change for 2009.

Last thoughts

Shaheen – We will continue to see brands open to ideas from retailers to survive, because the truth of it is, there aren’t that many great retailers out there.

Tiffany – The teen retailers who did well last year had something special, they all had something that others didn’t – and it wasn’t all about price. The lesson is, if you’re carrying the same stuff as everyone else, it’s going to be tough.

Dick – I have two boys, 15 and 16. They shop Active on the internet, and other retailers. They know the stores, the brands, the stories. They know what they want. Folks, ecommerce is here to stay. It is a generational change in shoppers.

Doug – Two points. One: There are no sacred cows. Any area that was so sacred you couldn’t talk about it before? Talk about it, and talk about it now. Reinforce the things you do right, eliminate the others. Two: Lesson your dependence on third parties to deliver your message. Do more to connect directly with your consumers.

  There is no way for small retailers to compete on price. So focus on the things you can provide that big retailers can’t. Independent retailers, this is an opportunity for you to create an experience you can’t get in a homogenized mall store. Ask your manufacturers for different product; and then ask yourself what kind of experience you’re giving customers.

 

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