No Limits Distribution just announced it will be distributing Sanuk in Canada. I also heard it has a new men’s underwear brand that it owns, Saxx, that is supposedly revolutionary in a way that goes beyond my expertise.
Given all the news out of Canada lately with the West 49 acquisition and Zumiez expansion, I thought it was a good time to talk to No Limits founder Darren Hawrish about the Canadian action sports retail climate and more.
No Limits distributes nine brands in Canada including Osirsis, Famous Stars and Straps, Sessions, Tap Out, Capital, Coal, Obey and Union.
Tell us about your new deal to distribute Sanuk in Canada. Is that a conflict at all with Reef, which is also under the No Limits umbrella?
Actually, taking on Sanuk is more like a brand swap. As of July 1, Reef has moved all Canadian business to their Montreal based Vans and North Face offices so we are no longer working with Reef in Canada.
We are very excited about taking on Sanuk and its huge growth potential in Canada. Not only is it one of the hottest brands in our market today, but Sanuk’s culture and distribution strategy falls in line perfectly with our own here in Canada.
What is the retail climate like in Canada right now?
The best way to put it is that retail has a hangover right now. It’s awake (but not fully) and is hurting from the past 12 months of weak sales and low margin business. Dealers are beginning to see sales pick up, but they are still having a tough time paying for past purchases, making it tough to freshen up inventory.
What do you think of big U.S. retailers such as Journeys and Zumiez moving into the country?
It’s a big move and it requires extensive structural undertaking to expand into another country. However, they are both large companies with good history and neither of them would make this move unless they saw opportunity in this market.
Action sports is our primary business, so on the outset I’d say it’s encouraging that well educated retailers believe there is still room for growth in this market in Canada. Of course being patriotic, I wish it were Canadian-owned retailers that could service the market to its full potential.
If these two new entrants are able to surpass the challenges ahead of them, then I believe we will see some fall out of good Canadian retailers that are simply not able to operate under the same economies of scale.
I believe these new entrants played a big part in West 49 selling to Billabong. West 49 was already having a tough time and recognized these two big players as direct competition against which they could not compete. It was a good time for West 49 shareholders to exit before things became worse.
On page 2: Spring orders, Obey in Canada, Saxx
How are orders going so far for Spring 2011 season? Are retailers comfortable prebooking or do they want to order closer to season?
We haven’t actually started pre-booking for 2011, but have been discussing expectations around it with dealers for the past few weeks. Of course everyone would prefer to book as late as possible to have the best read on trends and inventory needs, but that’s not a realistic opportunity with most brands.
Dealers are generally well educated in their budget needs and are comfortable pre-booking by deadlines. It’s been much more difficult these past few seasons and everyone is playing with much more caution, but dealers really do work with us and bookings come through.
Sales have started to pick up at a moderate pace, and in general, retailers have been running tighter than usual on inventory, so I expect 2011 to be a good booking season.
Obey is a hot selling brand here. How is the brand being received in Canada?
Obey is experiencing the same demand here in Canada. We set up a more select distribution for the brand with a very underground marketing approach. This meant a slower cycle to the growth phase, but we’re in it now and are very stable and strong as a brand in Canada.
Consumers (outside of the true art, music lifestyle community) are now just learning about the brand and are appreciating the fresh style and feel of Obey. Also, we have great retail partners that really helped build the brand and are now experiencing the same high turnover and consumer demand as in the USA.
Are you targeting the action sports market with your underwear brand, Saxx?
It’s just one of the markets we are actively pursuing.
Saxx is an underwear brand and is leading the charge to create a new category of men’s furnishings in specialty retailers. This category was traditionally distributed through the department stores.
The customer who buys one pair (and is happy) comes back and purchases at least another 4-10 pairs. This repeat consumer purchase on the same product is new to the action sports market.
For example Sunny Smith, a small Surf shop in Orange, CA has one customer who’s bought 13 pairs already across all three fabrications.
In addition, retailers are finding Saxx has become one of the highest turning sales dollar per square foot of any brand in their store.
But, Saxx is not just any other underwear, they actually solve a guys problem of “tolerated discomfort” if you know what I mean. (No more constantly needing to adjust “the package”).
We’ve recently opened up several key players in the action sports industry, including Jack’s Surfboards (Huntington Beach, CA) , Hansen’s (Encinitas,CA), Coast to Coast (New York), and ET Surf (Hermosa Beach, CA).
We also have crossover into fashion all the way to department stores like Nordstrom set to test in their top doors later this month.
