Adio President on new distribution strategy

We talked to Jim Stroesser of ADIO about the remaking of the brand’s entire business model, including cutting ADIO’s skate team, lowering prices and targeting a more mainstream, price sensitive customer.

What is your background in action sports and when did you join the brand?

I have been involved in the industry for over 25 years and have worked with most of the industry’s giants such as Nike, Oakley, Quiksilver, Pony, and was an owner/partner in Converse, buying the company from bankruptcy, rebuilding the brand into a global icon, and selling it to Nike.

I joined Adio in December 2009 after AL&S took on a long-term global license from K2, which is a division of the Jarden Corporation.

What is AL&S?

AL&S is a shoe company based in New York that owns or licenses many brands including Bob Marley, Levi’s, FUBU, Phat Farm, and U.S. Polo.

Let’s talk about ADIO. Where is ADIO based now?

We have been running ADIO out of a great location on Cedros in Solana Beach for the last year, but we moved our corporate offices back to the New York in December 2010. However, the marketing and sales departments remain in Southern California.

In the last year you cut a lot of jobs, right?

We let go of our entire skate team as well as some employees based in San Diego. But, we now have a small flow team and introduced the ADIO Pay it Forward giveback program, which provides product to skaters, action sports athletes and musicians in need through a number of organizations.

Aren’t you worried that as a skate shoe brand not having a core skate team is going to affect your brand perception, especially with the core skate market?

The core channel hasn’t really supported the brand for a few years. Based on today’s business environment, we were forced to drop our skate team and put the money and emphasis back into creating great product to create a viable business model. We still do a grassroots-marketing program, a giveback program, and we’ll still do marketing through music and skateparks.

It was a controversial decision, but at the end of the day the brand has to make money to survive. You can’t give anything unless you have something to give. So we made changes to get back on track.

Why did you decide to change your distribution strategy as well? You’re now selling shoes for a less expensive cost to broader distribution channels at mid tier accounts?

We were up against the DCs and Etnies, etc. of the world. Rather than try to position ourselves to compete directly against the big boys, we decided to go down a price point and offer consumers an authentic skate brand at a value price.

It’s pretty simple. We offer a high quality shoe and better price points from a brand that still has great awareness. AL&S is a sourcing and product powerhouse, which will help make a profitable business model for ADIO.

How exactly are you changing your pricing structure?

Our shoes were in the $40 to $70 range. Now they’ll be more in the $20 to $40 range. We will offer our tech series including ¾ airbag shoes for $40 retail with long margins for the retailers, which is an incredible price for that type of shoe. Most companies would not be able to offer such quality at that type of price.

See Page 2 for more on Adio’s new strategy

So where will you sell? Not to the core, but to mid-tier only?

Our retail structure will be less about the core although they can still buy ADIO if they want to have an authentic skate brand at our new pricing. We plan to do more business within the mainstream stores like Shoe Show, Shoe Carnival, Big Five, and Sports Authority.

We originally were spending a lot of money investing in the brand’s marketing and now we are going to the next phase to make it profitable with today’s business environment.

We plan to still give back to the skate market, but you have to generate sales and profits to be able to give back to the market. We invested a lot into the brand with the (SST) Skate Specific Technology series and the Going Forward marketing campaign.

How big is ADIO now and many doors are you in?

Size-wise we are not as big as our brand awareness. For doors, I’d say we’re probably in around 4,000 doors domestically but our international business is strong and growing. Our new pricing strategy rolls out this spring so we’ll probably add a lot of doors.

How have retailers responded to ADIO’s changes?

Mainstream retailers seem to be okay with it – specialty stores were disappointed. To mainstream accounts, we think it’s a better strategy because we are offering our products to a broader consumer base with better margin structure.

How many mainstream stores do you plan to sell to? Will you sell to Target or Wal-Mart?

No, we will not sell Target, K-Mart, Wal-Mart, or Payless. Airwalk is in Payless. We will probably compete against World Industries directly unless some of the other skate brands decide to compete at lower retail price points as well.

We have less direct competitors than we did before. It’s a smart strategy. We think we will double in sales this year and quadruple in size in next three years.

Besides running Adio, you are also partners in a music company?

Yes, I am an owner/partner and board member of Dirtbag Music, which is a record label and an apparel company targeted to musicians from fledgling bands to high-level rockstars. Dirtbag just recently became an independent record label partner with Warner Music, which is like getting Nike to join forces with your company. I was attracted to the company because of the brand authenticity and impact that music has on popular culture in every industry, especially action sports.

I also sit on the board of the San Diego Sports Innovators (SDSI) with Chairman Bill Walton. SDSI is a non-profit organization that helps companies in all aspects of the sports business by mentoring young entrepreneurs, providing access to working capital, connecting new technologies to the sports industry and providing a networking platform for companies and individuals.

Through SDSI, I have become involved with Code Technology and Neptunic Technologies, both companies that have break-through technologies that have huge potential to be game changers the sports industry.