LOS ANGELES — Richard Baker likes to tell listeners that in the action sports industry, where executives really do show up to meetings in shorts, he’s known as The Suit.
Never mind that the Op chief, known as Dick, resuscitated one of the category’s legendary original brands back from bankruptcy and into a thriving force with 35 licenseesin 83 countries. The portfolio counts home, accessories, fragrance and clothes for every member of the family that is expected to exceed the $250 million mark in wholesale volume in 2004 — a sixfold increase since Baker arrived.
Or that in his second elected term as president of the Surf Industry Manufacturer’s Association he has refocused the organization to run more like a business and better serve its membership.
When he and his partners in the San Francisco-based investment group Doyle & Boissiere acquired Ocean Pacific Apparel Corp. from Berkeley International Capital Corp. in 1998, the mild-mannered Baker was a relative unknown in this arena. Most in the surf industry only knew of him as a New York transplant, the former president of Tommy Hilfiger’s women’s division.
But as Quiksilver chief executive officer Robert McKnight insists, “The suit’s gone, he’s got the goatee now and he’s one of the bro’s. It’s not easy to come into our tight-knit surf community. Dick hasn’t done it by trying to talk the lingo. He’s done it through action: pioneering SIMA in Europe, making the [annual environmental fund-raiser] Waterman’s Ball better attended than ever. He’s been able to articulate the surf industry and its causes. Op was this mass-market joke of a brand and Dick’s been able to revitalize it. At the end of the day, everyone likes to hang with him.”
Counter to prevailing wisdom in the action sports industry, it doesn’t take a surfer or skateboarder to ride a company to success. A board rider, co-founder Jim Jenks, at the helm of the once-$700 million brand certainly didn’t prevent it from filing for bankruptcy in 1992.
A decade later, most observers credit the “secret” of Op’s juniors and overall branding triumph to a multibrand strategy Baker introduced that targets product categories by age group and distribution, positioning its West Coast-inspired lifestyle products across several segments. It’s no longer about being “core,” a near-mythical positioning, whereby board and street brands strive to retain credibility among the original fans by claiming not to appeal to outsiders.“No one’s going to confuse Op with being core anymore,” said one competitor at the August ASR Expo in San Diego. “But what does that mean anymore?”
The brands at Op Apparel are:
Op, the contemporary banner brand sold in department stores.
Ocean Pacific, for 22- to 45-year-olds. The spelled-out label is available exclusively through J.C. Penney through the end of 2003, with wider mid-tier distribution going forward. It is considered more sophisticated resort- and casualwear.
Seven2, the newly launched, fashion-driven line, which enveloped the high-profile, retro revival Op Classic experiment, a mini-line of its Seventies heyday classics that proved a hit among cool specialty shop consumers from Japan to London.
It hasn’t been easy — and the company was being shopped around last year.But that’s ancient history now.
“When I look back at companies I’ve been involved in,” said Baker, “a common theme emerges: They all required some form of reconstruction, repositioning — either as a brand or category. I believe our business model is one of the future. You’re going to see a lot more setups aligning with multiple manufacturing partners. By offering cool product with cool marketing, it no longer is a function of where you bought it.”
To that end, the company keeps tabs on its licensees, working intimately with them.It recently added New York-based Mitzi for junior handbags, backpacks and related accessories. “I’m an operating person by background. I didn’t approach this where you license the name out and collect a check,” he noted. “We’re involved throughout the process. The difference today is we’re making great product and we’re marketing the brand.” In 2001, it brought its advertising and public relations in-house. Ad placement quadrupled to 40 titles in 2002, increasing pages by 20 percent this year with an additional 20 percent expected in 2004.
“There’s a huge price-to-value equation that didn’t exist five years ago. In reinventing Op, it would’ve been impossible to play in the high-end fashion part because there was a huge movement in apparel where prices were getting lower and quality higher.”The Op juniors line grew 40 percent in 2002, and is expected to rise in sales “significantly” this year, said Baker, as distribution continues through midtier channels such as Kohl’s, May Co. and Federated stores.
But Baker isn’t ignoring more trend-setting specialty stores. The success of Op Classics prompted the birth of Seven2 — a take on 1972, the year three surfer friends founded the brand —which tested the retail waters last spring with a men’s line, then introduced a women’s swim collection a season later. The company put the brakes on the line this fall, opting to skip a season to finesse the apparel end of the brand (swim shipped to Victoria’s Secret and other specialty retailers in November) and ready it for a major spring 2004 rollout in women’s and men’s.
“Our focus with Seven2 was pushing the boundaries in product direction andimage,” continued Baker, who expects first-year sales of $15 million. “More importantly, it’s about expanding beyond sport with a more sophisticated fashion base. There’s a huge void between the pure surf brands and pure urban brands. We see a big opportunity to attract a young individual with a fashion-driven, music-oriented lifestyle.”
In fact, the overall strategy of playing to the modern snapshot of the so-called California brand, one that is more about a broader lifestyle than specifically about surf, has been integral to the company’s overall success. Besides athletes, “ambassadors” of the brand include musicians, DJs and graffiti artists whose shows the company sponsors. And its most visible poster girl, national surfing champion Holly Beck, made international fashion news as a Chanel runway model — a side gig Baker happily points out.
Understanding the California culture is not exactly an outsider study for Baker. He’s a Golden State native, although growing up in the San Fernando Valley, an inland suburban area north of Los Angeles, might as well have been New York to the beach-bred rulers of the action sports universe.
His three-decade career started at Bullock’s, then shifted into the wholesale arena, as he moved through a succession of top gigs in New York, including executive vice president of Eagle Shirtmakers’ Pierre Cardin sportswear and dress shirts division, president and chief operating officer of Winston Mills’ Marithe & François Girbaud division (when the company held the U.S. license to produce the line) and ceo and president of Izod Ltd.’s men’s wear.In the mid-Eighties, Baker headed north to San Francisco and eventually rose to president of Esprit Sport, followed by Esprit Women’s Wear, opportunities that provided much of his “education of seeing the big picture of a global lifestyle brand. It changed the way I looked at everything —business, aesthetics, style, taste.” It’s also where he met his wife, Una, an Esprit designer, and where he was when the first of his two children was born. Today, she and the teens are avid surfers.
At Hilfiger, he led the expansion of the juniors line, which grossed $100 million in the first year, through product licensing agreements.
“The opportunity to come to California took a lot of people by surprise. It hasn’t been easy. It’s been a real labor of love. But it’s been about staying true to what I know and what Op is about.”
Not having “grown up in the vacuum of the [action sports] industry, the culture” has benefited Op and the industry itself, observed Thom McElroy, a consultant to board sports manufacturers and retailers.
McElroy believes Seven2 “could go head-to-head with the other brands in the category,” mostly upcoming hot labelssuch as Rvca, American and 1984. “Dick knew that he was maxing out the distribution of Op, so he was smart enough to start the new brand.”
Lanie Pilnock, trend manager for juniors at Marshall Field’s, looked at Seven2 with the department chain’s buyers at the August edition of MAGIC International.
“I thought it had a new, fresh perspective. Surf tends to be too girlie-girl and Seven2’s a great bridge between surf and skate and street — a little edgier, not as cutesy.”
Still, the retailer, which upped its buy into the surf lifestyle category this fall, stocking Hurley, Billabong and anticipating deliveries from Split and Roxy for spring, decided to pass on the line for now. Pilnock said its Midwestern juniors customers, age 14 to 19, are probably “rating the lines they want from the media blitz that’s happening from advertising and all the new hot shows like ‘The OC’ that feature the brands we carry.”In fact, getting younger generations who didn’t grow up on Op’s signature cord shorts or terry polo shirts to turn on to the brand has been both a challenge and blessing for the company.
In the recently released Wave Report from Board-Trac, the syndicated market research firm that tracks the habits of 12- to 24-year-old consumers who participate in or are influenced by board sports, Op barely made the grade. Among respondents nationwide, it didn’t show up in the overall top 10 brands (by comparison Abercrombie & Fitch made number 10), and only ranked 10th — tying with another brand, HIC, when it comes to boardshorts.
But the total sampling of 2,124 young men and women are so-called core consumers, who participate in some kind of wave-riding activity at least once a month.
“Op went big and broadly mainstream, and some of these teens, who tend to shop specialty stores, aren’t that familiar with the brand,” said Board-Trac managing director Marie Case. “Op wasn’t on the radar when 18-year-olds started shopping. It’s only in the last few years that it has come back on in a huge way. My guess is that next year, it will register a little higher.”
(Indeed, in this year’s WWD 100 list of most-recognized apparel brands, Op ranked sixth in juniors; second in swimwear, and number 33 overall.)
There are specialty stores, like Yellow Rat Bastard in New York, that are chomping at the bit for Seven2. YRB president David Ishay said the inaugural delivery of men’s pieces sold “very well,” and he’s looking forward to reviewing the women’s line. “They don’t brand it as coming from Ocean Pacific, so we wouldn’t expect the customers to know or even care about that link.”
Others caution that while Op has risenamong cool specialty stores while trading on its signature past, the high-image retro pieces “already look old hat,” said one observer.”
But Baker and his crew are already working on that. Spring’s Seven2 line aims to compete with the best of them, including women’s lines from Volcom or Hurley or those outside the arena altogether.“The real issue is what’s after Seven2,” said Baker. “We have a huge opportunity to grow Op and Ocean Pacific. We’re locked down to a specific distribution strategy for now. But it’s an issue of keeping our heads down in the next two to three years and watching the brands grow beyond anything the company’s done before.”
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