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LONDON — It was a sunny May day in Sardinia when 250 unsuspecting men and women spotted Naomi Campbell and came face-to-face with the future of Speedo.
On May 19, Speedo’s international employees gathered in southern Sardinia for their annual company conference. A larger-than-life photo of Campbell wearing a white bikini hand-embroidered with thousands of sequins and Swarovski crystals had been posted near the entrance.
Everyone stopped and stared. No one knew why she was there or, for that matter, what brand of suit she wearing. At the end of the day’s meeting, Speedo chief executive officer Andy Rubin staged a fashion show with 10 swimsuits dreamed up by the London-based swimwear designer, Melissa Odabash.
“The idea behind doing the Odabash suits was to create a product so beautiful that supermodels would want to wear it,” Rubin said in a phone interview. “We wanted people to say, ‘We didn’t expect that from Speedo.’”
Rubin’s family owns Pentland, a privately held, international brand management group that, in addition to Speedo, owns sports, outdoor and fashion brands, including Ellesse, Kickers, Berghaus and Red or Dead. It also holds the worldwide license for Lacoste footwear and Ted Baker footwear.
Pentland has transformed Speedo into a brand with $500 million in wholesale volume. The brand is sold in 172 countries and has 70 freestanding stores and 80 in-store shops. A spokeswoman for the privately held Pentland said 2002 retail volume of all its brands was $2.3 billion.
Speedo has 65 percent of the worldwide market for racing and performance swimwear, and has about 20 percent of the U.S. market. Speedo sponsors or has relationships with 850 swim clubs in the U.S.
In the early Nineties, Pentland began buying controlling stakes in the various Speedo companies around the world and eventually purchased the rights to the Speedo brand worldwide from Linter of Australia. At the time, Speedo had no distinct image and, according to Rubin, many people assumed it was a local brand in their market.
“There was no [single] international product line — each market had its own colors, shapes and sizing, and a sort of ‘brand policeman’ to oversee it all,” Rubin said. “What we did was put the pieces of the puzzle together. In fact, our biggest challenge so far has been producing an international collection.”
Indeed, Rubin can remember some of the first Pentland-organized annual company meetings when Speedo directors from around the world would look at the season’s international collection and insist it wouldn’t work for their customers.
Rubin said the May meeting in Sardinia was particularly sweet for him. “There we all were, on the beach, doing beach sports — and testing the product, and basically living the brand,” he recalled.
Rubin and his father, Stephen, were no strangers to brand building. In the early Eighties, the elder Rubin turned his initial $77,000 investment in Reebok International into a 55 percent stake worth $777 million. Pentland sold the last of its Reebok holdings in the early Nineties.
Rubin said of his father. “In the early years, we worked very hard at creating an umbrella that would group all of the Speedo businesses. We set out to give the brand a clear and consistent positioning, and reenforce its brand values.”
In 1998, the younger Rubin replaced his father as ceo of Pentland. “There has been a gradual move towards fashion.”
“We wanted to put a new emphasis on fashion in our beach, rather than the pool division,” he said. “Speedo has traditionally been performance-driven, but we thought why can’t it be catwalk-driven, too? If you think about it, the beach is a natural catwalk. The idea was to partner with high-end designers like Melissa and give more of a couture feeling to the beach collection.”
Although Odabash’s designs aren’t made to go in the water, Speedo asked the designer to create three suits to be sold at retail (see related story on page 8).
Rubin believes that a move into fashion isn’t so far-fetched for Speedo.
“A few years ago, we asked consumers how they felt about the idea of Speedo as fashion,” Rubin said. “What they did say was they trusted Speedo for fit, high quality and durability, which made us think that we could transfer those values to a more fashion-oriented product. If Speedo could make a swimsuit aimed at best performance in the pool, then why couldn’t it make one aimed at looking your best on the beach?”
Rick Leto, the executive vice-president of merchandising at Kohl’s, said, “We consider Speedo a super-brand at Kohl’s — which means that we sell all product categories — from swimsuits to goggles to beach towels for men, women and children. Over the years — and I’ve been watching Speedo ever since 1979 — Speedo has evolved from a performance brand to a more balanced brand. At Kohl’s, Speedo’s sales have grown every year and have met all of our expectations in terms of growth and sell-throughs. Even in light of the bad weather, men’s wear has been well ahead of plan.”
While swimwear comprises the bulk of the sales at Kohl’s, Leto sees opportunity in less expected products.
“They’ve developed this water-proof pocket for men’s swimming trunks so that when a guy goes swimming he can put his money — or whatever — in and it won’t get wet. They have all these value-added features that enhance the perception of the brand. I think that’s the way forward for them.”
Rubin’s team set about designing new fabrics that could compete in a fashion market, the latest being a white fabric that doesn’t become transparent in the water, and next season’s Sculpture fabric, which holds the body in while allowing freedom of movement (see related story on page 30).
“With Sculpture, we’re capitalizing on the whole holistic, well-being, Pilates trend,” Rubin said.
In addition, he said, “Speedo has a heritage in fashion. In the beginning, it made fashion swimwear. Only when it saw a gap in the market for performance swimwear did it go in that direction.”
It was Speedo that was a leader in rescuing swimmers from those knitted wool suits that were designed simply to cover the body, and which stretched and lost their shape when they hit the water. Speedo would later go on to replace the silk with nylon and blend the nylon with Lycra spandex.
Speedo’s first icon product was the “Racerback” bathing suit made of silk and launched during Speedo’s founding year in 1928. At the time, the company that was to become Speedo was still known as MacRae Knitting Mills. It was founded by Alexander MacRae, a 22 year-old immigrant who arrived in Sydney, Australia from the Scottish fishing village of Loch Kishorn in 1910. The company, founded in 1914, began by manufacturing hosiery and expanded into underwear, and later swimwear.
The Twenties were heady times for water lovers. Swimming was becoming accepted as a sport and more liberal attitudes toward mixed bathing meant that men and women needed more practical suits for their summer outings. The Speedo name sprung from a staff competition where one Captain Parsonson coined the phrase: “Speed in your Speedos.” The brand was soon dubbed the “great Aussie Cossie.” (Cossie is short for costume, as in swimming costume.)
Then opportunity knocked and Speedo set out to fill what it saw as a gap in the market for competitive swimwear. Throughout the Thirties and Forties, Speedo dominated the world of competitive swimming, with increasing numbers of athletes choosing to endorse the brand. During World War II, 90 percent of the company’s production went to clothing for soldiers, while 10 percent went to essential civil service production.
The year 1956 was a turning point for Speedo when it dressed the Australian team for that year’s Melbourne games. Within a week, the Australians won eight gold medals and boosted Speedo’s profile worldwide. Three years later, the brand was being exported to the U.S. and Canada.
After founder MacRae’s death in 1938, the company remained in private hands until 1951 when Speedo Knitting Mills was incorporated and became a public company listed on the Sydney Stock Exchange. Throughout the next three decades, Speedo built its name on competition swimwear, supporting clubs and teams at a grassroots level and working with top-tier athletes, but it also moved into beach and surfwear.
At the same time, its business paradigm was granting licenses for the manufacture and distribution of swimsuits with the Speedo name in a variety of markets around the world. Among the companies that held licenses for Speedo was the Warnaco Group. Under Linda Wachner, Warnaco’s former chairman and ceo, Speedo’s retail presence in the U.S. market multiplied.
In the Nineties, Pentland would take what eventually became an unwieldy structure, and set about turning it back into a world-class brand. In May 1990, Pentland bought a 39 percent stake in the management buyout of the North American Speedo license, AFC, for $10 million. That purchase gave Speedo the rights to the Speedo name in the U.S., Canada, Mexico and the Caribbean. Later that year, in August, Pentland bought the Speedo brand name and the Australian Speedo operations for $37.1 million from the Australian Linter Group. In December, it bought Speedo Europe for $8.8 million. By the time the year was out, Pentland owned the Speedo brand worldwide.
Rubin said the future is going to be about controlled growth.
“Seventy-five years from now, I’d like to say that my heirs will be managing a quality brand that’s consistent and aspirational, with an attention to detail,” he said. “We’re not looking for explosive growth. In fact, we see this as a long-term project with correct positioning in the market.”
He added that there may be co-branding in the future, too, although it’s too early to be talking about a chain of Speedo resorts in sun-drenched locales.
“We are looking at different ways of creating a lifestyle feel, and experience, for our customers,” he added. “We’re using the 75th anniversary to as an opportunity to build on our strengths. We see it as a launch pad.”