Surviving the business cycles is one part adaptability and reinvention. The rest is all about brand equity.
A panel of executives from mostly the apparel industry — ranging from pro skateboarder Tony Hawk to Differential Brands Group Inc.’s Michael Buckley — talked Monday about brand-building mistakes and successes during investment firm Roth Capital Partner’s annual Roth Conference in Dana Point, Calif., which runs through Wednesday.
A common theme for the panelists was brand authenticity — a currency across any industry that can help weather the ups and downs in business.
“I survived two cycles of skateboarding popularity,” Hawk said during the panel. “The first time around was in the late Eighties…a lot of it was just giving up my name freely for licensing and for contracts and I learned very quickly that people didn’t care about the integrity or the quality of the product. So when I got sort of a second chance at it, I kept control of my name, my brand, my likeness and that was a fight. It was a battle and there were some deals I lost along the way but I ultimately proved myself.”
Hawk is a serial entrepreneur with a video game series under his belt along with clothing line Hawk Designs Inc., which was part of Quiksilver Inc. up until 2014 when it was sold to Cherokee Inc. for $19 million. The deal was part of a turnaround strategy for Quiksilver as it aimed to shed brands that fell outside of its core portfolio of larger moneymakers for the company.
The deal made sense for Hawk, who told the crowd at the conference that the company now has the backing to scale globally.
“It feels like we’re finally at that stage where we can take advantage of that global [brand] recognition,” Hawk said. “It’s something we wanted to do for the last 10 years but couldn’t.”
The ability to retain control of the brand or at least find the right partner to maintain that brand integrity is key, the panelists pointed out.
“There’s been a lot of lessons learned at Cherokee,” said Cherokee Global ceo Henry Stupp.
He cited the company partnering with Target in the Nineties in a deal that transformed the brand into a multibillion dollar business, but the upward trajectory didn’t last forever. “But we learned along the way that if we don’t invest alongside them we could strain our relationship with our partners, which is what brought me to the company in late 2010,” Stupp said. “We were in about 19 countries. We were declining in most purely by not supporting their efforts and we introduced a new platform we called our 360 where we would become a better partner. We took keys back. We started developing product, developed a supply chain and created a whole suite of marketing tools.”
Cherokee in the last five years has gone from a $1 billion business to about $2 billion in sales and from 19 countries to about 50 under Stupp’s leadership.
It’s an intricate dance, knowing when to strike a strategic partnership in the case of Cherokee and Hawk Designs. It’s just as challenging determining when to grow the direct business Differential ceo Michael Buckley pointed out. Differential owns Hudson Jeans and Robert Graham.
“We love to think that we could grow there [in wholesale] forever, but the reality is you cannot control your own destiny certainly at the premium level just on the wholesale side so it’s very important long term that premium brands develop a direct-to-consumer model,” Buckley said.
Performance Sports Group Ltd., which sells athletic gear under brands such as Bauer, Mission and Maverik to primarily 16- to 18-year-old boys who play lacrosse, baseball and hockey, about a year ago announced an initiative to go direct with Bauer with about eight to 10 doors over the next several years — a small amount against the roughly 1,500 doors in North America the brand is in but still a big decision in the context of balancing relationships with retailers.
The stores have small ice rinks and employees trained to be able to speak to customers about the performance properties of what the stores sell.
“We wanted the shopping experience to be elevated,” said Performance Sports president Amir Rosenthal. “We sell only at premium price points … [the stores are] very much meant to be complementary.”
As brands go direct, they’re also seeing retailers take control of their own destinies via private label, another shift the broader industry must adapt to.
“We see retailers doing more and more private brands and they’re fully in their rights to do that,” Stupp said. “We’re in a situation now where Target’s introducing private brands to replace Cherokee next year. That’s fine. We’ve seen that cycle happen. We’ve seen it happen every 8 to 10 years. At the end of the day…retailers don’t make brands. Consumers make brands. True brands have emotional attachment and we like to coexist with the private brands. We feel like we’re a very important part of the ecosystem in a good, better, best scenario.”
Even with the backing of a larger parent, how much floor space a brand gets on the store floor always comes down to brand equity, pointed out Rosenthal, who used the example of VF Corp.
“One of the things that’s special about VF is if you ask the average person…whether the various brands that are under VF are all part of VF Corp., they’d say I have no idea. I just know that it’s a brand and I like what it sells and that product speaks to me. We want to do the same thing with Performance Sports Group. We want our brands to stand on their own.”