Surfing brand Billabong International is moving down stream into retail to better control how its products are sold. An increasing trend amongst the large retail chains is to increase the proportion of merchandise they sell under their own brands. Brands like Billabong can either cop it sweet and sit back and let their share of floor space and sales decline or they can take steps to control their own destiny. It is pleasing to see that Billabong has opted for the latter. Billabong is increasingly seeking to make retail acquisitions as a way of gaining greater control to their route to market. Last year they acquired the California based RVCA brand, the West 49 retail chain in Canada, Surf Dive’n’ Ski and Jetty Surf in Australia. Likewise Billabong is investing to build its online sales, which currently makes up 3% of their revenue.
Billabong is not alone in needing to re-think its strategic direction in terms of its consumer interface. For a long time brands have been sensitive of creating channel conflict and ever so respectful to the large retailers. But the respect is increasingly not being returned , brands need to seize the initiative back. Brand management needs to in fact be just that, brand management. Online represents the most obvious space to be managing more intensively. Why wouldn’t a big brand like Billabong not wish to offer the most compelling, engaging and intuitive online offering in its market category?
In terms of a retail footprint the investment required is significant, and for many manufacturing and wholesaling brands beyond their financial means or scale to create their own retail chain. For those retailers there is a need to be a little more creative. Why not seek to joint venture in a retail business? Seek out a number of complimentary brands and underwrite a shared dedicated retailing arm. Yes, it is difficult finding partners of the right size and same motivation, but they are there in many categories. When there is so much focus on co-creating with your customers, why not co-create with your peer band owners.
If your key major retailers are losing the spirit of collaboration and pursuing a more intense self interest position, reinvent your market interface, at the very least creatively explore the options.
Peter Singline
Brand Scientist
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