California Apparel News

Quiksilver Inc. will ride a big wave into Las Vegas when it holds its grand-opening party for a new 3,200-square-foot store on Feb. 23. When the company reaches shore, it will find a retail world that’s getting crowded.

The Fashion Show shopping center, the new Las Vegas address for the Quiksilver Boardriders Club, is already home to surfwear retailers Pacific Sunwear of California Inc., Abercrombie & Fitch’s Hollister Co. and the Honolua Surf Co., the apparel brand and 19-store retail chain purchased in January by surf manufacturer and retailer Billabong. The increasing retail competition from manufacturers is raising eyebrows from those who earn all their revenue from running a store.

“I do not think that distribution of these products via company-owned stores will be a good long-term fit for these firms,” said Greg Weaver, chief executive officer of Anaheim, Calif.–based Pacific Sunwear. “I do not think the young customer wants to see these products in five, six or seven places in the mall. This process dilutes the productivity of the core accounts, such as PacSun.”

Traditional retailers may have to get used to this trend. More surf manufacturers have been testing out retail in the past few years.

In December, Rip Curl opened a 4,500-square-foot store in the Santa Monica, Calif.–based Third Street Promenade. In January, Hurley International debuted a 660-square-foot shop inside Huntington Surf & Sport in Huntington Beach, Calif. Volcom opened a shop on Los Angeles’ hip La Brea Boulevard in 2003, and Billabong opened a 5,600-square-foot shop at The Camp in Costa Mesa, Calif., in 2002.

Carlsbad, Calif.–based surf maker Rip Curl also entered a partnership with veteran Northern California retailer Santa Cruz Surf Shop in January. A majority of the fashion and accessories sold in the 15-year-old store in Santa Cruz, Calif., will bear Rip Curl’s logo.

Rip Curl is scouting opportunities to expand in New York, where Quiksilver also maintains a store in Times Square.

“There’s a strong chance we’ll be partnering with a store here,” said Adam Sharp, a spokesman for Rip Curl. “New York is the center of the universe, and in terms of expanding the brand across the country, you have to look at New York.”

Although these manufacturers’ stores often number fewer than four per company, they are proving to be strong rivals, said Aaron Pai, owner of Huntington Surf & Sport, who has been retailing surfboards, wet suits, T-shirts and boardshorts for 26 years.

“It’s a higher level of competition,” Pai said. “They’ve done their homework in business, and they know what’s up with retail—more than any mom and pop who just opened their store.”

If these manufacturers’ retail efforts are formidable, their ambitions are by no means uniform.

Gregg Solomon, senior vice president of retail for Huntington Beach–based Quiksilver, said the company’s goal is to have stores make up 25 percent of sales.

For Costa Mesa–based Hurley International, the store in Huntington Beach represents a chance to craft the best showroom the company can imagine, said Chief Executive Officer Bob Hurley.

“It’s hard to tell our story in other people’s stores,” Hurley said. “We can showcase what we stand for and what we believe in.”

Chris Rosaasen, co-founder of Los Angeles–based casual contemporary golfwear maker Rosasen, says such a store acts as a showroom on steroids. The company opened a 1,000-square-foot store on Los Angeles’ fashionable Robertson Boulevard in December.

“We’re rooted in golf. It scares a lot of retailers off,” Rosaasen said. “The store shows golf is a lifestyle—it’s not just golf shirts and pleated pants. We got a lot of accounts by bringing them over here and showing how our clothes could fit in their store.”

While Rosaasen confirmed his 4-year-old company will concentrate on manufacturing, he said it will also be opening other shops in Las Vegas and Japan in the next two years.

Quiksilver’s Solomon said the company’s stores are not only good business but also the manufacturer’s best ambassador.

“That was the early idea behind first expansion—it was to make Quiksilver a global brand,” Solomon said. “We’re not competing with other company-owned brands in the surf market. We’re concerned with other brands, like Diesel, Polo or Hilfiger.”

Quiksilver intends to add five more stores this year to its 30 shops in the United States and also plans to build a store in Shanghai that, like the company’s Paris and Moscow stores, will serve as an exotic locale for surf.

All surf manufacturers interviewed took pains to emphasize they do not compete with traditional retailers. Adam Sharp of Rip Curl called traditional retailers his company’s bread and butter.

“The bulk of distribution is in our core account base, and as we continue to grow, we take care of core accounts, and that’s where the growing opportunities for distribution lay,” Sharp said.

Many analysts who follow the surf industry say these manufacturers are not ready to take on traditional retailers.

“They’re not competing with PacSun,” said Marie Case, managing partner with Board-Trac, a market research company in Trabuco Canyon, Calif., that specializes in the surf and skate industries. “You won’t find most of the manufacturers’ stores in a mall. If they’re not in close proximity, there’s room for everyone. These stores could benefit the other retailers. They’re like big billboards— it’s big exposure. The other stores benefit down the line.”

Jeffrey Van Sinderen, an analyst with the B. Riley Co. in Los Angeles, said manufacturers will have a learning curve.

“If it’s just a few stores to showcase a brand, there are benefits to doing it, such as exposure and clearing out inventory,” Van Sinderen said. “The danger is if they open too many stores, and if they get into all the dynamics of being a retailer, you have to build a parallel infrastructure to some degree.”

Operating a retail division is a tension at Quiksilver, said Solomon, who added that it’s the price to pay for being a mature brand.

“We’re primarily a manufacturer and a wholesaler,” Solomon said. “They’re different businesses and mindsets. It’s a challenge to make a company think both ways.”