Viii) Surf Brands

This industry is full of examples of the dangers of quick success that comes from explosive growth; players in the industry then lost contact with what made them valuable in the first place, ie their customer base who put surfing ahead of work and want surfing to fit into their lives in a way they choose.

Starting in the 1970s, companies like Quicksilver and Billabong grew to be billion-dollar companies that were favourites on the stock market in 1990s. Then this was to be followed by declining sales and profitability.

In the early 2000s, the big surf brands, flushed with funds, tried to lock in vertical retailing by buying bricks and mortar surf retail shops that only stocked their own brands. This approach provided an opportunity for other retailers to become multi-branded and to look at online retail sales; the latter became more important with the expanding broadband and smart phones usage highlighting online retail selling advantages. One company, SurfStitch (owned by Justin Cameron & Lex Pedersen), saw the opportunity. At the same time, the large surf companies overproduced and were frantic to get rid of excess stock. SurfStitch, which was at one time sold to Billabong, is now listed on the ASX with a turnover of A$ 200m. In 2015, it was in 130+ countries; with a market capitalisation around A$ 500 m (January 2016) - this is greater than both Billabong's and Quicksilver's combined at thier peak.

SurfStitch has spent around A$ 60 m. on 4 seemingly unconnected acquisitions
- surfer media company (stabmag.com)
- surf forecaster (Magicseaweed)
- action sport video producer (Garage Entertainment)
- surfboard accessory producer (Surf Hardware International). This last one is SurfStitch's only direct link to production.

Their main strength is selling surfboard and hard goods online, as most bricks and mortar retailers are unable to stock bulky items. SurfStitch's online presence relies on images and action clips and made hard the fastest growing proportion of their business.

Their main market emphasis is men in the age group 15 to 35 who are looking for what's new and what's next, ie being cool
(source: Nick Carroll, 2016)

 

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