#2 – Tim Harmon, The face behind Pacific Sunwear

When you’re the biggest action-sports retailer in the world, by default you’re going to be influential to the rest of the food chain. In fact, it’s been said that if by some act of god PacSun suddenly closed all its doors tomorrow, the trickle down would have devastating consequences in the surf industry.

For the uninformed, consider that PacSun currently has 882 stores and that fiscal sales for 2003 squeaked into billion-dollar territory. And it’s far from done growing: by the end of fiscal 2007 the company plans to grow to 1,000 Pacific Sunwear stores and 1,400 total stores including the d.e.m.o. chain.

While the growth and reach of PacSun is common knowledge, there are less-known reasons behind the growth and reach of the PSUN ticker. Most people are familiar with Greg Weaver, PacSun CEO. Fewer know Tim Harmon, president and chief merchandising officer, and the force behind an aggressive test-marketing program, which involves unique and close relationships with the brands they carry. “We work with the brands at the line-conception stage and share with them our successes from the previous season and where we think our business is going to go forward as they’re building their lines, says Harmon. “In that process we can test a lot of concepts together before the season starts.

“They really have broken it down to be very scientific for the customer base, says O’Neill Sportswear President Kelly Gibson, “and that’s where Tim has done a great job. PacSun, probably more than any other action-sports retailer, has a good idea what product is going to sell, and they know early enough so that companies can factor these orders into their production runs. Having an indication of what’s going to be strong helps the brands as well. The logistics behind producing such massive orders, and the interaction during the line-conception stage, mandates that manufacturers have their production and back-end procedures dialed.

As with any successful business, PacSun is not without its critics, though. While shareholders are certainly pleased with PacSun’s high-margin private-label business that produces brand-name-like products (and accounts for a steady 32 percent of its sales), specialty retailers, particularly the ones within Pacsun’s store radius, are concerned. “They {the manufacturers} should be jumping up and down saying ‘knock it off,’ or better yet, ‘stop knocking it off,’ says Greg Smart of Florida’s Inland Ocean Surf Shop.

Others would like to see PacSun do more to support the action-sports industry besides just selling the products. “I don’t see our strategy there changing, says Harmon. “In the past we’ve sponsored the X-Games and got involved in smaller community relationships and have not found those venues to be a driver of our business on a national basis.

Indeed, as a public company, PacSun is measured by a different yardstick than any other retailer in the surf industry. But are they actually part of the surf industry? That’s a whole nother article.