Where Have All The New Brands Gone?

You could see it in the aisles of ASR and Surf Expo. It’s on the minds of specialty retailers around the country. As the big brands continue to improve their sourcing, marketing, inventory tracking, and brand management, the sophistication of the entire surf industry has reached new heights.

The bar has been raised so high, in fact, that some are wondering if it’s still possible to launch an independently financed clothing company in today’s hyper-competitive retail market.

The Volcom success story has been around for a decade. Hurley rests on a foundation that took years to build. Take a look around your store. How many truly new companies do you see?

“None,” says Surf City Owner Roy Turner. “It’s a tremendous worry. We used to offer cutting-edge stuff, and that was how smaller shops like mine competed against the PacSuns of the world. When did we all become stockbrokers? We’ve all become soft, and I’m as guilty as anyone. We’re playing it safe when maybe we should be investing in {those brands that are like} penny stocks and trying to hit a home run with one of them.”

Steve Avery, store manager of K-Five Boarding Company in Encinitas, California, is also open to picking up new lines. “We just picked up the new line Byrd recently, and the stuff looks really good,” he says. “Some of the bigger clothing lines get complacent with their designs and logos, and the underground lines really keep them on their toes,” says Avery. “The smaller lines also aren’t a huge risk to carry because they can work with your shop with guarantee sell-throughs. Sometimes it’s hard if they miss or can’t ship the orders, but usually we can work with them on that, and there’s always next season.”

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Turner and Avery aren’t alone when they say there’s shelf space for a new brand, but the barriers to those start-ups remain daunting, and making a splash in the current market is expensive. And yet, despite the challenges, a handful of start-up brands like Jedidiah, Turkey, and Rvca are willing to swim in the rough wakes left by the big-brand superliners.

Another such brand, Eugene, is the brainchild of 24-year-old San Diego County designer Jordan Mitchell. “When I started Eugene,” he says, “I sometimes felt overwhelmed by how much time and money went into making a line, but all I could do is to take one step at a time.”

Mitchell came up with the Eugene concept in 1999 but is just now taking the first steps to getting the brand out to the market: “I wanted to try something new, and wanted to make clean and simple designs that people are drawn to.” Mitchell has put together a limited line of T-shirts that he feels offers something new.

While competition for retail floor space is fierce and dominated by the big brands, Mitchell has taken a relaxed approach with Eugene. “I don’t feel like I’m competing with the other clothing lines. Most T-shirts are just logo-based. I try to do more art-design based, and I think if customers are looking for something unique and creative, they’ll look for alternative brands.”

But Mitchell admits that being creative and designing a line is one thing, but having the right contacts to retail buyers and promoting and marketing the line is another.

So far Mitchell’s strategy is “grassroots marketing with a guerrilla flair,” and he’s been teaming up with other North San Diego County brands and athletes from the area. “Word of mouth goes a long way,” he says.

It’s possible to make do with a grassroots marketing approach. That’s usually not the case with financing, though. Mike Lesher, an industry vet whose worked at Billabong, Hurley, and Counter Culture, says, “Time and time again I’ve seen new companies try to start a clothing line or sunglass line, they borrow money from their families, and they have a really good idea and designs, yet lack the business savvy or contacts to puull it off.”

Now Lesher is running a new company called Fusion Partners Inc., a venture-capital business for the action-sports industry that launched in 2001. Based in Newport Beach, California, Fusion Partners aims to give start-up brands a road map through this industry. “We hope to give needed financial as well as marketing advice,” says Lesher. “We are customizing to each company’s needs — from financing and financial management, to partnering our clients with potential angel investors.” An “angel investor” is an individual who provides capital to startup companies.

Lesher says the most common problems he sees when talking to clients is a lack of financial knowledge as well as an underdeveloped business plan: “I’ve also seen management not completely sure of the whole business relationship with vendors and retailers. Finally, it’s tricky to have the necessary financing for personnel so you don’t have one person doing twelve jobs or vice versa.”

Although the barriers to entry have never been higher, it seems many retailers would like to offer their customers something new — and claim they would be willing to put up with some hassles to get it. Who will be the new Volcoms, Ezekiels, or Counter Cultures of this decade? No one is sure, but it seems there’re a lot of people looking for an answer.

— with reporting by Jimmy Nakano