Electric CEO Eric Crane discusses decision to acquire Electric from Volcom, advantages to being privately held & challenges in today’s market
News hit Thursday, March 16, that Volcom had sold Electric to private management headed up by current Electric CEO Eric Crane. Many details around the deal are not being released, including financial terms, but Crane was able to explain the strategy behind his decision as Electric’s new sole owner and management.
Crane was one of the original members who built the brand in its earliest stages, and from his perspective the acquisition makes sense from a couple different levels. From a brand standpoint, it will be easier for Electric to tell its story “at it’s own pace,” without outside market pressures.
In today’s current economy, and perhaps even more so within our hyper-magnified world of Action Sports, it’s no secret that publicly held companies are often at odds with their brands’ core missions. That was not the case, however, with Kering, according to Crane—who says the France-based company is one of “the best and greatest” possible large-scale partners out there. It was only two years ago that Kering poured a significant investment into Electric to help with a successful re-brand, Crane points out. He praises Kering’s innovative team for identifying Electric’s unique position in the market, and recognizing it would perhaps be better served under independent ownership.
“It is because of Kering, and Todd Hymel, that the brand was even in a position that made sense to take on,” he shares. “Their support over the last few years has been huge, and their investments in the brand have fueled the momentum that we are experiencing in the market now.”
…For the brand, we are only as valuable as our commitment to our message. In the market we are in right now, I think it’s more important for the longevity of the brand to stay focused on what we are good at.
Kering acquired Volcom and Electric in 2011, under its former name PPR. Prior to that, Electric was acquired by Volcom in 2008 in a deal that saw $23.25 million paid directly to Electric shareholders.
“We will miss working with the whole team at Volcom and Kering,” Crane continues. “I am really grateful to both brands for all they have done for Electric.”
What's the background on this new deal. Are there private investors that came in to support you on this, or how did that work?
As of now, there aren't any investors.
So what has the process been like? Was it a lengthy one, where it was something you knew you were going to do for the last few years?
It's interesting. Timing is everything as you know, and so back in May 2015 I was doing some strategic meetings in Paris, and I had floated the idea out of several different models that Electric could pursue in the long term, and almost tongue-in-cheek, one of them was "you could sell it to me."
I think the idea sort of took position in someone's heart and as the time went by, and we started talking more and more about things, we started to take it more seriously. About six months ago I put a formal offer in and it just progressed from there. The process was made as smooth as possible by the awesome Volcom & Kering teams.
What does the amount of buying a brand look like, especially from a personal level?
We aren't disclosing any of the financial terms.
What does this mean for the relationship Electric has with Kelly Slater? I know he has been a big part of the campaigns and product push over the past year and a half. How will that work moving forward?
I think it's up to Kelly really. He was introduced to our brand through the relationship with Kering and since then we've done a lot of great work together and we're really proud of the glass we put out with him. We would love to work with him in the future, but ultimately it's up to Kelly.
Why does it make sense for Electric to go off on its own right now, and what does your 12 month strategy look like—is it any different than the projected course you were on with Volcom and Kering?
For us, what it means most, is that we just get to focus on doing what we need to do, which is making world class eyewear, continuing to service the market as best we can, and taking advantage of our position to grow market share. Even though the market is having a tough time, our brand is still growing within that. We will continue the strategies that we developed while working under Volcom and Kering.
If anything, the thing that's going to change the most is our pace. We can just exhale and go with what makes sense, and focus on continuing to service our core retail base, which we know is the whole reason why we exist, and just really take care of those guys…just ease into everything and grow into the brand that we are meant to be.
What do you feel is the strongest positioning for the brand moving forward? I know eyewear has been the roots of the brand, but Electric has also put focus on watches and other categories recently. What area of the business do you see as the true source of future growth?
We have definitely made some awesome products over the last couple of years, but when you really distill the power of Electric to its essence, it's an eyewear brand, and it's best at making eyewear. That's really where we see the opportunity for the most growth in the near future. The quality, the craftsmanship, and the story and the message behind Electric in that category is really strong. We pride ourselves in being a world class contender in that category. Not to say we aren't proud of all the other stuff we make, but we'll definitely be evaluating everything going forward to try to stay focused on what works the best.
From a logistical standpoint, would you say things are going to change at all in terms of internal processes?
To that point, not really at all. We have a shared services agreement with Volcom. Warehousing and IT services primarily. We'll be working closely with the Volcom guys still as much as possible. So in that way we still feel a part of the family, and are hoping for things to be business as usual.
On the distribution side, are you looking at making any changes or re-evaluating which channels you are in?
Electric is 90% distributed in action sports & lifestyle specialty doors, so most of our work will continue to be done there. Over the last year, we started to sell Nordstrom for the first time, because we needed more of a platform to tell our women's story. They've been a great partner for that and it's been working really well. This last January we did the PGA Show. We started selling Electric products to local golf clubs and started making some special lenses for golfing. Finally we said, ‘why don't we just go to the show and see if everyone likes it as much as we do?’ We are focusing primarily just on golf specialty, like coastal and mountain areas where we already sell. The resorts in the mountains are already ski and snowboard in the winter and the same staff selling then goes and works the golf course in the summer. So it was a natural fit for us.
I think the challenge of having a captive audience, as an industry, is tough. We've sort of lost our center of mass a little bit… The brick and mortar specialty guys can't compete with the amount of engagement the brands are having with the end consumer, or it's difficult for them to.
With the performance line we just released about 8 months ago, The S Line, that's given us a lot of attraction with the Outdoor World. Outside Magazine gave us its Gear Of the Year award for our glasses. We've been received really well into the outdoor space. I think we will continue to explore all the natural adjacencies to whom we've grown to be. We just won't be forced to do something we don't want to do. And that's the key. If anything, the thing that's going to change the most is our pace. We can just exhale and go with what makes sense, and focus on continuing to service our core retail base, which we know is the whole reason why we exist, and just really take care of those guys. Also start talking to our new customers more, and just ease into everything and grow into the brand that we are meant to be.
Are there any foreseeable changes to your current headquarters?
None foreseeable. And Europe and Australia are in tact as well.
Final thoughts from you: What do you think is the biggest challenge that you face as a brand, or even the industry faces as a whole?
I think the challenge of having a captive audience, as an industry, is tough. We've sort of lost our center of mass a little bit. There's a lot of e-commerce growing really quickly and direct-to-consumer engagement with the brand. The brick and mortar specialty guys can't compete with the amount of engagement the brands are having with the end consumer, or it's difficult for them to. Then you have large lifestyle chains selling product that's in the specialty stores, and all the different points of distribution. I think the hardest thing is going to be figuring out how both the retailers and brands can work together to preserve the spirit of the way they used to do business. I think that there could be a new way that could evolve that utilizes all of the technology and all the touch points and works best for both the retailer and the brand. But the retailers and brands are still battling a lot. So until we start to get creative and figure out how we can utilize all the different assets to work for both, it's going to be tough. That said, as long as there is young, subversive people who love to do the things we love to do, we stay relevant. There is always going to be a future for that. We may just not service them in the same way we used to.
Do you think this new position for Electric is going to allow you to be more flexible as a brand to work with retailers and help evolve the model?
Yes, I think that is one of the key benefits of the new situation for Electric. We just really need to listen more as a brand, and I think we will have the time and patience to be able to do so.