Reef VP of Marketing Kevin Flanagan On The Future Of Core Retail & Reef

Kevin Flanagan

Since being acquired by VF Corporation in 2005, Reef, which was founded over 25 years ago, has suffered a bit of an identity crisis in the opinions of many as it has gone through several leadership changes. However, on the dawn of its next executive search following the departure of former President Jim Gerson on July 30, 2010, the company’s executive team is focused on the momentum that 2010 has seen both financially and from a product development standpoint.

We had a chance to catch up with Reef VP of Marketing Kevin Flanagan and Girl’s Marketing Director Lindy Williams on July 28 to discuss Reef’s financial performance, position within VF, how the company’s helping core retailers, and its future plans following Gerson’s resignation.

(All responses by Kevin Flanagan unless otherwise noted)

I was listening to the VF earnings call the other day and was disappointed to hear that Reef wasn't mentioned —is that due to the size of the brand within the company?

They have a policy of not breaking out the brands individually. If a brand is pertinent to what they're talking about they'll grab a number here and there, but the consistent policy is to report the overall coalition numbers and not the individual brands.

Can you comment on Reef's Q2 performance?

I can say that financially we're doing really well this year and exceeding our expectations.

I understand Jim Gerson is leaving this Friday. Is that something that was news to you guys or something you had been planning around?

It was news – it was a decision that he made and shared with us just last week.

Going forward, what kind of impact do you expect this to have on Reef and how's the general mood there right now?

I think the mood's high. Going back to seeing financial success, I think everybody in the building helped develop the strategies that are in play right now, and they're seeing that success. They have a commitment from the Reef management team and VF to not drastically change that because we are successful.

Is there a succession plan in place yet? I understand CFO Roger Spatz is going to be heading things up in the interim.

Yep. He's the interim president. I spoke with [VF CEO] Eric Wiseman and he is absolutely confident in the brand and doesn't feel like he has to rush to make a decision. He hasn't even formalized his process, and I can share that he's happy with the brand and doesn't feel compelled to rush his decision.

It seems like a good time to be a part of VF. The second quarter results were really strong. What impact does that have on Reef? Does that create a budgetary windfall or does it lead to more scrutiny as far as matching the numbers that Vans and The North Face are posting?

It's actually a benefit. It means more investment in the brand. Because we are performing so well financially, VF is reinvesting into Reef disproportionately. For example, we did 18 shop-in-shop installs in the core market where we've done elaborate build outs and reinvested in the core to keep that channel alive and thriving. Everywhere from HSS to Jack's to Coastal Edge on the East Coast, WRV, they all have shining, new Reef sections.

It sounds like those have been performing pretty well too.

They have. It's one of those things where we know as the economy recovers, that the brands that are best dressed are going to succeed, so we're starting to really dress ourselves up.

What role do core retailers play in your strategy and how important are they to the success of Reef?

Very important, even though we know that the core channel is shrinking, largely due to macroeconomic [issues], a lot of which is out of their hands. We know it's challenging for them so we're doing a couple things for them. First, we have a product line called Shop Series that is only for core retailers. We print a separate catalog, hold back our key styles, and give them first bite at the apple.

At the core level, we're also investing in the look and feel of those shops and making sure that we attract the imagination of our core consumers and keep kids going into the surf shop channel. We know that it's important to have a core channel that's healthy and thriving for the long term success of Reef and the whole industry.

What are the factors you use to determine which shops to partner with for your build outs?

It's a combination of five or six filters that we use. We call it the “Core 54” internally. We picked 54 core retailers that we feel best  represent. Either they have a key location, a certain legacy in the industry, a certain heritage, and how they portray Reef in the store is important.

As far as the core channel shrinking, as that happens, what is your strategy for continuing to grow distribution while still staying authentic with the core channel?

We've got to look at all the channels. We have to look at our partners in the mall and make sure that we have good representation there. That includes conversations with PacSun and understanding what their long-term vision is. We're happy with the conversations that we've had as far as them supporting  and reinvesting their space in the core brands. We definitely pay attention to that channel.

Going back to VF – what kind of synergies have you seen over the last five years as far as leveraging their expertise and working with Vans and The North Face? How autonomous is Reef within that structure?

Reef is fairly autonomous but we share the best business practices. I don't want to overstate the economies of scale and the efficiencies, that's not my area of expertise, but it really comes down to solid business practices: five-year plans, being organized. We have an expression that we have to 'plan the work and work the plan.' That goes across all the VF brands.

Do you work fairly closely on some functions with some of the other brands?

Yeah, we share insights. Most of the conversations surround the core consumer, understanding what a shift in buying habits means. We talk a lot about that.

I've been hearing a lot about how well the Supreme collection has been doing and the general excitement about the launch of the hanging footwear Coastal Cruisers collection. Can you talk to me a little about other growth opportunities for Reef and its retailers with getting into the close-toed category?

We are excited about Coastal Cruisers. Going back to the opportunity to help the core channel. We'll be delivering product October 1. We're giving retailers another product that they can help fill the Reef section, especially in areas where it gets colder in the fall and winter.  The product evac we've got has been fantastic.

We've got some new team riders, but it's a little too early to share right now. We've got verbal agreements from young riders that will help create some buzz within the industry and get people paying attention to the product as well as we're going to advertise this fall, have a launch party at the U.S. Open. It's a 360 degree marketing plan.

The Reef Deckhand

The Reef Deckhand

Who are you targeting with that line? Is it a different demographic or building on your current Reef customer?

Reef has a pretty broad consumer base. Our target consumer is 18 to 24, but we know that  the average age of a surfer in America these days is 30-years-old and we know we capture the older consumer as well. They're a nice, repeat buyer, but we really view Coastal Cruisers as an opportunity to excite some of the younger consumers and get them turned on to Reef.  We think the product's styling is pretty forward and the young kids are going to be the ones to initially pick it up.

Any other big changes you guys are anticipating and looking forward to as far as marketing and product?

Lindy Williams: Not necessarily any big changes. We've had this strategy in place for the last year now and we're so focused on successfully executing this plan that we don't want to do anything to radical . We've given our spiels to the sales reps about what we're doing from here out and now it's about executing on that plan. We have a few tricks up our sleeve, but for the most part just tons and tons of product innovation coming out of here and targeting how we're going to release things and pay equal attention to all the stories and the good things coming out of here.

KF: It really comes down to the excitement that we have about the product. Everything from our Cocona boardshorts to some of the really cool fair trade stuff we're doing on the girl's sandals, we're just excited about the product really.

How are sales on the girl's side compared to guys these days?

It's holding its own in a market that is challenged and in some ways shrinking. With less disposable income, girls are migrating to the Forever 21's and fast fashion shops. We believe that there is a direct correlation between the recession and cheap product and cheap prices. We expect there to be a return to quality, branded products that have authenticity. That's absolutely going to be part of this next cycle as we claw our way out of the recession.

Hopefully that clawing takes place here pretty quick.

From your lips to God's ears.

Are there any additional messages that you'd like to share with your core retail partners?

We appreciate their tenacity. They have a spirit that Reef shares. We've been around for 25 years – we're an iconic brand and those are iconic stores that we want to see stay in play.