Seafolly is opening its own stores in the United States, with the swimwear brand signing its first lease for a flagship store in Los Angeles.
Seafolly already achieves 8% of its sales in the United States but had found it was too hard to make money with a wholesale-only strategy in the country.
The swimwear brand was established in Sydney in 1975 and now has revenue of over $90 million a year and sales in 42 countries.
Seafolly chief executive and part-owner Anthony Halas told BRW he would rather not open stores outside Australia, but in some markets it was the only way to grow profit.
“Opening stores is risky. We’re relatively unknown in the US but it’s hard to make money there as a wholesaler,” he said.
“There are so many brands there. No brand has significant market share, so the retailers hold the purse strings and they negotiate hard.”
Adding to its 25 stores in Australia, Seafolly opened its other overseas store in 2011 in Singapore.
In Australia, Seafolly has changed its strategy by entering into an exclusive distribution partnership with Myer and by withdrawing stock from all e-tailers other than its own virtual shopfront.
David Gordon, executive director at Bentleys Consulting, told SmartCompany there are a surprising number of Australian niche fashion retailers opening overseas.
“Many of these businesses are small to medium-sized, privately owned companies and by international standards are quite small,” he says.
Examples include Forever New, Cotton On, Spotlight and Lorna Jane.
Alternatively, Gordon says Australian retailers which are competing in a mature local market where organic growth is a grind have resorted to brand extensions into associated categories to increase sales.
These brand extensions include Cotton On, which has Cotton On Kids, Body and Men; Bardot, which extended into Bardot Junior; and Witchery opening a men’s chain under the Witchery brand.
“Seafolly competes in a specialist category where the number of brands is limited and design is absolutely critical,” Gordon says.
“In this sense it can have a distinctive offering.”
Gordon says as Seafolly has been wholesaling overseas already it has a base of established contacts and understands the markets.
“Apart from ensuring that they have an effective supply chain overseas, Seafolly needs to ensure it understands the differences in size and fit requirements and manages the alternative seasonal range requirements overseas,” Gordon says.
SmartCompany contacted Halas and Seafolly for comment but did not receive a response prior to publication.