Marketing

Wipe out

Engel Schmidl /

In 2008, Billabong was Australia’s hardest working brand. Last week, its board sacked long-time Billabong insider and CEO Derek O’Neill, a move that appears to have been in the works for some months.

So has Billabong really lost its mojo or is it just a victim of the global retail slowdown, with the CEO becoming the sacrificial lamb?

Will bringing in a CEO who has a good retail track record but zero background in the surf culture – so critical to Billabong’s customer base – help?

A number of years ago I was working with a small “cult”-like ski apparel company and we discovered a critical element in their credibility with customers was that the founders and all the key people were ski fanatics. They walked the talk (or, in this case, they boarded).

Billabong’s new CEO, Launa Inman, had a stellar retail track record at Target. She moved quickly, however, to dispel talk that she wouldn’t be able to relate to Billabong’s youth-oriented customer, stating that there is some crossover between people who shop at Target and the key demographic that frequent Billabong stores. But the question is a valid one.

Founded in 1973 on the Gold Coast, Billabong – while having a surf background – has long since diversified into more general lifestyle apparel. It acquired other companies throughout the early 2000s in pursuit of an expanded retail footprint to offset its distribution base. A move, in hindsight, that has probably left it increasingly vulnerable to the global retail slowdown.

Perhaps its board should take a moment to read the recent article about Patagonia CEO Yvon Chouinard where he talks about his own company’s slow-down in the early 90s.

Faced with being cut off by creditors and forced to lay off employees for the first time, Chouinard recognised the need to focus on the core of what had made the company successful in the first place. He doubled down on corporate responsibility and their environmental promise, and Patagonia today continues to go from strength to strength.

It is perhaps an unfair analogy in that Patagonia is privately held and Billabong today is a publicly traded “stable” of companies. But it can be guaranteed when people hear the name Billabong they don’t think about Element, Tiger Lily, Palmers Surf, Xcel or any of the other companies acquired in the last decade.

Like all companies with storied pasts, that history echoes across the years and still plays a big role in how they are perceived today. Customers think about the lifestyle of beach days, cool waves and the surf culture and attitude that accompanies them.

Discussions of retail footprints, retail expertise, store performance and improvement in the business (read increase share price) aside: yes, the business has to be profitable. Yes, if parts of the business are not generating revenue, then look at why and how to address it.

For me the critical question is not whether Ms Inman can improve the bottom line (shuttering stores and selling off underperforming assets will accomplish that in short order); but whether she will destroy the very “Billabongness” in the process, making it just another clothing company with some OK stuff to wear at the beach and a bunch of stores in shopping centres and airports?

Time will tell.

See you next week.

Michel is an independent adviser and advocate dedicated to helping organisations make promises they can keep and keep the promises they make – with a strong, resilient organisation as the result. She also publishes a blog at michelhogan.com. You can follow Michel on Twitter @michelhogan.

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