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BRA Presentation

BRA Presentation. Outperforming Your Competition Mitch Kummetz, CFA Senior Research Analyst Retail Team Leader D.A. Davison & Co. mkummetz@dadco.com. Who am I? . Author of Mitch’s Boardsport Report. Research Analyst covering Apparel, Footwear and Specialty Retail Stocks. Who am I? .

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BRA Presentation

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  1. BRA Presentation Outperforming Your Competition Mitch Kummetz, CFA Senior Research Analyst Retail Team Leader D.A. Davison & Co. mkummetz@dadco.com

  2. Who am I? • Author of Mitch’s Boardsport Report

  3. Research Analyst covering Apparel, Footwear and Specialty Retail Stocks Who am I?

  4. Who is your competition? • Inside the pond…other surf/skate/snow shops

  5. Who is your competition? • Inside the pond…other surf/skate/snow shops • Outside the pond…specialty stores, department stores, sporting goods stores, vendor-owned retail

  6. Specialty Retail

  7. Specialty Retail • 550 new stores in the next 3 years

  8. Fun Facts! • Zumiez currently has 5 stores in CA and believes it can ultimately grow to 70 stores in this market

  9. Fun Facts! • Zumiez currently has 5 stores in CA and believe it can ultimately grow to 70 stores in this market • These new stores represent roughly $90 million

  10. Specialty Retail • 550 new stores in the next 3 years • 2.5 million new square feet in the next 3 years

  11. Specialty Retail • 550 new stores in the next 3 years • 2.5 million new square feet in the next 3 years • $1 billion in the next 3 years

  12. Specialty Retail

  13. Where will that $1 bil come from? • New business

  14. Where will that $1 bil come from? • New business • From A&F, AE, Aeropostal, etc.

  15. Where will that $1 bil come from? • New business • From A&F, AE, Aeropostal, etc. • From inside the pond

  16. Competing outside the pond • Know your competition

  17. Competing outside the pond • Know your competition • Emulate their strengths

  18. Competing outside the pond • Know your competition • Emulate their strengths • Expose their weaknesses

  19. Outside Competition…strengths • Purchasing Power

  20. Outside Competition…strengths • Purchasing Power • Infrastructure

  21. Outside Competition…strengths • Purchasing Power • Infrastructure • Private Label

  22. Fun Facts! • Private label represented 30% of Pac Sun’s sales in 2004

  23. Fun Facts! • Private label represented 30% of Pac Sun’s sales in 2004 • Private label represented 13% of Zumiez’ sales in 2004

  24. Outside Competition…strengths • Purchasing Power • Infrastructure • Private Label • Marketing Budget

  25. Outside Competition…strengths • Purchasing Power • Infrastructure • Private Label • Marketing Budget • Web Presence

  26. Fun Facts! • ANF had direct-to-consumer sales of $110.6 million in 2004

  27. Outside Competition…strengths • Purchasing Power • Infrastructure • Private Label • Marketing Budget • Web Presence • Gift Cards

  28. Fun Facts! • Consumers spent roughly 11.5% of their holiday budgets on gift cards this season according to the NRF

  29. Outside Competition…weaknesses • Limited access to brands

  30. Outside Competition…weaknesses • Limited access to brands • Minimal hardgoods exposure

  31. Outside Competition…weaknesses • Limited access to brands • Minimal hardgoods exposure • Rigid real estate model…mostly mall based and inland

  32. Outside Competition…weaknesses • Limited access to brands • Minimal hardgoods exposure • Rigid real estate model…mostly mall based and inland • Lack authenticity

  33. Objective • Retain the kid living by the beach.

  34. Objective • Retain the kid living by the beach • Capture the kid visiting the beach

  35. Exposing Weaknesses • Brands

  36. Top Brands • Independents…Volcom, Billabong and Quiksilver

  37. Top Brands • Independents…Volcom, Billabong and Quiksilver • Pac Sun…Quiksilver, Billabong and Volcom

  38. Fun Facts! • Quiksilver accounted for 10.9% of Pac Sun’s sales in 2004

  39. Fun Facts! • Quiksilver accounted for 10.9% of Pac Sun’s sales in 2004 • Billabong accounted for 9.4% of Pac Sun’s sales in 2004

  40. Need to Focus on • Smaller, less-distributed brands

  41. Need to Focus on • Smaller, less-distributed brands • Derivatives of larger brands…POVD

  42. Use BRA muscle to convince vendors to focus on • Incubating new brands

  43. Use BRA muscle to convince vendors to focus on • Incubating new brands • Funding small struggling brands

  44. Use BRA muscle to convince vendors to focus on • Incubating new brands • Funding small struggling brands • Developing derivative brands

  45. Exposing Weaknesses • Brands • Hardgoods

  46. Hardgoods • Drives customer loyalty

  47. Hardgoods • Drives customer loyalty • Emphasize softgoods side of surf hardgoods

  48. Hardgoods • Drives customer loyalty • Emphasize softgoods side of surf hardgoods • Skate/snow hardgoods brands (Independent, Element, Burton, etc.) are national, while surf hardgoods tend to be local…this can be a point of differentiation

  49. Exposing Weaknesses • Brands • Hardgoods • Location

  50. Location • Surf shops have a captive audience in the summer

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