This opportunity was questioned by an analyst, who pointed out that Billabong has been selling to “non-participating” customers for a long time, and how would this strategy be different.
“What the research has shown is that it is not just about the market segment. The question is have we been able to satisfy them? There is no particular outstanding label in the market. And we have the skills. It is all about the product, understanding what the consumers want.
Billabong’s stores are cluttered, full of old stock and sell under a range of “banners”. Inman says: “We need to use the front of our stores, improve our visual display, and have a clear marketing plan. It is all about traffic when it comes to retailing. If you can attract customers, and keep them in the store for eight minutes, they are likely to buy.”
The problem, however, is that Billabong doesn’t know what it wants. “We are not quite sure how the stores should look,” Inman admits.
Billabong has cut as many of its stores as possible, however. Inman has appointed a global head of retail, Colin Haggerty, to “sweat the assets”. The target is to lift the performance of the remaining stores from the bottom to the top. In particular, Inman wants the lowest 92 stores, which have average sales of $69 million and are making a loss, into the next bracket, on average revenue of $107.
Over the next four years, that will add another $35 million to EBITDA, Inman believes.
The company has two investments in e-commerce sites: Surfstitch and Swell, with sales of $30 million and $20 million respectively last year.
Inman has been criticised for her lack of online experience in taking up the Billabong appointment, and is moving fast to outline the online opportunity. “This is our greatest opportunity and we will integrate this with our bricks and mortar,” she says.
“We are going to get them onto one platform, over time. So when a consumer comes into our store if we haven’t got the product they want, they can go online or on their mobile whilst in our store, look at stock levels, and order through Billabong or Surfstitch. This is totally integrated retailing.”
Surfstitch sells about 300 other brands, which Inman sees as valuable market research. “We get to understand what is happening and what the trends are.”
The company recently started a site for the Billabong brand in America and it is almost bringing in 4% of total US sales, she says.
Asked by an analyst whether this means it is breaking even, Inman says that 4% is about the breakeven mark.
Billabong will climb out of its hole as a global company. Inman has already done the global checklist and knows the numbers.
She is going to slash 15% of the company’s styles. Why? Because about 22% of them deliver 80% of sales. She will cut suppliers by 35% because 85% of purchases are generated by 19% of suppliers.
She has appointed three new global heavyweights: the aforementioned Colin Haggerty, as global head of retail; Chris Zyner, head of human resources; and Andy Laws as head of strategy. She also has a swag of consultants to help her out.
She will set up a “transformation” office dedicated to the turnaround. Inman says the strategy will succeed because it is based on research – finding out what has happened in the businesses, who the customers are, and what they want to buy.
Kath Walters is the editor of LeadingCompany and an award-winning journalist of 15 years’ experience. Kath was previously a senior writer and editor at BRW magazine covering management, strategy, finance, entrepreneurship and venture capital across all industry sectors. In 2006, Kath won the Citibank Award for Excellence in Journalism (General Business). Follow her on Twitter.
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