Surfpolitik Billabong on Target for change?

In: Surfpolitik by Stu Nettle 82 Comments Wed 9th May '12

Tags: Billabong , target , derek oneill

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What to make of this morning's announcement that a former head of Target, Launa Inman, will take over the CEO's role at Billabong? Should we make any correlation between Inman's former company and the direction of her new one?

A bit of backstory before we get to those questions: Inman replaces Derek O'Neill, a 20-year veteran of Billabong and the person in charge when the companies recent retail strategy was sunk. For the last five years Billabong spent big on bricks-and-mortar retail space in an ambitious plan to dominate the surf retail market. They were felled by the Global Financial Crisis and diminished retail spending.

In February this year, with the company floundering, Billabong were the targets of a takeover by a private equity firm. They subsequently sold half of Nixon watches, announced 400 full time staff would be axed and planned to restructure the company.

Prior to their fall Billabong, along with Rip Curl, Quiksilver and Hurley, were dominant in the surf retail market charging a premium for their goods. Unlike the others however, Billabong had a broad portfolio of brands that filled every aspect of the surfing lifestyle: watches, wetsuits, sunglasses, surfing hardware, swim wear, footwear and all manner of clothes. Although the products may have sported different logos Billabong was the one-stop surfing company.

In that regard they were beginning to resemble Target and its all-in-one shopping experience. With different market positioning, sure - Billabong pitched at high-spending, aspirational buyers; Target the common people - yet the success of each company hinged on a multi-faceted approach to supply chain solutions. Rather than concentrating on one product or field they sourced, manufactured and then sold myriad products in their own retail space.

And now to address the opening query: Is the announcement of a new CEO at Billabong a signal of an impending change in direction?

It might be reading too deeply into the situation to expect Billabong would move as downmarket as Target yet a slide in prestige is imminent – if not already in progress. The perception of Billabong as a hardcore surf company has taken a battering as the surfing world moves toward smaller, niche brands. They've fallen out of favour with long-term surfers, the heady days of the Hawaiian Billabong Pro and the adventurous Desert Challenge a distant memory. They've also cancelled their longest-running World Tour contest, the Billabong Jeffreys Bay Pro, which was demoted to a six star Prime this year.

Since Billabong's fall doubts have been expressed over their other surfing expenses, such as the Tahiti Pro, the Mundaka Challenge, and also their many sponsored riders, some of them on million dollar-yearly contracts. They're not expenditures that Launa Inman was ever troubled by at Target. The question now is whether she'll be troubled by them at Billabong.

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