RIP CURL :THE SURFING COMPANY

GROUP 4

CHAUHAN Rakesh Singh IHSAQ Ahsan PAL Rudrajeet PERRIE Anne-Cécile

15 Nov 200715 Nov 2007

MINI PROJECT 2007Anders Heden & Jane McAndrew

ABSTRACTABSTRACT• Today : great place in the world-wide market of clothing. • Why Rip Curl? Because it is a potential brand of surf-wear capable to be a

market leader in a highly competitive business environment. • Competitors :

- Quicksilver, a world leader - Billabong who is close to Rip Curl - Squalo, new on the French market

Assignment:Assignment:

- Possible information sourcing of Rip Curl and its 3 competitors.- Strategic planning related to purchase, assortment and distribution; - SWOT analysis - Establishment of a developmental proposed strategy plan.

Methods:Methods:

- intensive Internet search,- collective reasoning from the information - contact with a commercial from Rip Curl France, Mr. Markus Hietamaki, and Business Manager of Squalo France Mr. Perrié Jean-Damien,

Industry DefinitionIndustry DefinitionDesigning & producing new products; distribution, marketing and brand building of

functional surf-wear clothing (wetsuits) for active-minded people driven from a board riding heritage for men in French market.

Industry DescriptionIndustry Description

• Multi-million dollar industry worth US$13 billion a year • Worldwide 20 million practitioners and growing steadily• European market valued at around €550 million and growing approximately 15% per cent a year.

Turnover surf wear market (2000)-France

The Value ChainThe Value Chain Manufacturer Segment Sourcing from China, India, Taiwan ,South Korea, Vietnam Wholesale segment Quicksilver, Billabong, Squalo Retail SegmentSurf shops, Licensees, Specialty stores, Hypermarkets, Factory outlets,

Supermarkets, Internet,

Five Force ModelFive Force Model

COMPANY DESCRIPTION AND ANALYSISCOMPANY DESCRIPTION AND ANALYSIS

Business IdeaBusiness Idea

• Sports wear apparel and main focus is on surf wear products like wet-suits, surfboard and accessories.

• Company for surfers by the surfers and offering products to complete their search or journeys.

The CompanyThe Company

• Founded in 1969 in Torquay, by two Australians- Brian Singer (Sing Ding) and Doug Warbrick (Claw) with the manufacturing of surfboards.

• In 1970 they begin production of wetsuits. Since last more than 30 years Rip Curl was at the forefront of research, development and technology in surfing .

• Rip Curl have exclusive licencee for France in Hossegor. Founded in 1985, the French company now counts more than 125 employees.

• With their long histories in surfing their brand embody innovation, quality, performance and design which is demanded by French consumers who are well aware of body support during sports and exercise.

Purchase strategyPurchase strategy

• Rip Curl uses a global sourcing strategy with parallel suppliers. As volumes have increased and tariffs have decreased so a huge swing towards manufacturing in China has eventuated.

• Rip Curl supplier acts as an integrated sourcing supplier as either apparel can be sourced on full price basis or sometimes CMT basis as they nominate suppliers of material of there choice in the production of an apparel item.

• The Company also consults with its local sourcing office who provide valuable local expertise and product knowledge.

• The company through its co-coordinating role aims to centralize the existing sourcing capabilities .

Current StrategyCurrent Strategy

Assortment strategyAssortment strategy

Distribution strategyDistribution strategy

• Selling through company-owned 45 – stores in France. The seat of Rip Curl France, and also Europe is in Hossegor.

• Maximizing revenue from prime-location stores is one of the strategy on which company is working.

• To oversee and supervise the licensees’ customers to ensure that the brand remains paramount and is not supplied to discounters or wholesalers who do not maintain the integrity and authenticity of the brand.

• The Company’s licensing model focuses on ensuring that the licensees sell the surf lifestyle products to the top of the sales pyramid. Major customers include specialty retail chains and independent surf retailers.

• In France, they are also selling through controlled distribution including Surf retailing chains, Brand concept specialty stores, Independent specialty stores ,Mail order – companies, and the Internet.

Future GoalsFuture Goals• Ambition is to open more than 50 stores and double retail sales by 2010

• Increase the number of licensees; support and develop current licensees to increase market share,

• Achieve measurable and sustainable improvements through health projects, environmental programmes,

• Showcase products in their entirety and to have complete creative control over that presentation to have real-time feedback in regard to product direction and in-store presentation.

Strengths Weaknesses

Revolution in design and flexibility Forefront of research, development and

technology in surfing Reflects local market tastes and themes Follows Full-Price Principle, private label

principle As integrated retailer, it has the newest

marketing support materials in its showrooms, Brand reputation and better brand licensee

intervention.

A small material change in Rip Curl products sourcing arrangements have an adverse impact

Change in existing relationships have an effect on the ability to source appropriate product at reasonable cost

Lack of a strong management system to monitor large group of licensee relationships and retailers.

Opportunities Threats

Niche opportunities for innovative high-end products

Gaining a slick reputation for having girls line improve substantially

Short term focus on core accounts to develop existing account base

Growth, strengthen the brand and relationships through new types of specialty stores and chains.

Fashion trends change rapidly Adverse impact on the single-brand core surf

image resulting in loss of market appeal Sticking to schedules and working with

deadlines risk of oversaturation and having their dealer

support erode Change in quota arrangements, in the political

or economic environment

SWOT AnalysisSWOT Analysis

QUIKSILVERQUIKSILVER The CompanyThe Company

• Quiksilver, Inc., one of the world's largest manufacturers of surf-wear and other board-sport-related equipment

Current StrategyCurrent Strategy

• To expand its leading position in the outdoor market to bring their lifestyle message to the global world

• To emphasize innovative design, active fabrics and quality of workmanship

• Develop design concepts primarily based on the Company's own research

• Formalise a process sharing designs, art, fabrics, samples and patterns with its international licensees to have new products sold under the "Quiksilver" name.

Purchase StrategyPurchase Strategy

– Quiksilver’s men’s surf-wear collection are purchased or imported as finished goods as the company by independent contractors located in China, Vietnam, North Africa and Portugal.

– Products are manufactured based on design specifications provided by the company whether they are produced from

• Raw materials provided by the company• If they are purchased or imported as finished goods.

– Thus Quiksilver follows a combination of both Full Price and CMT principles in their extensive purchasing strategies.

– Goods are generally manufactured and processed on an order-by-order basis.

– The Company attempts to keep only enough finished product in stock to meet sales commitments and anticipated orders and reorders on a seasonal basis.

Assortment StrategyAssortment Strategy

Distribution StrategyDistribution Strategy

• Distribution is based in surf shops and specialty stores that provide an outstanding retail experience for their customers.

• Company's products are distributed in approximately 18,600 retail locations.

• The foundation of Quiksilver's business is distribution of product through surf shops, board-riders clubs, and specialty stores.

• This core distribution channel serves as a base of marketing

legitimacy for Quiksilver.

• Quiksilver is marketed throughout the world via a network of franchises operating 300 shops in Europe and through large distribution chains and independent stores.

SWOT ANALYSISSWOT ANALYSIS

BILLABONGBILLABONGThe company – How they startedThe company – How they started- Billabong was founded on Australia's Gold Coast in 1973 by surfer.- By the 1980s, Billabong had firmly established its place in Australian surf

culture and was ready for international expansion.- 1990s the surf industry grew exponentially and professional surfing

gained a new found respectability.

Products and BrandsProducts and Brands- Marketing, distribution, wholesaling and retailing of apparel, accessories,

eyewear and wetsuits- Other businesses were also established: . acquisitions of the Von Zipper sunglasses brand . Honolua Surf Company . Element footwear range

Billabong todayBillabong today- $110 million in 1999 to more than $1 billion in the 2005-06 financial

year.- 1750 staff world-wide, with the majority located in the key surf

destinations of Australia’s Gold Coast, Orange County in southern California and Hossegor in south-west France.

• Involves retailing through self shops• multi-brand strategy

Purchase StrategyPurchase Strategy

• Group of third party contractors which operates in more than 30 global destinations (Asia, USA, South America, Europe)

• Manufacturers of supply chain (50% China, 15% USA, 8% India) ; 200 individuals suppliers

• Billabong against the unacceptable

• Environmental regulation

• Outsource 98% of the products

AssortmentAssortment Strategy Strategy

Distribution StrategyDistribution Strategy• Board-sports retailers and company’s own brand retail outlets

• Specialty surf and skate shops

Current StrategyCurrent Strategy

Futures GoalsFutures Goals

• Quality of the brand and distribution and development • Diversification but always in sliding sports

SWOT AnalysisSWOT AnalysisStrengths Weaknesses

Marketed and promoted internationally through association

Multi-branding for promotion – Efficient distribution strategy High brand valuation and image,

supplying quality surf-wear Dedicated to share holders Low prices

and consistent supply supports ecological sustainability and

cultural diversity

Proper order management of diversified assortment

litigation problems Rarely uses long term pricing strategies

Opportunities Threats Reinvestments in product design Acquisitions and mergers New shop-in-shop corner concept Plans to open new retail stores Increasing popularity of surfing

Increasing competition and slowing growth

Cost of transport affects ability to distribute

Logistical and organisational difficulties Trade agreements, unauthorised piracy,

socio-cultural influences

The company – How they startedThe company – How they started

-Squalo surfwear was born in 1994 in Mexico, Puerto Escondido

-Leading brand in Mexico and slowly emerging in Europe

-Proud to broadcast these image in other countries (Italy, Spain, USA, France)

Products and BrandsProducts and Brands

- All the goods are imported of Mexico and its a distributor, a retailer and wholesaler.

- Clothes, eyewear, accessories, wetsuits

Squalo todaySqualo today-Squalo and “new generation”: 10-30 years old people. Surf attitude is really a lifestyle

-Squalo and holidays : people who just want to be cool on their clothes

SQUALOSQUALO

Current StrategyCurrent Strategy• Image of authenticity and identity• Influence of the French market

Purchase StrategyPurchase Strategy- Full price principle- B2B- Ex works- minimum lead time

AssortmentAssortment Strategy Strategy

Distribution StrategyDistribution Strategy- Independent stores and particularly surf-shops- Web sites- No licenses and no franchisees but it’s being negotiated

Futures GoalsFutures GoalsOpen new stores and particularly one in the a famous street in Bordeaux in April 2008

SWOT AnalysisSWOT Analysis

Strengths Weaknesses

Product quality and quality control Infrastructure and logistics well in

place Product diversification.

No proper technical surf-wear(wetsuit) brand in French market

Internal developmental problems

Opportunities Threats

Interesting margin Transparency

Major competition with well established surf-wear brands

Lack of established brand image in the French market

Market dynamics

Purchase StrategyPurchase StrategyProduct Modularity Principle

Attempt to mass customise functional wetsuits, to match the key individual end-customer requirement.

Sourcing of functional raw material and intermediate product till fabric into sheet rolls and accessories from low price procurement bases in China, India, South-east Asia. Subsequent transportation to France for warehousing the material. Development of infrastructural set-ups within Rip Curl’s own capacity to materialise the final product according to customer preferences.

RequirementRequirementKey requirement of matching the exact body shape for individual end-customer satisfaction. Purchase and implementation of a relevant body scanning or imaging technique system through integration of information technology, mechanization and team base flexible manufacturing. This would increase the product diversity and add to the assortment range.

JustificationJustification

STRATEGY PLANSTRATEGY PLAN

Opening more liaison offices JustificationJustification In response to the increased dependability on the 3rd party licensees in the

outsourced countries, strategic opening of own buy houses or liaison offices at the key manufacturing hubs is essential to supervise off-shore operations. This sufficiently shortens the value chain which increases agility, flexibility and transparency.

RequirementRequirement More flexibility and agility, transparency, better flow of communication, lesser

monitoring requirement

Assortment StrategyAssortment Strategy To shift from the collection based mass production technique to

high-end mass customised product assortment

RequirementRequirement• Diversification of Assortment from the discrete collection range to individualisation.• Key marketing plan implementation to diversify products for surfer market

segmentation – commercial divers and amateur surfers – catering different product requirement based on functionality.

• Product development and research extension in the field of wearable technology and smart textiles to devise intelligent wetsuits with key developments required for product commercialization.

• Extension of the research & development unit in Soort-Hossegor in France. JustificationJustification Wider assortment range ensures broader market capitalisation and expansion and

hence brand-build up. Economically, the long term analysis suggests company profitability.

Marketing StrategyMarketing Strategy

Proactive engagement in intensive market survey and analysis.

RequirementRequirement • Requirement of more recruited personnel in market survey and analysis.

• Efficient database and information system.

JustificationJustification• Marketing increases the popularization of the brand and implementation of

customization strategy. The increased marketing of the diversified product range needs to fetch the customer affinity to increase turnover volume.

Surf-active membership

• Make the wetsuit body scanning system an integral part of the secured Rip Curl website so that the surf-active members of the Rip Curl surfing community can access it to self evaluate the exact customised product as per their specifications and requirements and mail order them. Quick response delivery is evident through courier or at the beach outlets.

Distribution StrategyDistribution Strategy

Quick ResponseQuick Response

• Setting the wetsuit final fabrication unit in Soort-Hossegor, France within the companies own base would help faster market access, and viable and quicker customised product delivery as per order placement.

Opening self-owned retail outlets at key surfing beaches and Opening self-owned retail outlets at key surfing beaches and spotsspots

• Plan to open exclusive company owned outlets at the best surfing beaches in France each in Hossegor, Aquitaine, Biarritz with proper customized wetsuits for the target group speculated through market research.

Shopping shop conceptShopping shop concept

• A new way for distribution strategy, of having own shop in big stores like in Gallery Lafayette or Printemps. This strategy would let Rip Curl to build up brand image as for Big Fashion brands.

Sustainable DevelopmentSustainable Development• Organise surfing events in Hossegor, France once every year to

contribute for environment sustainability programmes and coastline protection.

TIME PLANTIME PLAN

• Double retail sales by 2010.• To open more than 50 flagship stores of Rip Curl in 2 years.• Open 100 Liaison offices in the major production hubs till 2010.• The plan is to open 10 stores in 2008,15 stores 2009 and 25 stores in

2010.• Finance can be proposed to meet out of internal accruals and market

borrowing.

The brand store is to demonstrate product breadth and to heighten consumer awareness of the Company's brands. With new stores the brand can be established more prominently among the consumers mind. Consumers will get total concept experience of Rip Curl products. They will be the sales channel as well as a marketing channel. By doubling the retail sales by 2010 the company can compete to be in 2nd position in the same segment.

•The infrastructural cost includes the general overhead cost, set up cost, and variable asset costs estimated to be around $ 0.8 million in 2008. With subsequent setup development the infrastructural cost decreases considerably; on an average $ 0.35 - $0.40 million in 2009-10.

•Liaison office setup cost chiefly consists of the fixed asset and variable asset and developmental costs roughly estimated to be around $ 0.20 million, in the off-shore bases.

•The Body Scanning System along-with the upgradation of the present database business systems is quoted to be around $ 0.6 million. This covers the initial installation cost. Further year 2010 would require certain system updation cost.

•Extension of Product development and Research facilities in Soort-Hossegor, France within their own base would require an finance of nearly $ 5.5 million (2008-10).

•Opening 50 retail outlets in key strategic locations in France like Bordeaux is estimated to be around $ 25 million overall till 2010.

•Market Survey, training and recruitment of new personnel is estimated to be $ 1.6 million till 2010.

BUDGET/FINANCESBUDGET/FINANCES

Thank you for your attention