What Price Core?

Thursday, 28 February 2013

Words: Nick Carroll

It's clear who Quik's three favourites are.

Originally it was rumoured that everyone had been cut from the Quiksilver surf team except for Kelly Slater, Dane Reynolds and Craig Anderson. This has since been proven false, but it's clear who the favourites are on Quik's website.

Jeez there has been a lot of yelping about the last few days’ business activities at Quiksilver Inc’s US HQ.

Some facts have been reported, on some hard decisions. Quik’s and DC’s Womens and Girls lines have been cut and around 30 employees let go, along with some unspecified number of surf and skate athletes.

But the rumours have been way more fun. This guy’s been dropped! All these guys have been dropped! They’re pulling out of surfing! Aarghh! The world’s in flames!

The rumours are all a bit too hot. Many of the surfer contracts being touted as torn up are in fact still calmly in place. For one, Jeremy Flores called SL yesterday, concerned that his mates were all calling him in a lather, worried he was out of a job. It’s not the case, JF reassured us and his mates.

It hasn’t stopped many people from assuming that Quiksilver must be flat in the water, broke, or otherwise horribly buggered to even be considering these things.

But there’s something more complex being played out here.

Quik is not broke. Far from it. If market investors are right, it’s on the brink of a new phase of success. The share price has rallied massively in the past month.

Instead I think what we might be seeing here is the final, inevitable decline of Core as a driving force within these big companies.

By “Core” I mean the old idea of surfing as being a community, a sort of tribal village, where everyone looks after each other and helps each other out, and the rest of the world can deal with us on our terms, or politely go fuck itself.

Kelly Slater at the Box. Photo: ASP/Robertson

Quiksilver's biggest star sneaks in a solo sesh at The Box. Well, apart from the seven photographers in the water with him.

This idea still exists in many surf towns and boardriders clubs and surfboard designer circles. Indeed, it’s a basis for many surfing lives. But the days of it being central, or even a bit tangential, to the thinking of major surf labels are swiftly passing.

It shouldn’t come as a surprise. Those institutional investors in New York must have always suspected they were getting the wool pulled over their eyes when the Quik management team would come over from the West Coast and explain why they needed to spend a shit load of money on these gromfests and mid range pro surfers and dubious payments to this guy and that guy and "watering the grass roots" all over the planet, and why they needed all these different labels for different niches in what’s a niche market to start with.

It must have sounded to a cool-headed observer like magical thinking. After all, core surfers were only a fraction of the market – the people buying the majority of the gear were doing so because they liked the idea, not necessarily because they were doing it.

But while the sales were up and everything was Dandy, the investors would perhaps have thought, well, yeah maybe these surf companies ARE different after all, maybe we better keep our hands off their seemingly odd activities.

But the past four or five years have changed all that. "Core" did not immunize any of these companies against the GFC and associated losses. “Core” helped not at all. There was no magic. Instead the GFC exposed all sorts of typical weaknesses in the businesses, the sorts of weaknesses you might have expected in many such companies which had been busy expanding in a formerly blossoming retail environment but suddenly found themselves buggered.

In short, surf companies have been exposed as being like any other businesses, and the real owners have decided to take over the running of this ship, and run it like they'd run any other such biz: clean everything out, straighten up all the supply lines etc, get focused on the task of selling through, and forget all this Core stuff. For them the Quiky trademark is solid and bankable and does not require grass roots watering, any more than any other strong brand. They will work to burnish it by association, the way most of those slick US brands do, but that's a different marketing task. That’s not trying to prop up an entire subculture.

Investors understand this process and that's why they're driving up the share price. 

Quiksilver VS Billabong shares as of today.

Over the past year Quiksilver's shares have been trending in the opposite direction to Billabong.

In the light of this, it’s been touching to see just how many people, commenting online, still feel a kind of not-quite-clarified identification with the major brands. Some of the commentary seems to indicate a feeling of betrayal and a desire for some kind of payback: “Don’t buy their products!” and so forth.

But one can’t help but notice, even this talk is couched purely in consumer terms. If it’s just a choice between buy or not buy, what price Core?

The chances of most of Quiksilver’s clientele being affected by such sentiment, you’d suspect, is about zero.

In this whole play Quik, as it has been for many years, is just a bit ahead of the curve. The company’s business difficulties began well before Billabong’s debt crisis and well before Claw and Sing-Ding began looking for buyers for Rip Curl.

At some point in the next two years, both those companies’ ownership concerns will be resolved. It’ll be interesting then to see how they cope with the challenges that Quiksilver is now so decisively tackling.

For more reading head to: http://www.shop-eat-surf.com/news-item/4686/mcknight-and-mooney-set-the-record/-

Meanwhile, Dane plays a $2 piano in Mexico.

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