Billabong Losses: Lessons for Retail


Billabong has today made an announcement like none ever before in its history: a loss.  The downturn in the retail sector in Australia has claimed its most formerly-profitable scalp, proving that even the giants of this sector are not immune to the seed change that has taken place in retail.

What is taking place is nothing less than a revolutionary change in the way that Australians purchase their goods and services.  I listened to Billabong CEO Launa Inman this morning discussing a whole new model for the way that her company approaches new product development.

She has decided to hive off lesser internal brands, and to consolidate the key product offering and focus on what makes and has made Billabong unique, plus when designing new lines that they make a small number and test them before pushing them worldwide through the business.  This makes a lot of sense.

She also spoke about being true to the Billabong brand, which was described so pithily this morning by another analyst as being embodied in the idea that having a ‘board’ makes your life better – be it a surfboard, a skateboard or a snowboard, that’s what Billabong was/is all about.

There is a key insight here in the power of simplicity.  Know what your market edge is, and stay true to your belief in your uniqueness.  In chasing profits, many businesses lose direction when they diversify, when in fact what they need to do is narrow in on what makes them different/better than the others, and then make it even more different/better than before.

The honeymoon for Australian consumers with Billabong is not over.  Far from it.  Cutting their overheads and zeroing in on what it is that they do best, better than any other lifestyle and leisure retail brand, is the path back to profit.  Because when you buy a Billabong shirt, you are buying part of a dream that is wrapped in sun-drenched days, surfer cool and ‘carving it up’ on whichever board you choose.  That is an intangible brand value that has been somewhat lost, but not irretrievably so.

For retailers who are pondering in alarm about the future, the multiplicity and variety of retail point of sale options is an opportunity as well as a threat, and despite the flood of poorly-made cheap imports and knockoffs, a powerful brand still has impact at the till.  With Summer only weeks away, it will be interesting to see if Australian consumers rediscover their love for Billabong, now that it has transformed from ‘local son done good’ to ‘little Aussie battler.’


Yours in PR

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