At the Piper Jaffray Consumer Conference, Zumiez management said one of the keys to growth would continue to be market consolidation as local shops continue to decline, yielding market share to larger chains.
Zumiez CEO Rich Brooks said the marketplace was saturated – particularly in specialty retail, and that overcapacity represented an opportunity for Zumiez to maintain its stellar growth rate. Brooks added that an evolving marketplace has posed a challenge for retailers as smartphones and other high-speed handhelds has empowered the consumer through price-transparency, greater availability of product and a better knowledge of technical product features.
Brooks also pointed to manufacturing costs as a legitimate concern for the market, noting that while he expects the price hikes of cotton to eventually subside, labor rates have the potential to be a true long-term issue.
Brooks went on to say that Zumiez has seen its brand portfolio shift to smaller, more specialty vendors that typically have larger presences in independent shops. It’s actually the small brands that, in my mind, have the potential to perform the best in this cycle, said Brooks, and it’s because we know there’s demand that exists for those brands today because we see it in our daily results. Brooks added that small brands often already incorporate higher prices, and would therefore be more resistant to the impact of rising manufacturing costs.
Brooks added that Zumiez was committed to building its online presence, admitting the company did a really bad job of it for a long time. Brooks noted the retailers e-commerce platform us gaining traction lately, improving penetration by 4.5% in the last fiscal year and by 6% in the most recent quarter.
Finally, Brooks spoke on the companys recent expansion into Canada, noting that thus far, efforts have proved successful. He predicted the company could open 10 stores in Canada this year en route to the goal of 60-65 initial stores.
