Tavik gets creative to survive
We’ve been checking in with young brands recently to see if and how they have survived the recession.
Today, we catch up with Tavik founder and CEO Erik Paulsen, who shared with us the varied business strategies and alliances he has employed to make it through the downturn, which hit the brand hard.
Paulsen founded the brand in Laguna Beach in 2004. Known for loud graphics and grassroots marketing, prior to 2007 the company raised capital through strategic angel investors and spent a lot of its budget on staff and marketing.
“We were shipping hundreds of accounts. Stores were paying and retail was pumping for us,” said Paulsen.
Then the recession hit.
“Overnight, everything stopped,” Paulsen said.
With stores closing and most of its capital already invested into developing the future season or tied up in products that shipped to stores, Tavik started losing money.
Instead of closing shop like some brands did, Tavik implemented a few strategies that stabilized its business, Paulsen said.
First, they cut their account base to retailers who they knew could pay, and extended terms and developed deeper relationships with the accounts they kept. At one point Paulsen said they only had 30 accounts.
Paulsen himself said he took on quadruple the work, and the company leaders found ways to cut costs wherever they could.
One of the smartest moves Paulsen said the company made was to get out of its current lease, and move into a warehouse with one of his manufacturers.
“To share overhead costs at such a tough time, made sense,” he said. “Instead of spending money on rent, I could work to start paying a few vendors we owed money to and get caught up. We could start planning, budgeting and forecasting again.”
Tavik also teamed up with a vertically integrated, locally-based screen printer and manufacturer, CS Fashion Enterprises, known for its history of printing for action sports brands like Ocean Pacific (Op), Hobie, Hang Ten, and Quiksilver.
Paulsen describes the partnership as a type of joint venture. CS Fashions helps Tavik with production, samples, trade shows, manufacturing of printables, and has linked them to a team that helps the brand run sell-through reports for all territories as well as conduct direct sales to major accounts in the Midwest territory.
Tavik kept its East and West Coast sales rep teams, and still runs all the design and marketing.
“The partnership became a hybrid between a manufacturing partnership and licensing agreement, and has allowed us to focus on what we are good at: sales, marketing and design,” he said. In return for backend help, Tavik shares profits with CS Fashions.
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Swimwear, John Wayne licenses
Besides sales and manufacturing support, teaming up with CS Fashions has allowed Tavik to conduct at-once business with retailers.
“Our best categories are Ts and board shorts, so teaming with a screen printer has been really beneficial, because we can now print Ts, tanks and fleece locally and turn printable products around in a week,” said Paulsen.
Tavik decided to license out women’s swimwear and become a licensee themselves, teaming up with John Wayne on items like Ts and boardshorts.
“Women’s swim is a difficult category to compete in,” said Paulsen.
“Swimwear is its own animal, and we would need a large marketing budget to compete with established brands so I decided to allow someone else with the capabilities, time, capital and know how to build a swimwear collection around the Tavik brand name.”
Nicole Hanriot of the company Designs by Nikki approached Tavik with designs, contacts, and her own financial backing. Paulsen teamed up with Hanriot and formed a partnership and licensing agreement. Hanriot does the designs, sales, and manufacturing with Tavik’s approval.
“Nicole really knows swimwear and in the last year took really took it to the next level,” said Paulsen.
Within one year, the Tavik swim brand opened 70 doors including American Rag, Swell.com, Karmaloop.com, The Closet, Spyder, Free people, 80sPurple.com, WRV on the East Coast, Revolveclothing.com, Diane’s and more. They have also received press in magazines including Marie Claire, Riviera, Bliss and Self.
John Wayne license
For the John Wayne license, the brand teamed up with representatives of the iconic Orange County native, who died in 1979, to produce a limited run of boardshorts and Ts that Paulsen said are “flying off the shelves.”
“We still have a few things we are catching up on from the last two tough years, but we are growing back to and beyond where we were two years ago, with a much tighter program,” he added.
Tavik currently sells to The Closet, Hobie, Tilly’s, Swell.com, and more. He said they plan to control domestic distribution and expand globally in the future.
They also plan to expand their internal team, athletes, and artist and music division, which Paulsen said will grow significantly in 2011.
While the brand was suffering for a while, Tavik has surely found new ways to stay in the game. As Paulsen himself said, “The best time to build a business and capture market share is coming out of a down economy.”