Grom Grows in Spite of the Pandemic
It’s been a tough year for many businesses, forcing companies to drastically adjust their strategies, but also creating new opportunities.
We recently caught up with Mike Madlener, a former Dakine veteran and now CEO and co-owner of youth action sports brand Grom, to see how business has gone for the brand during the pandemic.
How has the pandemic impacted Grom?
Grom CEO Mike Madlener: In March of last year, I was really concerned about the immediate outlook. We had record pre-books for spring and summer going into last February and were getting ready to ramp up. Then by March, it was pretty much disaster on all fronts with order cancellations and revenue interruptions. Those were tough days as we watched our year slipping away. We decided that the best way forward was to keep our employees, freeze overheads, find ways to support and accommodate our retailers, keep our supply chain in good order and give our kids upbeat ways to market the brand.
We wanted to be ready for the bounce back, but it took way longer than we anticipated. On the upside, the waiting game forced us into better business practices that will continue long into the future. By June, the orders began to come back, and the last five months of the year were off the charts good for us.
Did Grom grow revenue in 2020?
Mike Madlener: Yes, and it was quite a relief. We ended last year up 25%. The last five months of last year were very busy, and the first two months of this year have been record-setting for us. We managed to keep our supply chain working properly and have been delivering on time, which our retailers have been very thankful for as their businesses have also picked up dramatically in many cases. Being a reliable supplier is key.
Have you expanded the categories that you carry?
Mike Madlener: Yes, we have expanded our product range. The two most notable: we started a very successful “GROM Racing” category which covers motorsports including motocross, kart racing, and off-road racing, as well as creating a new “Juvy” age range category for 3-7.
What are your most popular products?
Mike Madlener: This year our breakout piece was our skate pants. We have a new ‘Built to Slam’ pant, and the response has been phenomenal. These are a robust twill with plenty of stretch. We call the fit “Ride Right,” and it’s right in the middle of baggy and slim with room in the trunk but medium in the leg and still stylish — even if you are into baggy.
We blew out of them almost immediately and actually cannot keep them in stock, though we are working on that.
How many employees do you have? Have you made any significant new hires?
Mike Madelner: Before the pandemic we were getting ready to hire, but by March of last year that was out the window. We have created a very streamlined new strategy that really works for us: we keep nine key positions in-house, and then we use outside assistance for certain professional duties and temporary help in the warehouse during our busiest months. This has created a very tight-knit team and the ability to remain agile through uncertainty.
Have you expanded your wholesale business into new accounts? If so, any notable ones?
Mike Madlener: We have a strong and growing specialty retail base, and we appreciate them so much. We also do a great business with some larger chains like Tilly’s who have been really amazing to work with over the past few years. We are happy to welcome two large online retailers to our family: Zappos and Backcountry.com.
How are you marketing the brand?
Mike Madlener: Our evolving marketing is actually one of the raddest things that I’ve ever been a part of. We provided an original platform for our audience that did not exist before. Around that platform a fast-growing community sprang up, and now our kids just organically market GROM with us. Our engaged youth audience supports us every day online with posts, re-posts, stories, reels, and literally original content they create featuring Grom. The kids are the media online. It’s honestly awe-inspiring.
I’ve seen some snow imagery on social media. Do you plan to move into outerwear?
Mike Madlener: We definitely have demand in snow for sure, and it’s tempting to pursue. However, having worked at Dakine for so many years and among other things, actually overseeing the launch of the Gore certified outerwear program during my time there, I know how complicated a proper snow line actually is. The days of throwing a patch on a jacket and calling it “snow” are long gone. For the moment and under our current structure, although we have demand, I do not have the resources needed to launch a proper and sustainable program at this time.
What about the girls’ business. Any plans there?
Mike Madlener: We already have a girls’ consumer. Our girls dig it that we are not making “girly” stuff and when they rock a Grom cap, jacket, flannel, or whatever, it’s a statement for them. We are just going to hang back a moment and embrace the power that our female audience creates when they wear Grom as is, and hopefully we might be as successful as our predecessors when we finally jump in.
Are you still self-financing the business or have you brought in outside investors?
Mike Madlener: Yes, we are still self-financed, and it has been both a blessing and a problem. A blessing because it has forced me to literally feel the pain of lost or wasted money and also, I have trained myself to think of everything in real dollars and not just percentages.
It’s been a problem because we have more demand than capacity and we are leaving quite a bit of potential untapped. I am thinking I will address the financing soon as it may be starting to become more of a problem than an asset, but I have really enjoyed building Grom thus far.