A Business Analysis of Zumiez Inc, a Niche Retailer

Zumiez, being a retailer amongst quite a few in a niche market, is losing a significant amount of stock value and sales. However, the company only just became publicly traded in 2005, and although it may be difficult to assure that Zumiez Inc. will recover viewing the Currently available data, having been first incorporated in 1978 Washington, their previous successes cannot be disregarded. Recent acquisitions, within the past 5 years, have also contributed to their steady decline, being that the passing of company ownerships heralded little
to no increase in sales.

Along with is the consistent, and in some cases inevitable, decline of retail stores. With internet access and online retailers offering equal or higher quality goods for similar pricing, consumers are gradually shifting towards the conveniences offered online rather than those offered in retail stores. Take into account discount stores and supercenters, and most specialty tores like those owned by Zumiez are steadily dying off. Aeropostale, for instance, was forced into bankruptcy. In consideration of these factors, and many more, it can be said that Zumiez InC.

, a company chosen due to personal experience with the skateboarding industry, may be seeing its end in the near future.

Zumiez Inc., a renowned corporation in the action sports industry, was chosen for this particular report due to the close association it has with skateboarding, the author’s preferred sport since childhood. Having thoroughly established themselves from 1978 onward, Zumiez
Incorporated has installed stores on a global scale, effectively utilizing their opportunities by building in many European nations, Canada, and of course in the United States, where the company began.

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Even with the instability of the clothing industry, as well as the very niche target market, Zumiez has consistently outlasted other retailers in the same business. However, on the same note it cannot be denied that the shifts to online retailers and the performance of discount stores and supercenters have greatly impacted the company. With falling stock prices and sales, an economic slowdown would almost certainly ruin Zumiez, even with taking their online business into account. Ultimately, the fickleness of the consumer involving “want” goods will just as easily eliminate Zumiez. So unless the company switches to pharmaceuticals or some other essential-for-living goods, their future as a business will continue to be questionable.

Regarding the direction in which the company plans to head, assuming they survive long enough, it can be surmised as being “To give back to the community which has built us.” Although not explicitly defined anywhere, after reading through the information page of the
company’s website, one would assume that they are a company built from the ground up in hopes to support the same community that the founders themselves are members of. A phrase often used, with some modification, can just as well be applied to Zumiez Inc, “For skaters, by
skaters.” With that said, no future plans have been expressed as to the company’s goals or plans, excluding the typical long-term profit margins.

Employees can expect a fairly similar treatment under Zumiez as they would under most apparel oriented retail stores. Average hours, average pay, generally obnoxious customers, and the potential to advance, training included. With this in mind, though, consumers of the action sports industry, skaters, snowboarders, surfers, etc., are encouraged to join and may be prioritized over other potential employees, as consumers of this industry often times gain a thorough understanding and appreciation of the equipment and apparel used in the sports.
Surprisingly enough, Zumiez does not offer sponsorships or have a team of riders like many other action sport companies.

As for programs or promotions that encourage employee involvement, the most important come from the company’s participation and contributions to many competitions and social events, the most recent of which, named “Zumiez Best Foot Forward”, involves touring various skate parks across North America with teams from other companies such as Converse, Almost, Enjoi, Bones, and various others that are also helping to sponsor the resulting events. Videos and details can be found at the following URL: http://www.zumiezbestfootforward.com/.

Utilizing events such as these produce an incredible amount of stimulus for both the employees and consumers. Seeing as ho many employees were/are consumers and supporters of the very business they work for, being able to contribute to these large promotional events
greatly improves moral, as well as allow for customers and even employees from other companies to grow a fairly positive relationship between one another. Excluding the promotional benefits, Zumiez also offers training, 401K, dental, travel expenses (for the described events), product discounts and giveaways, health insurance, vision insurance, performance bonus’, and a variety of others. (Glassdoor, 2015).
The ethical behavior and guidelines are fairly typical and universal, however informal they may be listed as in their Code of Ethics. If anything is to standout is that they place particular focus on customer relations and, being how niche the company is, Iit’s to be expected.
Another fairly important issue is Zumiez’s take on the environment. Seeing as how heavily dependent the skateboard industry is on wood, it can be said that the company has a fair hand in ecological issues. That being said, there have been efforts in mitigating deforestation by using
some of the more fast-growing species of bamboo, of which can grow up to 2 feet every 24 hours. Although not an entirely new invention, bamboo skateboards are not carried by many retailers, neither online nor in physical stores. Zumiez, however, offers them in both.

Zumiez does not produce these products themselves, rather, they sell the products of other major companies (this excludes limited edition items or any collaborations that may be produced). The products they do sell offer much to the action sports industry, providing hundreds of thousands of fairly priced items to consumers world-wide. This further exemplifies the overall goal of the company of giving back to the community. Along with their selection, there are various other services such as on-site set-ups, experienced customer service providers, and even online services that allow for custom built boards according to customer price range and ability.

It can be surmised that the core benefits of their products is that they allow for conveniently placed, reasonably priced action sport goods to be sold to those specifically looking for said goods. With reference to the consumers, as with most other markets, their demographics cannot
be defined into one neat little package. That being said, there is one key characteristic that differentiates this market from others, and that is the fact that they are advocates of action sports. This includes not only the apparel and equipment, but also the competitions, promotional events, and the renowned brands of the industry. Being how intrinsic customer relations is to the company, it’s no surprise that their advertising and promotional campaigns also draw on these relations. Specifically: competitions, magazine ads, promotional giveaways and sales, tours, music and local events. All of which pertain to the company’s main goal of creating positive relations with and becoming synonymous with the action sports industry. Of course, online resources are also used, as social media sources like Facebook and Twitter further facilitate the company’s purposes in a natural way.

All things considered, one would assume that the company is at least comfortably profitable, and that it has a steady foot hold in the market. Now, the latter is most certainly true to a degree, as Zumiez has been in business since 1978 and have plenty of time to, and have
successfully, establish themselves as a prime retailer and advocator of action sports and its goods. The former, however, no longer holds true for recent years. Retrieved from Mergent, 2016 . The above isted graph, showing share prices for a one-year period, clearly portrays a
steady yet resistant decline of the company’s value. Looking further back in history, starting in 2005 when they first became publicly traded, shows stock prices being as high as $48 a share. The decline is expected, however, as consumer tendencies have shifted more to discount stores, supercenters, and online retailers (which, fortunately, Zumiez Inc. has made use of). Recent acquisitions including a European business, Blue Tomato, have allowed for Zumiez to expand globally, as well as further expose their industry and image, but sales and stock price drops have been consistent regardless. The table adds to this, as most company assets and finances have experienced a clear decline, continuing into the current year, 2016.

In a more hopeful assumption as to the future of Zumiez Inc., one could say that the recent decline is simply part of their business cycle. Ignoring the coincidental decline of other retailers, although not in the same industry, this theory holds some merit. With only ten years worth of data to work off of, starting in 2005; the first few years seeing a sharp high and steady drop, followed by a steady rise and then another steady drop. Repeating until 2015, with each high being slightly lower than the previous. Currently, in 2016, Zumiez is experiencing a substantially lower share value than they have before (although not the lowest), and may potentially begin rising again within the coming years. This ideal is further supported by the fact that financial analyists are split on the decision as to what to do with the company’s stock. Either to buy, or to hold. In both cases, however, it is assumed that Zumiez Incorporated does indeed have a future worth watching for as a consumer, employee, and especially a shareholder.

In reiteration of Zumiez Incorporated’s current standing, it can be succinctly described as such: A popularized brand since the 1970s is experiencing the difficulties most retailers face under the current consumeristic tendencies, with online retailers, supercenters, and discount
stores bombarding even the most niche of markets. The resulting drops in sales is causing even the most well established and long-standing businesses, such as Zumiez, to drop drastically in terms of share pricings. However, Zumiez has only recently became publicly traded, and with their recent acquisitions, online retailing, promotional events, and overall image, it is difficult to assure whether or not they will be around for the coming years.

References

1. Mergent, Inc. (2015). Zumiez Inc. data report. Retrieved May 5, 2016, from http://www.mergentonline.com.suscorp.idm.oclc.org/companvdetail.php?pagetype=Synopsis&compnumber=111860
2. Microsoft, Inc. (2015). Zumiez Inc. MSN Money report. Retrieved May 5, 2016, fromhttp://www.msn.com/en-us/monev/stockdetails/fi-126.1.7UMZ.NASZumiez, Inc. (2016).
3. Zumiez Inc. information. Retrieved May 5, 2016, fromhttp://www.zumiez.com/help/zumiez-informationGlassdoor, Inc. (2016).
4. Zumiez Benefis Summary. Retrieved May 5, 2016, fromhttps://www.glassdoor.com/Benefits/Zumiez-US-Benefits-EL IE38024.0.6 IL.79 IN1.htm