T.E.A.M.

“C”

Teresa Fernandez

Mickael Liu

Adian Perez

Christina Salazar

Esther Yang

MKTG 130

T/TH 2:00pm

Table of Contents
T.E.A.M. “C” 1

Introduction ………………………………………………………………………….. 2

2
Management Structure ………………………………………………………………..

3
Products and Retail…………………………………………………………………....

4
SWOT Analysis……………………………………………………………………….

5
Company’s Business Objectives………………………………………………………

Target Customers and Market Selection…………………………………………….... 6

Controllable Variables ……………………………………………………………….. 8

Uncontrollable Variables……………………………………………………………... 10

Company’s Financial Performance ………………………………………………….. 11

Recommendations……………………………………………………………………. 14

Appendix……………………………………………………………………………... 16

References……………………………………………………………………………. 19

Introduction
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Zumiez Inc. is an American specialty clothing store founded by Tom Campion and Gary

Haakenson in 1978, and publicly traded since 2005.The company is sales apparel, footwear,

accessories and hardgoods for young men and women. Originally named "Above the Belt" when

the first store was opened at Seattle's Northgate Mall in 1978, the company grew quickly through

the early 80s with the addition of stores in malls across the country. With the rise of popularity,

the corporation changed its name to Zumiez and also changed their images to suite more young

adults.

Their mission statement reads, “We made our debut in the Seattle area in 1978, with a

single store location at Northgate Mall. Now we have grown, and currently have hundreds of

stores across the United States and Canada. We do what others have only dreamed of! We

provide you with cutting edge clothing, footwear, accessories, DVDs, hard goods for skate and

snow for active lifestyles. Everything we do revolves around the customer—you are the heart of

our company. We love and support the skate and snow industries that our customers live and ride

for. With the success of our retail Zumiez shops, we've opened our online store for the world to

experience, ZUMIEZ.COM! We want our customers to seek us, either shopping from their

recliner at home or roaming through their favorite Zumiez store location. So shop, download and

explore the world of Zumiez!” (Zumiez, 2018).

Management Structure

The top management positions are held by Richard Brooks the CEO and Christopher

Work in CFO. These men made the decisions that get carried out in store fronts across the

country. Each store has a district manager who is in charge of overseeing several stores within

their area. This would include sales/revenue and basic financial status for each store. The day-

to-day decision making would be do be a store manager, who would be incharge of hiring new
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employees, performing marketing strategies and promotions, as well as dealing with scheduling

and payroll. Store manager have a lot on their plate when managing a store so many of them

have assistant manager which they delegate some of these tasks to. Then at the end of the

corporate hierarchy is the sales associates/ representatives. These individuals are the cashiers, the

ones who deal with customers, and stock and present the merchandise to the public.

Products and Retail

Now that we have explained the management structure of the retailer, we are now going

to discuss the products they sells. Zumiez, Inc. is a multi-channel retailer of apparel, footwear,

accessories and hardgoods rooted in youth culture as expressed through music, art, fashion and

action sports lifestyle for young men and women. The company's stores cater to young men and

women between the ages of 12 and 24 of popular brands such as action sport lifestyle centered

on activities that include skateboarding, surfing, snowboarding, bicycle motocross, and

motocross. Its apparels includes tops, bottoms, outerwear and accessories such as caps, bags and

backpacks, belts, jewelry and sunglasses, footwear consists of action sports related athletic shoes

and sandals, equipment offerings, or hardgoods include skateboards, snowboards and ancillary

gear such as boots and bindings. The company also offer a selection of other items, such as

novelties” (Marketwatch, 2018).

SWOT Analysis

Upon doing our research we found that is company has some weakness and threats that

need some attention as well as many strengths and opportunities.

Strengths
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One of Zumiez main strengths is that they carry unique products and that’s what sets

them apart from other retail stores. A second strength is that due to their unique products they

have great customer loyalty. They have build up their company by creating trust with their

customers. Zumiez third strength is that they have created brand name value. Their name has

become well known within their target market. Their last strength is the innovative culture

they’ve created in their physical store locations and online. They have keep up with technology,

improving their online presence has aided them in e-commerces.

Weakness

Zumiez weaknesses are that they are typically small stores and lack locations outside of

shopping malls. Being that their stores are small they might not be able to put new products out

there to their customers. They have not taken the step into opening up new opportunities by

opening up a location somewhere else other than a shopping mall. They might find new

customers out of the shopping malls. Zumiez also lacks the presence of a mobile application for

smartphone users in which they are able to order clothing, shoes, accessories, etc. This is very

crucial in order for Zumiez to compete with its competition.

Opportunities

Zumiez opportunities are their online market and new innovations. They have to take

advantage of their online website and make sure they are keeping up with all new technology and

trends. Their target market are people who tend to be attracted to this. They also need to take

advantage of their social media accounts. They can use their social media accounts to promote
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more about the products they offer. This can be a door into finding new target markets that may

be interested in their products.

Threat

Zumiez threats consist of the possibility of customers changing their taste and intensive

competition. They have to make sure that they keep the attention of their customers and also pay

attention to what their competition is doing. Another threat that arises from Zumiez is the

demand for more digital implementations. Many of its competitors are bringing in more omni

channels in order to improve its image and Zumiez lacks that in a way.

Business Objectives

As the company continues to grow and face new problems, their goals and objection

containly changes to suite their current needs. Their overall sale goal is being able to sustain the

company’s needs of running it and then being able to support all of the sponsors and

organizations that help Zumiez. To help the achieve this sustainable and earn profit, they create

an objective to increase their sales in women’s apparel. Zumiez has showed continuance growth

in yearly revenue. According to CSI Market, Zumiez Inc’s revenue increase by 13.9 % last year,

and sequentially revenue grew by 6.15 %. Their annual sales growth rate is 6.74% compared to

the retail apparel industry growth rate of 4.83% (CSIMarket, 2018). Although the company is

doing good financially, there is still room for improvement one of which is increasing the sale of

women’s clothing.

In a company analysis done by Statista, a online statistics, market research and business

intelligence portal, organized their financial data into a chart titles Sales share of Zumiez

worldwide from 2011 to 2017, by product category. This graph showcases the percent of sales
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earned by their product category in relation in the total yearly sales. Overview this data, we can

see the in 2017 41% in their total sales came from men’s apparel while only 14% came from

women’s. Zumiez also sells footwear, accessories, and hardgood such as skating and

snowboarding gear. These product combined made up 45% of last years total sales (Statista,

2018). With that being said, Zumiez acknowledge that their sale are male dominant.They are

currently introducing new marketing and promotion tactics to bring in more female customers.

Target Customers and Market Selection

Zumiez, is known as a specialty brick-and-mortar and online retailer for apparel,

footwear, accessories, and hardgoods. Because of their choice in specialization it is adamant that

there target market, as stated from their company profile, are young men and women between

twelve to twenty-four years old that are passionate about a unique lifestyle. Zumiez allow their

target market to express their unique lifestyle through fashion, music, streetwear, and through

the art and culture of action sports. Not only do they carry their own brand but other brands,

products, and action sport gear as well, to cater to their target market’s taste and lifestyle.

To be able to reach their target market, Zumiez developed a concentration approach.

Concentration approach allows them to use various marketing strategies to both men and women

that fall between the ages of twelve to twenty-four using their similar lifestyle interest of action

sports. Since the ease and accessibility of the internet and advances in technology, their

marketing approach does not use traditional media such as television advertisements, posters, or

radio, but by using social media platforms to reach their target market.

As of currently have no commercials or advertisements, however they are very active on

social media platforms. They have an Instagram with 846,000+ followers, with post of that
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mainly consist of men’s apparel and shoes. Their Twitter account has 209,000 followers where

they tweet to their consumers and target market about new merchandise, events, promotions, and

communicate with their target market. They also have their YouTube channel with 52,807

followers. Their channel consist of uploaded videos of events they promote, and music from

guest musicians from the event. This channel self promotes the Zumiez brand by visually

informing their target market of the certain lifestyle Zumiez caters to. Another way to reach their

target market is by going to events they attend. Zumiez has sponsored and attended music and

sports events all over the United States and around the world to promote their brand and use their

brand influence to bring in more attendees to these events. By doing this they create a good

supportive brand image to create brand loyalty and exposure while simultaneously supporting the

lifestyle their target market is apart of.

Controllable Variables

Just like any other company, Zumiez has developed some controllable variables

throughout their company. The company has the power over these variables and it’s in their

hands on how they want to manage them. These controlling variables include: store location,

managing a business, merchandise management and pricing, and communicating with the

customer.

Store Location

Zumiez has developed a certain location for their stores, because they know who their

target customers are and where they are most likely to shop. Zumiez operates about 700 mall-
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based stores across North America, Europe and Australia, as well as an online store (Zumiez

Inc.). They are aware that their customers are mostly people that tend to shop at malls.

Managing a Business

Managing a business is also a controllable variable for Zumiez. Because the company's

employees were drawn from the subculture, their input was considered valuable, and store

managers (who had typically been promoted from the ranks of sales staff) were given relative

freedom in deciding how to arrange products and operate stores (Zumiez Inc.,2016). They decide

to let their employees input their thoughts on some of the stores decisions. Their employees were

hired based on their fit in the culture and they believe they have a good idea on what their

customers are looking for.

Merchandise Management and Pricing

Another controlling variable Zumiez holds is merchandise management and pricing.

They have the control of what they want their merchandise to look like and what price they set

for it. Zumiez has a certain look they want for their company; therefore, they carry certain brands

that fit with the style they are aiming for. It stocks brands, such as Billabong, Burton, Quiksilver,

Vans, and Spy Optic, as well as private-label goods. They carry Men’s and Women’s apparel and

accessories. A way they price their products is by looking at the competition’s pricing. Since

they’re competition carries most of the products they have, they don’t want to overprice or

underprice their products. They have to stay aware of what pricing their main competition has for

each item and be certain that they are in that range.

Communicating With the Customer

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Communicating with the customer is another controllable variable for Zumiez. This is

one of the most important controllable variables, because it's going to be the way they perceive

themselves to the customer.Alongside their action sports merchandise, stores also feature

couches, video games, and sales clerks who really use the gear -- all designed to encourage

shoppers to chill (Zumiez Inc.). Zumiez communicates to their customers through the store

atmosphere and their sales associates. They want their customers to feel comfortable and get the

feeling of a relaxed atmosphere when they visit their stores.

For their promotion strategy they don’t have much going on. They have the online

website and the social media accounts, but they are not making the best out of it. Zumiez stays

really focused on their skateboarding vibe in most of their promotions, but doesn’t realize that

their might be other market out their that might be interested in their products. On their social

media accounts most of their post are based on skateboarders. They don’t really post about

promotions their store might have throughout the year. They also have a rewards system, but

customers only get a gift after they accumulate certain points. They don’t actually receive money

to buy items in their store. Zumiez doesn't have commercials, mail-ins or coupons. This may be

something that they can implement in their promotion strategy to help the company.

Uncontrollable Variables

Consumers

Zumiez has to realize that with the shift of society and culture in today’s age, there is a

demand to keep up with what consumer’s need. With new trends coming and going, Zumiez

must be prepared to adapt to with the changes in consumer's need for apparel. Zumiez has a
T.E.A.M. “C” 10

target market that likes to be up to date with the newest products, trends, and accessories and in

order to succeed, they have to be able to adapt to any new changes out there.

Competitors

Zumiez also had to face it uncontrollable factors that come when running a business.

Zumiez is known to be a speciality store in the United States and have primarily been located in

malls. Zumiez faces heavy competition with competitors that sell: apparel, shoes, and accessories

that aim to target millennials. Those would include: Tilly’s, Pacsun, Vans, Forever 21, and, like

always, Amazon. But they also face competition with department stores that provide clothing to

kids and young adults that symbolize an “adventurous” and “wild” vibe to them.

Technology

Some advantages that Zumiez provides that sets them apart to some brick and mortar

stores is that it provides online ordering and allows store Pickup and ship to store. They also

provide loyalty programs and customers can claim prizes through the website.

Seasonality

Normally, Zumiez sets itself to have available inventory and styles to get them ready for

every season. Zumiez will tend to sell majority of products that are in season during that specific

time but also other products that aren’t in season to accommodate to certain consumers. They

also are up to date on styles and trends that are current during each season it goes through.

Legal Restrictions

When operating a company, there is always legal issues and restrictions that a business

must abide to in order to not face lawsuits in the future. Zumiez has to be able to keep up with
T.E.A.M. “C” 11

certain brand contracts that they use in order to sell in their stores and make sure they do not

break the contracts they have. They also have to worry about copyright

Company’s Financial Performance

Zumiez has been in business since 1978, and went public in 2005. It operates more than

698 stores globally with 607 in the United states, 50 in Canada, 34 in Europe, and 7 in Australia.

However, we will only look at Zumiez financial statements over a three year period, 2015 to

2017 fiscal years, that will provided us with essential information about the company’s current

financial position. What we discovered and was able to calculate from Zumiez 2015 to 2017

income statement and balance sheet was quite interesting to us. See Appendix A for further

information about Zumiez’s financial performance.

When comparing their financial performance from the past 3 years, 2015 to 2017 fiscal

years from February to January, it is noticeable that in their income statements their gross profit

was the highest in their 2017 fiscal year. Their total revenue for Zumiez in 2017 was $811,551

million and their cost of goods sold is $550,280 million. Giving them a gross profit of 35.37%

and a net profit margin of 5.32%. From the three year financial statements in Appendix A, they

have been facing a steady decline in their profit percentage and gross margin percentage with

2016 as their lowest. The ability of he company to meet their short and long term financial

obligations over these years has been on a steady decreasing meaning that the company has not

effectively managed their liabilities and expenses for their investors when looking at their

current and quick ratios. However, for their asset ratio their 2016 ratio of 1.88 was their highest,

however their 2017 asset ratio decreased to their average of 1.67. They were effective in

increasing sales compared to their average sale for 2016, but not in 2017. However the returns on
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equity and assets also shows a slow decline, making the company not a viable investment

company with their trend of decline in the current 3 year fiscal years if it continues.

From the company’s ratios in Appendix A, it is clear that ZUMIEZ has had better

performance in the past compared to their current 2017 financial statement in their performance

of profitability, liquidity, asset utilization, and market measures. Based on these, it is not likely

that their investors may not receive a higher return. This makes it possible for the company not to

be able to recover from their continuous decline within the next 5 years if they are not able to

increase them by changing their market strategy, increasing their sales of current assets and

inventory, and decreasing their total liabilities.

Key Ratios And GAP Performance

Apparel Accessories Stores

2016/2017 ZUMIEZ 2015 ZUMIEZ 2016 ZUMIEZ 2017
Profit % 5.90% 5.70% 5.30% 3.60% 3.10%
Gross Margin
% 48.60% 50.2 35.40% 33.40% 32.90%
Inv. Turnover 2.9 3.2 4.8 4.9 5.1
GMROI $2.74 $3.23 $2.61 $2.45 $2.91
Current Ratio 2.3 2.4 3.3 2.9 2.8
Debt-To-
Worth Ratio 1.5 1.5 0.4 0.4 0.4

Now, when comparing Zumiez past 3 fiscal years to the apparel and accessories stores of

2016 and 2017 we can see that the average Profit in % for the apparel accessories stores is 5.90%

in 2016, and 5.70 in 2017, in that case we can see Zumiez is way below than the industry’s

average of 3.60% in 2016 and 3.10% in 2017. The Gross Margin in % for the industry is 48.60%

in 2016, and 50.2% in 2017, again we can notice that Zumiez percentage is below the industry’s

average of 33.40% and 32.90%. Concerning the Inventory Turnover, the company has almost
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twice the turnover rate the industry average, 2.9 in 2016 and 3.2 in 2017 against 4.9 in 2016 and

5.1 in 2017, that means the company is selling products very fast to be able to have a huge

inventory turnover rate, but they also has a risk of being out of stock of inventory because of that

large turnover rate. The GMROI is a measure as it helps the investor or manager to see the

average amount that the inventory returns above its cost. A ratio higher than 1 means the firm is

selling products for more that what it costs to buy it. In 2016, the company has a GMROI of

2.45% and 2.91% in 2017, versus 2.74% in 2016 and 3.23 in 2017, meaning again the company

is under the industry average. The Current ratio measures company’s ability to pay short-term

and long-term obligations, the average of the current ratio of the industry is around 2.3, and

Zumiez has almost reach 3, this as stated in their financial performance above we can conclude

that the company is not managing their assets efficiently. Finally, the Debt-to-worth ratio

measures the ability of a firm to absorb losses, the higher the number the less stable the company

is, therefore Zumiez has a total net worth higher than it’s account payable, long-term debt

because its debt-to-worth is 0.4 in 2016 and 2017 which is way below the average of the industry

(1.5).

Recommendations

Based on the research and considering the strengths and weakness of Zumiez, we

developed two recommendations that would increase sales and recognition. The first

recommendations is to improve their store and online to better accommodate women shoppers.

One of Zumiez sale objections of 2017 was to improve their sales of women’s appeals, which is

14%, however their current promotion plan is not doing anything to accomplish this goal. We

created a plan utilizing the six p’s of marketing. Regrading place and product, we wanted to

focus on increasing awareness and sales in women’s clothing. In promotion, we want to

T.E.A.M. “C” 14

showcase their women clothing in stores; their current plan poorly display women's

clothing many of their stores don’t have female mannequins and tend to keep the

women’s clothing in one corner. We plan for Zumiez to display more of their women

fashion online(website) and store front. The order to complete this new promotion plan,

we will need to delegate more money to promote of women’s fashion. Once we apply all

these steps, we hope that their sales in women’s appeals will improve by 6%.

The second recommendation that we developed was to improve the company’s sales

promotion strategy. Zumiez has many active social media accounts including: Instagram,

Snapchat, Twitter, and YouTube. Currently, their posts on social media mainly include

something dealing with skateboarding and don’t really have any posts promoting their products

or any upcoming sales. Zumiez not only doesn’t really promote on social media, but they don’t

promote through commercials or printed promotions. Zumiez needs to utilize all the sources they

have available for them.

Applying the 6 Ps strategy the place that the recommendation would be implemented

online and instore. In promotions Zumiez can create commercials, sponsor ads on Instagram,

shorts ads on YouTube, mail-in ads, coupons, mail in catalog to customers, and improve their

rewards system. Their target market are likely to be on social media, so creating sponsor ads on

Instagram and short ads on YouTube can be a way to reach more of their market or other

markets. Tilly’s is one of their main competitors and they use mail in ads, coupons, and mail in

catalogs. Zumiez can make use of these sources as well, because when a customer receives a

coupon they are most likely to be interested in purchasing something and that can lead them to

visit the store and buy more at the end.

T.E.A.M. “C” 15

In the price category, the pricing can stay the same, but what might change the prices

would be when the coupons come in. These coupons are what customers tend to look for when

shopping. This recommendation would be implemented to all the products Zumiez offers. The

people involved would be Zumiez current target market and Men and women from other target

markets that might also be interested in the products they offers. Zumiez has a specific market

they target, but if they apply all these promotions they might find other markets that can be

interested in the products they offer. Performance will be improving traffic through different

media and increasing followers on social media.

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Appendix

Appendix A

2015

2016

2017
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References

CSIMarket. (2018). ZUMZ Company Profile. Retrieved November 4, 2018, from

https://csimarket.com/stocks/at_glance.php?code=ZUMZ

D&B Hoover. (2018). Zumiez Inc. Company Profile. Retrieved November 6th, 2018, from

http://www.hoovers.com/company-information/cs/company-profile.zumiez_inc.25df7c3

3a8838f0.html

Market Watch. (2018). ZUMZ Key Statistics - Zumiez Inc. Financial Ratios - MarketWatch.

Retrieved November 4, 2018, from

https://www.marketwatch.com/investing/stock/zumz/profile

Nasdaq. (2018). ZUMZ Income Statement. Retrieved November 20, 2018, from

https://www.nasdaq.com/symbol/zumz/financials?query=income-statement

Reference for Business. (2018). Zumiez, Inc. - Company Profile, Information, Business

Description, History, Background Information on Zumiez, Inc. . Retrieved from

https://www.referenceforbusiness.com/history2/7/Zumiez-Inc.html

Statista. (2018). Sales share of Zumiez, by product category worldwide 2011-2017 | Statistic.

Retrieved November 4, 2018, from https://www.statista.com/statistics/407844/sales-

share-of-zumiez-worldwide-by-product-category/

Zumiez. (2018). Zumiez Information. Retrieved November 4, 2018, from

https://www.zumiez.com/help/zumiez-information