It’s been a big year for PacSun.
In 2020, despite the impact of the COVID-19 outbreak, the specialty retailer recorded gains over the prior year, generating more than $700 million in sales. Two months ago, Piper Sandler named it the No. 3 favorite apparel brand for teens, surpassing Lululemon and Adidas.
And just yesterday PacSun completed a leadership transition that saw president Alfred Chang and parent company PSEB Group interim CEO Mike Relich become co-CEOs. (Chief brand officer Brie Olson was promoted to the role of president.)
“The growth we saw at PacSun was above what the rest of the industry saw, and it really showcased a lot of the work that we’ve been doing and the relevance we have with our consumer and community,” Chang told FN.
Here, Chang speaks about the retailer’s pandemic strategy, social media presence and key collaborations that are boosting its business in the COVID-19 era.
Doubling down on digital
While it maintains a fleet of roughly 340 stores today, the Los Angeles-based chain has seen greater success in e-commerce: Last month, PacSun announced that digital sales increased twofold in 2020 — now representing 50% of its total revenues. So far in 2021, online sales have surged a respective 65% and 170% from 2020 and 2019. Overall, year-to-date sales are up 105% from the prior year period, and up 48% from the same timeframe two years ago.
“Our digital focus is still our best story. We doubled our business, and our e-commerce growth in 2020 [not only] outpaced expectations, but also outpaced the industry,” Chang said. “Even when stores reopened, our target consumer — teens and young adults — were one of the first groups to get back out there, and we also saw our stores outperform all expectations.”
PacSun has also been working to expand its social media presence. Today, it boasts more than 2.5 million followers on Instagram, where it has launched a dedicated Instagram Shop, and over the course of a year, its TikTok channel has gained more than 680,000 followers and 10.2 million likes. (This week, PacSun hit a social media milestone with 1 million followers on TikTok.)
What’s more, Chang explained that the brand’s namesake app has seen “tremendous growth” in both the number of downloads and overall revenues as it continues to ramp up its omnichannel investments. (PacSun did not provide specific financial numbers.)
“A lot of brick-and-mortar retailers have looked to grow their e-commerce business over the last decade,” added the co-CEO. “I think the difference for us is that we’ve shown up for the consumer in all different touch points, and we know a lot of that starts with social media.”
Applying learnings from times of crises
Long before the onset of COVID-19, apparel and footwear companies had to contend with the retail apocalypse, which led to a rash of bankruptcies across the country. One such victim was PacSun, which filed for Chapter 11 protection in 2016. At the time, the skate- and surf-inspired retailer struggled to position itself as a brand, as well as faced a heavy debt load and saw declining foot traffic at malls, where most of its shops were located.
However, through a debt-for-equity agreement, PacSun was able to reorganize and close only about 20 of its then-590-plus units. It negotiated better rent deals with its landlords, received a new credit line to help cash flow, rebranded to draw in younger millennial and Gen Z consumers — and ultimately emerged from bankruptcy on firmer footing.
“Those moments taught us the importance of the fundamentals. It was extremely important for us to ensure that we created a brand that was relevant past the retail apocalypse,” Chang said. “There is no shortage of places to buy stuff, so we worked hard the last five to six years to not just be a place to sell products. We [wanted] to truly be a lifestyle brand that matters to and connects with our consumers.”
He continued, “It wasn’t a new strategy; [rather,] it was a heightened strategy to show up where they were … and have the credibility to be a brand that matters.”
Supporting consumers and communities
Over the past year, Americans were facing a confluence of emergencies: the global health crisis, an economic recession and civil unrest. For PacSun, these overlapping adversities became the catalyst for PacCares — a philanthropic initiative launched later in the year centered on the health and wellbeing of its community.
As part of the program, the retailer partnered with a network of charitable organizations dedicated to mental health, diversity and equality. It pledged to contribute up to $250,000 to support nonprofits, with inaugural beneficiaries including Lady Gaga’s Born This Way Foundation and the United Nations Foundation’s Girl Up.
Plus, PacSun created in the fall a Gen Z-targeted open forum through PacTalks — a biweekly Instagram Live series, moderated by experts and A-listers, like youth activist Naomi Wadler and actress Yara Shahidi, who discuss subjects like voting, social media stress relief, inclusivity and more.
“During COVID, obviously there were issues that really mattered to our community and team. These things ranged from the mental health impact of being stuck at home and the bigger social issues like women’s empowerment and social injustice,” added Chang. “They were important things that our consumers expected of us and further cemented our relevance, which is why we continue to move up the charts.”
Forging key partnerships
Among PacSun’s bestselling brands are Vans, Jerry Lorenzo’s Fear of God Essentials, Champion, John Galt, Kendall + Kylie Jenner and Adidas, as well as its own labels. But beyond its portfolio of top brands, the chain is recognized for its high-profile collaborations with influencers like Emma Chamberlain and Bryce Anderson, with whom it released a new gender-free collection as part of its summer campaign.
“It was one of our most successful campaigns,” Chang said. “All of these investments — in our campaigns and social media — are feeding into our tremendous digital growth, and we really see a lot of positive momentum there.”
Moreover, early this year, PacSun introduced Circulate Market — a new concept that brings together a collection from six Black-owned brands, curated by longstanding brand partner Circulate and its owner, Corey Populus. The assortment includes exclusive designs from the marketplace, as well as Blondie Beach Records, Bricks & Wood, Carrots, Reserved and Supervsn Studios. (According to PacSun, more than $75 million of its sales come from Black-owned labels.)
“These partnerships are really important to us in continuing to make sure that PacSun uses its platform to project what matters to Gen Z,” Chang added. “Clearly, as much as there’s some things that are happening for the positive, there are still some challenges out there in the world.”