Obey's Command: Follow Slow Growth

Shepard Fairey’s Orwellian posters with the vaguely ominous moniker “Obey/Giant” have been mysteriously appearing on billboards and public buildings around the world for the past 15 years. The artist’s next canvas? Nordstrom.

Fairey’s Obey Clothing collection is being sold in several Nordstrom locations, including The Grove shopping center in Los Angeles. The mainstream embrace of Obey may come as a shock to the legions of skateboarders and punk rockers raised on Fairey’s maverick reputation as an artist who braves the elements, and sometimes the police, to place his posters in public spaces.

But Fairey contends he is not shopping for shock value. Clothes are just another canvas for his designs, which also have been exhibited at the Orange County Museum of Art. Corporate clients such as Dr. Pepper/7-Up and The Comedy Channel also employ his Los Angeles–based design company, Studio 1, to inject street credibility into their logos.

But a pressing question may be facing Fairey and his partners at Santa Ana, Calif.–based Obey Clothing: How do you keep a growing brand fresh when youth consumers are always on alert to dismiss a label that makes a false step?

Slow the growth

The 5-year-old company, which offers everything from hard-edged military styles to bright, preppy looks, is carefully controlling its growth, according to Don Juncal, partner and co-founder.

“It takes time to build street credibility,” Juncal said. “You can spend a lot of money and jumpstart a business, but sales might drop a year after you introduce it. If you grow slowly and protect the retailer, they’ll represent the brand better, and they’ll understand when you have to grow.”

Juncal said his company will continue to stress wholesaling to small streetwear shops such as Carve in Costa Mesa, Calif., as well as growing specialty chains such as Ontario, Calif.–based Active Ride and City of Industry, Calif.–based Metropark. Obey Clothing, a division of Juncal and Broders’ 132 Inc., has been able to follow a low-key growth plan because the partners own and finance the company.

This policy has served them well. Juncal said Obey’s wholesale earnings have grown 70 percent annually since 2000, when stores such as Fred Segal in Santa Monica, Calif.; Villains in San Francisco; and The Closet in Costa Mesa stocked the streetwear.

The steady-growth campaign got a jolt of adrenaline in June 2003, when Obey introduced a women’s division. Retail sales of women’s clothing ended up 35 percent above original projections and may eventually become a bigger section of the business than men’s, according to Juncal.

Juncal said the company is scheduled to build a flagship store in 2006 in New York. Asian Obey fans shop at flagship stores in the Japanese cities of Tokyo and Osaka, as well as in Taiwan, Hong Kong and Singapore.

Juncal and his partners—Chris Broders, Eric Singer, Steve Mellgren and Fairey—achieved this growth without showrooms or an advertising budget. They market the brand by giving pieces to retail employees whom Obey hopes will appeal to the company’s demographic: 17- to 24-year-old men and women.

Obey also posts build-outs in stores, ranging from the 24- foot-wide, 6-foot-high mural in the Active Ride store in Burbank, Calif., to framed art signed by Fairey.

Fairey tale

Juncal and Broders had a hunch that working with Fairey, a well-known artist, would attract streetwear retailers. Fairey approached their company, 132 Inc., to print some T-shirts in 2000. While taking care of his order, they polled retailers and people in the action-sports market whom Juncal knew from his 11-year career as Redsand’s national sales manager. Their question: Would everyone buy a collection based on the art and rebel lifestyle of Fairey?

The answer was a unanimous “yes.” Fairey soon agreed to Juncal and Broders’ offer to build an entire collection of streetwear around his designs. The partners hired designers Mike Ternofsky for the men’s division and Erin Wignall for women’s. The company’s first retailers included Urban Outfitters.

Obey Clothing could grow much bigger, said Irma Zandl, president of trend research at The Zandl Group in New York. “The designs are so good that if they were distributed in more mainstream specialty stores like Pacific Sunwear, it could be wildly successful,” she said.

But Juncal reported having little interest in growing fast and big.

“We don’t want to be No. 1,” Juncal said. “We want Obey to have longevity as a brand.”