Loki approach positions outerwear firm for growing opportunities
Phil Castle, The Business Times
Fifteen years into the operation of his outerwear company, Seth Anderson believes the business is poised to take the next step in its development, and a big one at that. But it’s going to take capital and marketing — along with the versatility that’s become the distinguishing characteristic of Loki and its products.
“We’ve got a few tricks up our sleeves, and they’re not necessarily mitts,” says Anderson, co-owner along with Jess Rigg of the Grand Junction firm.
The hats, jackets and other gear Loki manufactures have been designed from the very beginning to keep mountain climbers, skiers and other outdoor adventurers comfortable and safe in changing weather conditions. Nonetheless, Anderson expects to appeal to a broader demographic: Many customers have discovered on their own that Loki gear works just as well for weekday routines as it does weekend outings, he says.
The capability to change, along with passion and drive, not only have generated sales growth for Loki year after year, but also earned Anderson and Rigg recognition as Entrepreneurs of the Year, a surprise announced during Entrepreneurship Day at Colorado Mesa University in Grand Junction.
“It’s an honor,” Anderson says of receiving the award presented by CMU, the Business Incubator Center and Grand Junction Area Chamber of Commerce.
Jon Maraschin, executive director of the Business Incubator Center, says Loki has grown year after year by manufacturing what he calls “fabulous” products. Anderson plays an instrumental role, Maraschin adds, as a tireless promoter of the company and its products. “He’s got the passion and the drive the company needs.”
Inspired by their experiences as outdoor sports enthusiasts, Anderson and his brother, Dirk, invented the company’s first product — a hat with a cinch top and a hood inside. By opening the top and pulling down, a face mask is deployed. By pulling the hood back and down farther, the face mask becomes a gaiter worn around the neck. The hat was designed to change to adapt to changing weather conditions.
Seth Anderson began selling his unique hats in 1996. He joined with his friend, Rigg, in 1997 to form a limited liability company to manufacture and market the hats. Using $700 of Rigg’s money, the two starting making and selling hats to retail outlets in Colorado and Utah.
The venture was named after Loki, the Scandinavian god of mischief who shifts shapes. Pronounced “low key,” the name of the business also reflects a philosophy of low-key styling incorporated into products.
Seth Anderson added to the Loki product line when he came up with the idea for building mittens into jackets. Once again, he was inspired by his experience outdoors. He says he was mountain climbing with his brother in the winter. His brother had taken off a mitten and the wind blew it away. They started talking about devising a way to build mittens into jackets so they’re available when they’re needed. That led to a design to attach mitts to the sleeves of jackets so they can be slipped on in seconds. A face shield and gaiter was added inside the hood for additional protection.
The product line has expanded even more since then to include hard shell and soft shell jackets, hooded sweat shirts and gloves. Loki manufactures and sells outerwear for men, women and children.
Continuing to offer versatility in its products, Loki developed a jacket that folds into a backpack with adjustable straps and pockets for additional storage. Still another innovative jacket design features insulation panels that can be adjusted with a tug of two cords to either warm up or cool off the wearer.
Loki sells its products through retailers not only in the United States, but also eight other countries, including China. U.S. sales accounts for about 70 percent of revenue, but Anderson expects growth in exports. “If you can sell well in the U.S., you can sell well elsewhere.”
Within the U.S., retail distribution accounts for about 70 percent of sales, while online distribution accounts for the remaining 30 percent, Anderson says. Retailers handle most online orders, though, in an arrangement that not only bolsters their sales, but also allows for quicker shipping to customers. Moreover, the deal encourages retailers to keep more Loki gear in stock. “We try to work with our dealers when we can.”
Until the onset of the recession in 2008, Loki enjoyed an average annual increase in sales of 20 percent, Anderson says. Sales have continued to grow since 2008 — but at a slightly slower pace of around 12 percent — and climbed to about $2 million in 2011.
Loki has the infrastructure in place to handle what Anderson considers a “sweet spot” of between $3 million and $5 million in sales.
While the company is well positioned for additional growth, it needs financial assistance to get there, Anderson says. “We are in the capital planning phase, definitely. We feel like we’re poised to grow to the next step.”
Additional resources are needed to market Loki and promote the value of products with multiple functions. Anderson says he wants consumers to think of Loki products the same way they would an iPhone or Swiss Army knife. “It’s less stuff that does more.”
At the same time, Anderson believes Loki can appeal to a broader market of customers looking for functional outerwear not only for outings, but also work and everyday use.
Some of the most promising increases in retail sales have occurred at outlets that also well workwear, he says. “People like this for so many applications.”
Fashion remains an important factor as well, however, he adds: “You have to make people look good.”
At the same time, Loki faces a fiercely competitive industry in which the company constitutes something of a David battling corporate Goliaths. “That’s been the challenge,” Anderson says. “We just try to work our best. We try to make a better product than our competitors, which I think we do.”
Fifteen years into the operation of his outwear company, Anderson says Loki constitutes an entrepreneurial success, albeit not an overnight one. “We embody what a lot of people think of as a way to succeed with the American dream. But it’s hard. It’s a lot of work.”
Anderson says the proposition of making products that benefit customers motivates him to keep working.
“I think that’s what it’s about. You always want to be benefitting your customers, basically more than yourself … and more than competitors.”