The State Of Holiday Retail

The holidays are upon us, and there’s no better way to be reminded of that than in your mad dash to find those last minute deals. This year, online sales—specifically mobile— have arguably risen to a whole new level, marking record highs over Black Friday weekend. The specialty brick-and-mortar shopping experience, however, still holds its place in the line up. Why? A couple different factors come to mind, the most obvious being, unless you know exactly what you are looking for, you still need to experience the product in person—for most, the feel of putting a surfboard under your arm and walking out of the store cannot stand up to clicking “purchase” on your screen.

With that in mind, we wanted to get to the bottom of what’s really happening on the ground at retailers across the country. We partnered up with Building the Revolution, an emerging brand with a dedicated grassroots initiative to support and give back to specialty core surf shops, to take a look at brick and mortar retail sales moving into 2016.

BTR, although they wish to remain anonymous, have gained a significant following recently, selling out of their modest offering of stickers and T-shirts, and garnering interest on an international level from retailers in Australia and the Caribbean. Clearly, specialty surf shops are still thriving in many regions. We take a look at that now, through a roundtable discussion on what’s happening with holiday sales, including how retailers are vying for market share amidst off-price e-commerce platforms, which brands have lent the most support, and where they see sales heading once the dust settles from the holidays.

The Retail Roundtable:

Aaron Pai, Owner of Huntington Surf and Sport – Huntington Beach, CA

Garret Carmichael, Sunrise Surf Shop  Jacksonville Beach, FL

Jeff Mollencop, Owner of Moment Surf Company — Pacific City, OR

Kevin “Kevmo” Morris, Heritage Surf & Sport – Ocean City, NJ

Charlie Fox, Owner of Maine Surfers Union – Portland, ME

The State Of Holiday Retail

Outside Huntington Surf & Sport, an icon in the SoCal surf community.

How have holiday sales been so far—up, down, flat compared to last year?

Aaron Pai:  So far, sales have been flat to down compared to last year…Some due to our construction at the pier side (Main and PCH) store and some due to many of the brands selling direct on the Internet and on sale during this key time of the season.

Garret Carmichael: Holiday sales have started off good. I would call it flat from last year, but a strong flat, and I think when the smoke clears at the end of the month, we will be up a little bit.

Jeff Mollencop: Up, significantly.

Kevmo: Down overall compared to last year due to a slow November but up for Black Friday Weekend and early December due to great weather.

Charlie Fox: Sales have been consistent this holiday, so far. We have noticed more of a demand for our own custom made boards. We also have noticed a greater shift to online shopping for surf-specific products up here in Maine.  This has been the case especially with wetsuits lots of people coming in asking to be sized up in a suit, then shopping online for their size or the best deal. It’s been such a problem that come 2016 we will be testing out a try-on fee system. If you want to be sized up for a wetsuit you will have to put a $20 dollar deposit down on the suit. This will hopefully cut out the people who are just getting sized up by us to buy online. We will be stocking more specialty brand wetsuits that you can't buy online, they may cost a little more, but we will also take the time and energy to size you up properly and make sure you have the right suit.  It's this type of customer experience we pride ourselves on.

The State Of Holiday Retail

The staff at Maine’s Surfer Union are a small, yet highly educated group of die-hard coldwater surfers. You have to be dedicated to surf Portland’s breaks.

What are you doing to stand out and attract new customer?

 Pai:  We are advertising more to attract new customers.

Carmichael:  The main thing we are doing first and foremost is focusing on strong customer service, having knowledgeable, helpful staff in every category that we sell, and being stocked up on the right products. That keeps the customers you have coming back and constantly endorsing your store by good old word of mouth. Sponsoring and taking part in events in our local community is also a way we attract new customers.

Mollencop: Focusing on social media.

Kevmo: We are hosting after hour events such as art shows to have people feel more comfortable in the surf shop environment.  Trying to create more of a community space.  Our local business associations have been active creating Holiday activities to draw more shoppers to our town. We have run some gift card promotions but are trying to hold price as best we can in a challenging and competitive holiday sales environment.

Fox: We curate our shop way different than your typical surf shop. We have tried to create an atmosphere where the culture of surfing is fostered. We had a local artist paint murals in our hallway that makes for a warm welcoming entrance, and put our hearts into making a space that feels true to whom we are.

We represent clothing brands that want our backing and support us. We carry brands that we feel really strong about that we can put our name behind and know the customer will be stoked on what we're stocking. A few of the brands would be Iron & Resin, Hippy Tree, Roark & United By Blue. We also make sure we're not really overlapping with the same brands with our closest competitor.

We stock surfboards that you will not see in any shops in New England; we carry 90% hand-shaped boards. We don’t stock any mass production board brands or any brands that our local competitors may have. We have a shaping bay in the shop where you can look in through the window and see our head shaper mowing some foam. We carry a lot of shapes that we like to surf, or what our close friends like to surf.

We also have a strong social media presence. We try to have fun with that and not take it too seriously. Instagram has been huge for us, and we have sold more boards on that platform than any other avenue. Despite how awesome social media and the digital world can be, customer service is still my biggest thing. We love educating our customer. If that's taking ten minutes to teach [them] about different longboard fins, or taking an hour discussing different board shapes and concaves,  educating the customer is going to go so far and help you out in the long run. We get really stoked when someone wants to pick our brain on board design or shapes, and wants to geek out with us.

The State Of Holiday Retail

Moment Surf Shop’s prime, beach side location.

Are there any categories within the shop that are seeing growth? What are they, and why do you think that is?

Pai:  Actually it has been a tough last quarter and things are a little slow right now… With the warm water and the hottest October on record, things have been not normal here in HB.

Carmichael:  We are seeing growth with some of the newer clothing brands. It’s exciting to see some new blood making headway in that space, but I wouldn’t say that category in general is growing. Probably the category I would call “miscellaneous”—speakers of all kinds, air fresheners, candles, knives, phone cases—I would say is growing, only because it’s something people are just now buying from a surf/skate shop. In the past, these companies didn’t make stuff like that. Now there are a lot of cool options but it’s not, and never will be, a substantial part of our business.

Mollencop: Yes, neoprene, spurred by continued growth of cold water surfing, and increased quality of wetsuits being offered by companies.

Kevmo: Unique items such as Stance socks/underwear, Go Pro accessories and electronics like Bluetooth speakers, are the growing categories for Holiday.  They are great gifts that will not break the bank but are sure to please under the Christmas tree.

Fox: Growth of our own product has taken off this year. I think this is because they really want to support a shop that takes cares of its customers, plus we're not really flashy. We're very low key and laid back.

The other part of our business has seen growth is our own custom shaped surfboards, which are hand shaped right here in our shop. We dropped SUPS this spring, because we saw a decline in that and our hearts weren’t really in the SUP business. So, we took that money and invested it into our board building. It’s probably one of the best feelings when you get to build a  customer a custom shaped board. We have sold more of our own boards this summer then any other brand. That really says a lot, that people like what we're doing and want to support our Maine-made boards. Our shaper is a custom wood worker so we do a bunch of amazing wooden tail blocks, custom fins, flex panels, fabric inlays, channels, crazy shapes, and tons of custom stringers.

What are some specific examples of recent support you’ve received from brands? How has this helped your shop grow?

Pai:  We get a super warm feeling from brands like Hurley, Volcom, Vans, Channel Islands, Salty Crew, Reef, Roark, O’Neill, Vissla, RVCA, Stance, Captain Fin, Quiksilver, Cycle Zombies, Hayden Shapes, and Firewire, to name a few.

We love partnering with these friends and making amazing things happen. Come on in to our Main and PCH location and check out the new construction… we are in the process of making a bigger and better Huntington Surf & Sport!

Carmichael: There’s a lot of examples in this category, I'm glad to say. One of the most direct was we recently had our Billabong rep come in and physically build out a whole new section for our shop. He literally came in and spent three twelve-hour days busting his ass putting it all up, and it looks incredible! It has helped the sales for that brand grow and it has made our men's section look a million times better. Hurley sponsored a premiere for JJF’s new movie in our parking lot and we had a huge turnout for that, then only a few nights later we did an amazing intimate slide show in the shop with Roark Revival. Those things help us grow because they are fun exciting events that keep people stoked on our shop.

Mollencop:  Increased margins for pre-book orders. More profit means more money for re-investing into the business and inventory.

Kevmo: Rip Curl, one of our strongest partners, ran a customer appreciation weekend with us providing food, raffles and discounts for all locations. It helps to create a unique brand experience for our customers without looking like we are just running another sale.

Fox: Hmm, this is a loaded question in our very small shop’s eyes. We don’t place massive orders or drop the big bucks with any one company so we don’t necessarily get a ton of support. We're paving our own path and if we get thrown a bone here or there then we will run with it. If I had to pick a few companies, first would be a couple local brands that have helped us grow and promote our shop. LiveME is a Maine-based company, and Chris the owner has helped us grow a ton with giving us terms on his gear and constantly sending customers to our shop even though they could buy from his online store. Because of all the support from him over the past three years, we decided to carry most of his line and support him just as much as he supports us.

Another Maine company FlowFold, started by our friend Charlie, makes wallets and bags from up-cycled sailcloth. They have sent a lot of business our way by promoting the store through their social media channels or simply by word of mouth. Right now we are displaying some of their new products, and are pretty stoked they chose us as their only retail shop.

We just picked up AXXE Wetsuits, 100% customizable wetsuits that are hand-made in Japan. I was blown away by the support from them. The North American sales manager came to our shop and talked to us about the brand, taught us how to measure up a customer, and educated us on the neoprene and how they build their suits to be warmer and more flexible.  We had a Skype conference with the VP of AXXE & the North American rep. They were super intrigued about cold water surfing and wanted to learn everything about it. They consistently want feedback from us on how their suits are working, what we think they could improve on, or what they are crushing on. This makes us feel really good at backing the brand; they're always asking you questions, want to learn, and make their product the best it can be.

It feels really nice when you have someone that wants to talk to you about what they need to improve upon or what customers are looking for, or when they're designing a new product or colorway they ask for your opinion. It shows they really do care about what your doing and what you think and your opinion really matters. They're not trying to feed you some kind of BS saying oh this is the hot product of the year or man this color is really selling really well right now. We get that so much from big companies it drives us nuts. We're in Portland, Maine not SoCal. A lot of the industry forgets about the small shops, the ones who represent their brands properly. We also have real seasons here in the Northeast with some real weather and we need to carry products that support our climate.

The State Of Holiday Retail

Building the Revolution’s credo, and one that rings true to the hearts of many in our close-knit industry.

What’s happening within our industry at the moment that is or could pose challenges to your business?

Pai: Our industry used to be providers of goods and services (and they still are)… but now, they compete with brick and mortar through selling direct.  Some of the brands had sales during Black Friday and many of the days in November, and now December.  Some of the brands had warehouse sales in November and December.  To me, this says that our surf industry is over producing goods and thus the surplus in inventory and the reason for many of the brands Internet sales and warehouse sales… thus, destroying the holiday shopping season for brick and mortar. In my “dream surf industry,” there would never be brand sales in November and December over the Internet along with absolutely no brand warehouse sales during the months of November and December, too.

Also, there is one particular surf industry site that has been 30% off since before Thanksgiving and today is still 30% to 25% off. This particular site is ruining the holiday business for all the brick and mortar shops up and down our California Coast.  I wish the surf industry would try and shut that site down.  If they shut it down that would be swell with me!

Still, my love goes deep for our sport of surfing and for our industry.  I will always love the brands and the people that are a part of it.  Surfer-owned surf shops are the best…. and we are surfer-owned. Merry Christmas everyone!

Everything is available with the click of a button on your phone these days. If you don’t make the shopping experience a fun, interactive, positive thing, and more importantly you don’t have what the customers want, you might as well close your doors because you are done.

Carmichael:  That's an easy one. I don’t think it's a problem that is specific to our industry. I think everyone in sales is being affected by this, one way or the other. The Internet…and more specifically the desire of companies to sell their product direct to consumers on said Internet. Companies are getting greedy and they want that huge margin that comes along with cutting out the wholesale aspect of their business. The problem with that is not many of these companies would be where they are without all the core shops that put blood, sweat, and tears into building the brands. I understand the Internet is not going anywhere. For some of these companies to expect us to support them and place all these huge pre-books, meanwhile they are putting “shop now” icons all over the internet, Facebook, and Instagram, it's just not right. That's the reason we focus on providing good customer service and stocking nothing but the best stuff in our store. Everything is available with the click of a button on your phone these days. If you don’t make the shopping experience a fun, interactive, positive thing, and more importantly you don’t have what the customers want, you might as well close your doors because you are done.

Mollencop:  The continued consolidation of retail. Larger companies buying up multiple businesses, both inside the surf industry and other action sports. Plus, large corporate businesses that now sell surf.

We are trying to elevate brand experience and celebrate product, but the distribution strategy our vendors have chosen limits that goal. We are forced to engage in the discount game for fear of losing customers.

Kevmo: The fact that customers have access to similar, if not the exact same, product from discount retailers online or in-store. That devalues the brands we carry. We are trying to elevate brand experience and celebrate product, but the distribution strategy our vendors have chosen limits that goal.  We are forced to engage in the discount game for fear of losing customers.

Fox: Surfing is blowing up, and that is great for the sport and business owners.  It also means products and gear are more widely available, inevitably leading to mass production and lower costs. As a small, independent shop, it is not possible to keep up with the mass fabrication. And we don't want to. Online meg-deals and price comparisons are always a challenge since it puts us into competition with companies with little to no overhead and no investment in the community. We value the community of surfing and the craft of board making, and believe there is a large consortium of others who do, too. That is what pushes us to improve the business and what in return will sustain it.

Board builders who would only sell directly to shops are now starting to cut the shops out of the picture and sell direct to the consumer to make higher margins and cut the middleman out. We ran into this over the summer with one of the companies we work with. We understand why they do this, but it hurts a shop when they invest time and money in building that board brand in the area. This is why we’re investing more into our own brand of boards.


Building The Revolution with Four Indpendent Surf Shops