Becker Co-founder/President Dave Hollander
Becker Surfboards has been a fixture on the Southern California retail scene since opening its first shop in Hermosa Beach in 1980. Over the last 35 years, namesake Phil Becker has shaped more than 100,000 boards, the company opened five new doors, and gave birth to its "baby," beckersurf.com, in 1996.
We recently caught up with Co-founder and President Dave Hollander at his Costa Mesa office to find out how this stalwart industry retailer is turning the corner on the tough economic times and setting its sites on the horizon.
How are things looking as we come into summer?
We're not out of the woods yet, but, compared to last year's numbers, we're having a good year. All of a sudden our first quarter is coming in and I can hardly believe it. We're making a lot more money with a lot less sales. Margins are insane. We're back.
It's all about cutting our expenses. I've always had a really high overhead. I was able to cut a lot of fat without really hurting people. Cutting back on days, salaries, and stuff. They all understand that it's part of having a job.
Where have you found most of those overhead reductions?
Things like closing an hour early, cutting my key guys back to four days, renegotiating rents with landlords, getting rid of additional insurance, like product liabilities and multi-million dollar umbrellas. It's $100,000 here, a $100,000 there, before you know it you've got $500,000 just like that. We've cut our payroll $10,000 per week – that's a half a million bucks [annually] – and everybody in the company is running fine, everybody gets it.
The neat thing is, in any other environment I would have alienated all of my people that have been with me forever, but we have the most amazing group. Everybody's going "we've got to do what we've got to do, we got to keep Becker strong."
Did you have to let people go?
We have not let any of our key people go. We had about 135 employees and we're down to about 85. Everybody we let go were part timers, students, people that worked on weekends. They're all in the wings. We had our managers and assistant managers, our key people, pick it up. We didn't cut their salaries.
I cut my five executives back to three to five days. I cut their salaries back proportionally so they can get more time off. It's in every newspaper – every company is doing this – laying people off, cutting salaries or cutting workdays, and I thought cutting workdays was the most fair and equitable way.
It was a little heavy. We got into bigger warehouses, a big management group, and a bunch more stores, the Internet was growing by leaps and bounds. Two to three years ago I was feeling pretty good, but that was a little bit of a fairy tale. Things were a little bit too good for too many people and too many landlords.
Our business has been a cash cow forever. Our surfboard sales are consistent, and there was always very little fluctuation. And then something was wrong in December 2007. I pulled all the numbers apart, and I thought surf was going out of fashion, which I've always thought is a real possibility. Don't ever let anyone tell you that can't happen. There are a whole bunch of stores that were selling Izod and stuff that are out of business because they thought preppy was going to be around forever.
By January I knew something was wrong. I started talking to everybody and it didn't seem like surf necessarily was going out. By February, I started cutting, not as dramatically as I should have, but I started cutting salaries, expenses, no more new racks, there are a lot of things you can cut. We're using both sides of paper on copies and stuff.
I was able to dull it a bit, but I never dreamt it would hit this hard and this fast. It was a perfect storm of a lot of things, weather, fashion, the economy. It was really a unique situation where you couldn't go out in a clown suit, offer 25 percent off and get sales. People just weren't spending money, it didn't matter what you did.
Sounds like you were ahead of the curve though?
If I had been much more behind, we might not have made it. I think I got lucky. I got my guys involved, and a lot of these guys have been with me 20 years. My team rallied.
Now that things are starting to pick up a bit, what lessons have you learned that you'll take with you?
The overriding lesson is to look at the expense side of your business. It was just crazy the amount of money I was spending. It was out of whack. You look at companies that are just amazingly efficient, and now I get what they're saying. I was just leaving an amazing amount of money on the table.
When things are looking good it can be easy to chase dollars with dollars.
Yeah, when you're growing you've got to put your organization together to grow, and unfortunately we hit a wall and went backwards. I put this organization together to grow. The only real ball and chain I've got is a 21,000 square foot warehouse that we got into two years ago, right at the top of the market. The one next door is going for half what I paid. We had it pretty much full, but we've cut way back on the inventory, and we're being a lot leaner like everybody. We're not ordering containers of surfboards now. We were going to open three more stores, the Internet was growing by 35 percent a year, and we needed space for all this. The lease was up on our old warehouse and the guy was going to raise the rent 30 percent. We had to move anyways so we went for the big one.
What tips do you have for renegotiating leases successfully?
None really. It's very, very subjective. There's not a one, two, three of lease negotiation. You've got to be ready to call bluffs and be ready to walk. My neighbor runs [the chain] Front Runners. He's smarter than me and he brought in a professional consultant to renegotiate some of his leases and he's really glad. You have to know how to play the game, and it is a game.
On a day-to-day basis, how have things changed for you?
A couple years ago I decided to kind of semi-retire. I delegated everything out. It was real relaxed, a lot of fun.
Long story short – now I'm back in the game. That's how it changed and that has actually made it more fun – it was too easy for a while. Blue Crush was when this all started, those were really good times.
It was kind of on auto-pilot?
Yeah, definitely. I had my hand in stuff, but just the fun stuff. I'm definitely involved a lot more now, but it's kind of weird, there aren't a lot of decisions to make. Right now, making no decisions is kind of the right decision to make. You're just kind of treading water, selling what you have to sell. The buying season is easy, you're not opening new stores, you're not spending a bunch of money on advertising, and there are really no big executive decisions to make.
I told my guys, there's a gnarly war going on right now. Get your heads down – let everybody shoot each other. When it's over, we'll be Okay and we'll come out of the foxholes. Right now we've just got to survive.
I heard you switched up the business model for your Huntington Beach store?
We changed our Huntington store to what's called an outlet pricing store called Becker Basement. It's not current goods anymore and everything has discounts on it. It's just like an outlet store. It keeps us up with all the other competitors down there with tents every weekend. It's doing really well.
What opportunities do you see out there?
If things turn around much more, there will be some opportunities here. There may be opportunities where guys couldn't make money because they just had one store, and didn't have a good infrastructure. I've got a really good infrastructure. I'm not making the announcement that I'm on the prowl, but there could be opportunities on the horizon and I'm open to them.
It looks like you’ve really invested a lot of time and energy getting people up in arms about the sky advertisers over your beach. Sounds like you were pretty successful in slowing them down? (For the full story, go HERE)
It was amazing how much public opinion lit up. How many environmental "causes" can you think of that 100% of the public is fervently against the issue. It is just a slam-dunk. It has a definite before and after. The deal is people are so used to being annoyed they take it for granted. That, and the fact that it is a three-month problem – by the time people start to flinch the season is over and they forget about them.
This was the third of three ads I ran in the Easy Reader – total cost of about 700 bucks for the three I think.
The Easy Reader and the Beach Reporter both did a bunch of stories as this unfolded. The Malibu Times did a long interview with me too, because the people living in the Malibu area were all wondering what happened to all the planes and a reporter on that paper researched back to our activity on the issue.
[This] could still go national with our industries help. Can you imagine the press for "Surf Industry takes on sky polluters around the world"? Hey, if it can work in the South Bay it can work anywhere.