The surf industry, like the rest of the fashion world, might be flirting with Eighties effects like neon, but the one memory from that decade no one is looking to revive is the down cycle surf apparel hit in the last years when the category suddenly lost its cool.
This story first appeared in the January 22, 2004 issue of WWD. Subscribe Today.
Instead of becoming a fashion history footnote, however, surf — or what the industry prefers to call “the California lifestyle” — bounced back within the next decade, becoming a multibillion-dollar global force. And this time, popular opinion holds that history won’t repeat itself. So many other factors — a changed retail landscape, new consumer attitudes, the maturation and sophistication of the category and its full embrace, finally, of a feminine side —may have actually protected the surf industry from ever hitting the skids again.
THE SURFING HIGH
The challenge at the forefront now? How to keep the momentum going.
“We’re a much deeper industry now,” said Randy Hild, senior vice president of marketing at Quiksilver, the leader of the pack, thanks to the $1.3 billion in worldwide sales the Huntington Beach-based megabrand posted in 2003. “As an industry, we have our own retail stores. The lifestyle is ingrained in the media. Sure, business could soften. We’re always paranoid about that, and that’s probably fueling our drive. But there are sure no signs that it will [dip] anytime soon.”
In fact, despite the return of checkered slip-on Vans and Op cord shorts, the surf industry and the world in general are very different from 1989. Surf — and its landlocked siblings skateboarding and snowboarding — have evolved from leisure activities to Olympic-grade sports. In the new century, board culture in all its permutations has become as American as apple pie. “This is not just a trend,” assured Steve Pinkow, president of Santa Ana-based Split Inc. “It’s truly become a lifestyle — and not just a West Coast phenomenon.”
Contributing is a new wave of youth more willing to cross cultures — musically, aesthetically, racially. Although their parents may have never been caught dead shopping in the mall for boardshorts or underground records, these teens are Internet-shopping savvy and as apt to drop into a PacSun as a Wal-Mart for clothes, then pair these purchases with something from the corner thrift store. They’ve mastered the mix in music (hip-hop, punk and electronica on a single radio station) and fashion (pairing a Billabong T-shirt with a Baby Phat skirt).
And the surf industry has opened its collective mind, too, broadening distribution channels into retailers this industry once either avoided or pretended not to care about. The fear of wiping out again meant much of the industry went through the Nineties touting the all-importance of remaining “core,” which meant staying small and avoiding the patina of selling out. But the industry now enjoys pointing to the likes of Quiksilver, which managed to remain “authentic” while growing exponentially.
Having real estate in department stores and other mainstream outlets “validates if anything,” insisted Bob Hurley, who remains at the helm of his eponymous brand, which he sold to Nike in early 2002. Indeed, the Costa Mesa brand with projected sales of $100 million this year remains among the most hardcore of labels.
“There’s a different mind-set today among teens,” Hurley said. “It started with the big sports contracts, then the rappers getting rich. I don’t think success or bigness is a liability anymore. The product, the quality, is what matters. Besides, kids will buy anything they love.”
Analyst Jennifer Black concurred. “I think department stores are the place [for surf brands] to be. It only validates them.”
But don’t expect the surf industry to rush into Wal-Mart, observed Joe Teklits, an analyst with Wachovia Securities. “They’ll build their own retail stores before going into other kinds of distribution points,” he said. “A continuing challenge is to keep grassroots marketing campaigns alive and getting the right product in the right shops. That said, the top six to eight surf companies are all in growth mode with years more to go.”
Signature stores are already increasingly becoming a part of the business for the leading brands.
A decade since opening its first door, Quiksilver counts 63 company-run stores domestically, including a lucrative, 3,000-square-foot flagship in New York’s Times Square and more than 180 company-run stores in Europe. Volcom and Stussy have hung shingles in Los Angeles, and Stussy has invaded Japan as well. Hurley opened a 400-square-foot in-store shop at Huntington Beach Surf & Sport in downtown Huntington Beach this month. And emboldened by a namesake store at The Camp in Costa Mesa, Billabong Australia this month acquired the Honolua Surf Company, with 17 doors in Hawaii and two in Las Vegas, in a deal worth up to $19.2 million.
Of course, it’s other retailers that the industry relies on most to move its merch, and, as department stores struggle, specialty chains such as The Buckle, Tilly’s and, in particular, PacSun are giving teens cause to max out their parents’ plastic.
Pacific Sunwear of California, Inc. was founded by two surfers and until the early part of the Nineties sold mostly wet suits and surfboards. In less than a decade, it’s become a 750-plus-unit nationwide phenomenon expected to double in doors by 2007. And that doesn’t include the company’s 114 urban-skewed d.e.m.o. stores, launched to connect with the hip-hop consumer — the other teen segment. It also shows little chance of slowing. The company’s stock shot up 40 percent in 2003, and is counted at a market value of $1.6 billion.
“Retailers like PacSun have done a tremendous job in telling the California lifestyle story, waving a huge banner as they take it into mainstream America where there’s no ocean,” said Marie Case, managing director of Board-Trac, the syndicated market research firm that monitors the habits of 12- to 24-year-old consumers who participate in or are influenced by board sports.
THE XX (Chromosome) FACTOR
Invariably, the segment most likely to line coffers is juniors, an area of skyrocketing growth for an industry that little more than a decade ago treated girls like they had cooties.
Now just about every core brand boasts a sister line.
Board-Trac estimates “the size of the total U.S. market of frequent surfers was 2.1 million in 2003, up from 1.6 million the year before. And of that number, 25 percent were female.” Among its own respondent group of frequent wave riders, the numbers are even higher: 40 percent are teen girls.
Even larger, of course, are the legions of girls and women who just want to look the part. It’s not so much about the girl who surfs, as the girl who shops. Surf brands and retailers such as PacSun are even advertising in mainstream media books such as Teen Vogue, Elle Girl and Cosmo Girl.
Among the surf brands advertising in those magazines is Split. Juniors makes up one-third of the company’s estimated $40 million in sales, which rose 64 percent in 2003 without a change in distribution. And it’s fast catching up with men’s. For 2004, Split’s juniors is expected to increase by up to 37 percent, Pinkow projected. “This is not just blind optimism. Due to strong sell-throughs in the fourth quarter, we have strong momentum going forward in ’04.”
Split has also led the way in another key area for the unprecedented growth of the action sports industry, especially in juniors: the move from basics into formidable fashion contender, with complete collections and options that leave no part of the wardrobe unconsidered.
“If you were to take a snapshot then and look at it today, the difference between now and then — even between 2002 and today — is that the surf industry is clearly in the fashion game,” observed Dick Baker, president of the Surf Industry Manufacturing Association and ceo of Ocean Pacific.
As the Santa Ana-based Op met fashion demands for retro classics by bringing back originals such as its Seventies-era cord shorts, the company introduced the decidedly forward Seven2 last year. The brand hits on fashion more than surf, despite its name’s nod to the company’s founding year of 1972. As a whole, the $250 million company is looking to grow another 20 percent in 2004.
“This fashion element is why we’re going to see a lot more of the junior lines by surf companies in more mainstream specialty stores,” added Baker.
Retailers agreed. Macy’s West, like others, began buying more extensively about two years ago. “It really was a slow start,” said vice president and general merchandising manager of juniors Rob Smith. “We started building partnerships with some of the key resources, starting small, finding the strengths and cultivating the department each season. It’s really a learning process with each resource.” Selected Macy’s West have designated collective areas stocking Roxy, Hurley, Billabong, O’Neil, Split and nonsurf brands that complement the lifestyle such as Dickies, Paul Frank and Puma.
AS SEEN ON TV
Brand diversification into media ventures, from video games to film and television production, has also reaped large rewards.
Quiksilver helped produce “Riding Giants,” the Stacey Peralta-directed, Sean Penn-narrated surfing follow-up to the award-winning skateboarding documentary “Dogtown and Z-Boys,” which Vans helped get into theaters. Like the first installment, “Giants” opened at the Sundance Film Festival to critical acclaim.
Billabong produced its own adventure feature-length film, “Odyssey,” out on DVD Jan. 27, as well as exclusively supplying the wardrobe to 2002’s summer hit “Blue Crush,” starring Kate Bosworth and Michelle Rodriguez. Not to be out-cooled, brandishing boards in last summer’s “Charlie’s Angels: Full Throttle” were a very hot Demi Moore and Cameron Diaz (who really does surf).
On the small screen, MTV’s “Surf Girls,” the WB’s “Boarding House: North Shore” and, more recently, Fox’s highly rated “The OC” are further whetting landlocked appetites for the lifestyle, the fashions and the brands.
“How do you get your message off the coast to the Heartland?” asked Hild. After media, he pointed to regional initiatives, particularly in collaboration with retailers. Holding contests, outfitting street teams, sponsoring local skate parks or being part of the club scene add up to grassroots efforts — even for a corporate behemoth. “Our theory now is just how we started it in Hawaii in the Seventies and Newport Beach in the Eighties: Start in a territory, focus on it by building a grassroots foundation.”
Maintaining integrity is a near obsession in this industry, and the key, said Hurley, is collaborating “with great retailers whose operations we like, we respect.”
Who makes the grade? Surf executives rank May Co. stores at the bottom of the list. Not only did it get on board late, they said, but the company just didn’t get it.
Kohl’s and J.C. Penney, they added, are so dominated by mid-tier urban brands that overtures to wade into surf have not gone over. “They just can’t get the access to the right surf brands,” said one executive.
Unanimously — even among those who don’t claim a rack — Macy’s West gets high marks among surf vendors. “Their buying is really good. They understand what the kids want. They have nice stores. They’re pretty brand-focused, and I think that’s what consumers like to see,” noted Hurley, echoing others. Well-known surfer girls make in-store appearances, and the retailer’s Web site profiles the more famous ones, as well as gives away surfboards through online contests.
Nordstrom also gets good reviews. “We love talking about their buying choices, their customer service. They take fashion risks. They’re more aware of the category and understand it,” said Hild.
“With the Midwest and mainstream retailers in general,” Baker said, “it’s about finding retailers that can sell the product versus those who simply can buy it. It’s the biggest challenge in determining distribution. The big difference between department stores today from five, 10 years ago are the ones who commit themselves with great presentation, great buys. But there are fewer of these kinds of stores. Sure, getting a big order is enticing. But can that distribution point sell the product?”
What most retailers don’t really take to heart, admonishes Split’s Pinkow, is that “you can’t fool this kid. They don’t want what they consider to be bogus. As the department stores look to expand, they may have to be careful; they have to be savvy in how they market to them.”
Indeed, the secret to Macy’s West’s success, believes Smith, “is to treat it like a specialty store business, not as if it were going into a department store. Value the brands and the distribution in the mom-and-pop shops. We respect the industry. And we’ll continue to focus on this business.”
Other favorites are Dillard’s and Galyan’s. Gottschalks is readying its surf-infused junior area in the coming weeks as product from Split, Hurley, Billabong, Roxy and O’Neill, along with customized fixtures reflecting the category, arrive in stores.
With relatively new junior additions Hurley, Billabong, O’Neil, Split, Roxy and Hang Ten, Marshall Field’s is giving the Midwestern fans of “The OC” the chance to dress the part. “It’s surf as a lifestyle,” Lanie Pilnock, trend manager for Marshall Field’s, said late last year. “We’re mostly a Midwestern retailer and we want to test waters first to see how our customer identifies with that lifestyle.”
Hild acknowledges he and his peers are keeping a watchful eye on retailers getting in on their turf, namely Hollister, which parent company A&F plans to take from 155 doors to 600 to 800 units in the coming years. And California — the state that inspired the $190 million, Ohio-based Hollister — is at the top of its invade-and-conquer list. Ironically, Hollister’s lifeguard motif has proven symbolic: Its strong year-end same-store sales helped boost otherwise diminishing returns from preppy sister Abercrombie & Fitch.
“Sure, our surf industry is a little paranoid about them,” admitted Hild. “But their existence just justifies and strengthens who we are as an industry.”
LOOKING INTO THE SUNSET
Older action sports apparel makers note that what killed surf in the mainstream marketplace in the late Eighties won’t happen again.
“That was a trend cycle that came and went. Neon killed surf,” said Baker, echoing others in the industry. “The whole surf world is on a different platform now. I’m very bullish about the next four years. The brands are way too diverse and too global not to connect to consumers.”
Not that there aren’t challenges.
For starters, the industry needs to continue telling its story, that of the true California lifestyle, to an even broader audience.
“Product excellence and relevance,” said Hurley, is another prime challenge. “Our product has to keep elevating, and on a worldwide level. It doesn’t fly anymore to say we’re surf and that’s enough. That was the Eighties.”