A Guided Tour Through The Multimillion-Dollar Ron Jon Empire.

In 1961, Ron DiMenna opened the doors to his first Ron Jon surf shop onLong Beach Island in New Jersey, which marked the beginning of anenterprise that would eventually flourish into 100,000-plus square feetof retail floor space, and counting.

[IMAGE 1]Today there are four Ron Jon outlets that span the continent: theoriginal Ron Jon on Long Beach Island; a 25,000-square-foot store at TheBlock in Orange, California; another monster emporium in FortLauderdale, Florida; and 52,000-square-foot behemoth in Cocoa Beach,Florida that’s open 24 hours a day, attracts more than 2.4-millionvisitors annually, and is also catty-corner to Ron Jon’s corporateheadquarters. A fifth Ron Jon is scheduled to open in Orlando lateSummer 2001.

Ron Jon Senior Buyer John Sabo is in charge of filling all that floorspace, which would be a daunting task for most people. But Sabo, whojoined Ron Jon eight years ago after a stint as a merchandiser atFederated Department Stores (Bloomingdale’s, Burdines, and Macy’s, amongothers), is used to handling large volumes, although he says the higlyspecialized surf market is trickier to buy for.

TransWorld SURF Business caught up with Sabo for a look behind theoperation that employs more than 350 people worldwide, receives 20,000hits per day on its Web site, and has a private-label program that’smade some surf companies nervous.

TransWorld SURF Business: So what’s it like buying for more than 100,000square feet of retail floor space?

John Sabo: It’s a challenge. I came from the department-store industrywhere I routinely bought for a lot more square footage than that, but itwasn’t as specialized or targeted as the surf business is.

We have a particular challenge because every one of our stores is in adifferent geographical location with very different demographics. Theassortments are almost completely different in each location.

We have sort of a Midwest, Northeastern tourist customer who comes intoCocoa Beach. New Jersey has a lot of people from New York, Philadelphia,and New Jersey. Ft. Lauderdale has a big Latin influence. California issuper ‘core.

TransWorld SURF Business: How do you decide what to buy for each store?

John Sabo: I work with my local reps and with the merchandisers inCalifornia, and I try to see as much product as early as I can. Thathelps me with my planning. I’m always looking for something that’sedgier in California. It’s more basic for the Northeast, and moretropical for Cocoa Beach. If I buy ten trunks, there may be four or fivethat would be the same for all locations, and another four or five thatare different in all locations.

TransWorld SURF Business: What’s the advantage of being such a big shop?

John Sabo: Since we’re bicoastal, we get to test a lot of things inCalifornia and look at the trends maybe six months to a year before theyhappen on the East Coast — that’s a huge advantage.

We’re not the biggest player in the surf industry, and I probably paythe same price as every surf shop as far as basic price on prebooks. Ouradvantage is that we work very hard on the retail side of business: Whatdo we need for fixturing? What do we need for P.O.P. or additionalsignage? What could we do from the marketing end to promote the brandin-store? We concentrate on the things that help us promote the brandsrather than going in and saying, “I need a buck off this or I need twobucks off that.”

TransWorld SURF Business: So is it sometimes a disadvantage being sobig?

John Sabo: Yeah, if you make a mistake, you make a big mistake!

With the stores being so spread out, a lot of it is communication. Ifyou’re a smaller shop, where you’re only dealing with one location, youcan be in the stores talking to your sales associates, talking to thecustomers, and physically looking at your inventories. I can do that inCocoa Beach because my office is two blocks away from the store, butit’s tough to get to the other stores all the time. That’s a bigdisadvantage.

TransWorld SURF Business: u have a very strong private-label program.Does that cause problems with the brands you carry?

John Sabo: Our private label has changed quite a bit. Five years ago inCocoa Beach the ratio of private-label to brand-name product wouldprobably have been 45 percent private label and 55 percent brand. That’sa pretty high percentage, but we’re in a tourist environment here. Whenwe opened the California store, we felt we could have a similarpercentage. We were wrong.

It took a year to figure out we couldn’t have that high of a percentageof private label in California, and what private brand we did have onthe floor had to be very fashion driven. So our ratio now is probablygoing to end up 75-percent branded, 25-percent private label. That’sprobably the right mix.

Our private-label program has been successful because we don’t sell ithead-to-head against the brands. So I don’t think it’s affected ourrelationships with them.

TransWorld SURF Business: Where are you seeing the biggest growth?

John Sabo: The skate market is just exploding. Not only in decks, butthe apparel and the shoe business as well. Going into next year, we’regoing to continue to expand our kids’ business. Our accessory businessis another area we’re targeting going into 2001.

TransWorld SURF Business: So what’s been lagging?

John Sabo: The trunk business was really tough last summer. Retailers notin the surf arena had trunks on their sales floor, didn’t sell themwell, and then really promoted them to get out of that business. Thateducated the customer to a pricepoint we didn’t want to be at.

But that just means we had to find other parts of our business thatperformed well. Men’s accessories did very well this year. Walkshorts –when you got away from cottons and into cotton-nylons and nylons — didvery well. And actually there was also a nice pickup in T-shirts. It waskind of a trade-off in different businesses.

TransWorld SURF Business: Will the surf boom continue?

John Sabo: I think so. But anyone who pigeonholes themselves to beingjust “surf” is going to have a difficult time. There’s a lot more goingon in the board-sports lifestyle than just ‘core surf. There’s a skateinfluence, there’s a streetwear influence — surf is extremelyimportant, but you’ve got to pull all that together to come up with whatyour brand is going to represent going forward. We struggle with thatall the time.

If you go back to Spring 2000, the feeling was, “Surf is hot, and wedon’t have to do anything else.” Then all of the sudden brands lookedover their shoulder and said, “What’s Hurley doing?” They’re notnecessarily a surf company. They’re a young-men’s active-lifestylecompany, and they touch a lot of bases.

TransWorld SURF Business: Which brand has the most momentum?

John Sabo: Billabong is on a great roll. They’ve done a fabulous job withthe new management team they’ve put together. The product looksexcellent — great merchandising and great marketing.

Hurley and Volcom are doing a great job, and I still see great growthpotential for both of those guys.

TransWorld SURF Business: Do surf contests help sales?

John Sabo: Contest are one of the reasons the skate business iscontinuing to grow. They can put together more of these contests andhave their athletes available for the average consumer to see, soconsumers actually know who they are. A lot of the stuff we do insurfing still is in Indonesia, South America, or Australia — placesthat the U.S. consumer really doesn’t identify with.

TransWorld SURF Business: Ron Jon has an extensive billboard campaign.What’s the strategy there?

John Sabo: In Florida, the billboards you see along the interstate comingin and out of the state are just part of Ron Jon. Thirty-five percent ofour marketing budget is for billboard advertising. You can’t be on I-75,I-95, or I-4 and not see a Ron Jon billboard. It’s a big draw to thestore. We have more than 100 billboards up and down the Florida coast.

But when you try to take that marketing philosophy to California on theI-5 or the I-405, it’s just not feasible from an economic standpoint –we could buy twenty billboards in Florida for the price of one inCalifornia.

In Florida, the billboard campaign is geared toward the tourists, afamily that’s on vacation in Florida. We want Ron Jon’s to be part oftheir tour, whether they’re going to Disney or Universal or KennedySpace Center or Sea World.

We also market very hard to all of the hotels in Central Florida –making sure everybody knows where Ron Jon’s is and what we do. The CocoaBeach store gets five- or 600 tour buses a year.

TransWorld SURF Business: What about marketing toward the ‘corecustomer?

John Sabo: We do much more of that in California. We’re one of thesponsors of the Huntington Surf Series. We do those types of things inFlorida as well. It depends upon the location and the demographics ofthe customer who’s coming in.

TransWorld SURF Business: Is Ron Jon a ‘core surf shop or more fortourists?

John Sabo: It depends upon the location. One of the advantages we haveover a lot of people in our marketplace is that we can appeal to a muchbroader audience than almost any other store. We’re not just appealingto a local mall customer, we’re not appealing to just a tourist, andwe’re not appealing to just a ‘core surfer. We’re not just going after ateenage surfer who might be between thirteen and twenty, and we’re notjust going after a family tourist. We can cover all those consumers, andthat makes us unique.

TransWorld SURF Business: Do you sell many surfboards?

John Sabo: People are amazed at how many boards we sell — particularlyin Orange. Even I’m surprised sometimes when I look at the numbers.

This year in California we’ll probably end up selling 500 boards, whichis a lot for a landlocked store. In Cocoa Beach, we’ll sell between 750and 800.

TransWorld SURF Business: E-commerce: boon or boondoggle?

John Sabo: It’s something we’re spending a lot of energy on. We’reactually targeting some marketing — radio and television — indifferent parts of the U.S., specifically toward our Web site during keytimes of the year for people who can’t necessarily get to a store. TheWeb site might be as much as one percent of sales this year, but it’sgoing to continue to grow in the next couple of years.

TransWorld SURF Business: What are some of the biggest issues facing thesurf industry?

John Sabo: One of them is for the brands to continue to be fresh withtheir merchandising. You can’t sit for one season on the same old stuff.You have to be constantly searching out new ideas, fabrics, and colorsbecause we’re definitely in the middle of a fashion cycle in themarketplace right now.

And how the brands market themselves is another big topic. Are theygoing to continue to spend the marketing dollars on surf magazines,contests, or sponsorships? Those plans — and how they fit with theretailers — are going to be a big challenge.

There are a lot of things retailers on the East Coast face as commonproblems, and the ability to sit down and just casually talk about thoseissues is really important. Surf Expo does a good job hosting a casualforum just prior to their show where East Coast retailers can gettogether and talk about business. I’d like to see more of that.

TransWorld SURF Business: How much bigger can Ron Jon get?

John Sabo: We’re going to continue to open stores. We’re still a smallcompany, and the stores we open are big. So if we open one or two storesa year, that’s a lot for us.

We’re also going to be licensing the Ron Jon brand overseas. We alreadydo a very good job with that in Japan, and we’ll target another seven oreight countries over the next two years. We want to continue to buildour brand internationally.ke that marketing philosophy to California on theI-5 or the I-405, it’s just not feasible from an economic standpoint –we could buy twenty billboards in Florida for the price of one inCalifornia.

In Florida, the billboard campaign is geared toward the tourists, afamily that’s on vacation in Florida. We want Ron Jon’s to be part oftheir tour, whether they’re going to Disney or Universal or KennedySpace Center or Sea World.

We also market very hard to all of the hotels in Central Florida –making sure everybody knows where Ron Jon’s is and what we do. The CocoaBeach store gets five- or 600 tour buses a year.

TransWorld SURF Business: What about marketing toward the ‘corecustomer?

John Sabo: We do much more of that in California. We’re one of thesponsors of the Huntington Surf Series. We do those types of things inFlorida as well. It depends upon the location and the demographics ofthe customer who’s coming in.

TransWorld SURF Business: Is Ron Jon a ‘core surf shop or more fortourists?

John Sabo: It depends upon the location. One of the advantages we haveover a lot of people in our marketplace is that we can appeal to a muchbroader audience than almost any other store. We’re not just appealingto a local mall customer, we’re not appealing to just a tourist, andwe’re not appealing to just a ‘core surfer. We’re not just going after ateenage surfer who might be between thirteen and twenty, and we’re notjust going after a family tourist. We can cover all those consumers, andthat makes us unique.

TransWorld SURF Business: Do you sell many surfboards?

John Sabo: People are amazed at how many boards we sell — particularlyin Orange. Even I’m surprised sometimes when I look at the numbers.

This year in California we’ll probably end up selling 500 boards, whichis a lot for a landlocked store. In Cocoa Beach, we’ll sell between 750and 800.

TransWorld SURF Business: E-commerce: boon or boondoggle?

John Sabo: It’s something we’re spending a lot of energy on. We’reactually targeting some marketing — radio and television — indifferent parts of the U.S., specifically toward our Web site during keytimes of the year for people who can’t necessarily get to a store. TheWeb site might be as much as one percent of sales this year, but it’sgoing to continue to grow in the next couple of years.

TransWorld SURF Business: What are some of the biggest issues facing thesurf industry?

John Sabo: One of them is for the brands to continue to be fresh withtheir merchandising. You can’t sit for one season on the same old stuff.You have to be constantly searching out new ideas, fabrics, and colorsbecause we’re definitely in the middle of a fashion cycle in themarketplace right now.

And how the brands market themselves is another big topic. Are theygoing to continue to spend the marketing dollars on surf magazines,contests, or sponsorships? Those plans — and how they fit with theretailers — are going to be a big challenge.

There are a lot of things retailers on the East Coast face as commonproblems, and the ability to sit down and just casually talk about thoseissues is really important. Surf Expo does a good job hosting a casualforum just prior to their show where East Coast retailers can gettogether and talk about business. I’d like to see more of that.

TransWorld SURF Business: How much bigger can Ron Jon get?

John Sabo: We’re going to continue to open stores. We’re still a smallcompany, and the stores we open are big. So if we open one or two storesa year, that’s a lot for us.

We’re also going to be licensing the Ron Jon brand overseas. We alreadydo a very good job with that in Japan, and we’ll target another seven oreight countries over the next two years. We want to continue to buildour brand internationally.