SS7 Day Three: Defining Our Culture

Day Three: Defining Our Culture
Saturday morning started bleary-eyed for many in the wake of the surf industry’s annual Blitzkrieg on the Squid Roe bar in Cabo San Lucas. Most survived with their sanity and health intact, but it was a near thing. Two summiteers closed down Squid Roe only to get a lift to a sketchy late-night “club out in the desert that turned out to be full of Mexican cowboys in shitkickers itching for a fight. The walk back through the desert was a long one.

But back in the freezing Faro Ballroom of the Crown Plaza Los Cabos, Ken Schmidt, former director of communications for Harley Davidson, kept the 250-person audience captivated for the better part of an hour. “The society we’ve created is filled with invisible transactions—pull people out of that and validate them, he said.

With a high-energy presentation filled with slides and sarcastic jokes, Schmidt solicited laughter and smiles from most of the crowd. Clearly it was a highlight of this year’s event. “This was definitely the best presentation so far, said Roxy Core Marketing Manager Danielle Beck.

Focusing on the ways Harley Davidson transformed its image to encompass not only its motorcycles but also an entire culture, Schmidt encouraged brands to do more than create products. “When somebody does something extraordinary for you, that makes you feel good about yourself as an individual, you feel very, very good about the person who did that for you, he said. “And you feel very, very good about the organization that he or she represents.

During his tenure at the Harley Davidson Motor Company, Schmidt watched the brand struggle at the edge of bankruptcy. After receiving a last-minute loan in 1985 to keep the brand in business, the company realized it had to quickly make a lot of changes.

Harley Davidson survived by enacting simple strategies such as listening to its employees and motivating them to do things differently, getting proactively involved in local communities, and recognizing the changing retail environment.

One of the ways the company has been successful in connecting and expanding its customer bases is through the “Harley Owners Clubs it sponsors worldwide. Currently there are 1,100 clubs that meet at local stores once a month (thus insuring regular visits to the retail space) and go for rides. “We wanted to bring people together in similar areas with a common thread of interest, explains Schmidt.

However, as Schmidt notes, not only did the company succeed financially, it grew on an emotional level with its customer base. “The most popular reasons people give for buying a Harley surround four words, he said. “Dreams, passion, freedom, and individuality—Harley Davidson has created a culture around its products.

Employee Development.
Bill Catlette co-authored Contented Cows Give Better Milk and is an HR guru-type. If that wasn’t enough to impress the SIMA audience, he somehow worked quotes from Mike Ditka, Jon Bon Jovi, Mark Twain, and Mario Andretti into his speech—a true reference wiz.

Still, the presentation proved to be fairly boring. After all the graphs and hard numbers of previous seminars, Catlette’s was mostly conceptual management stuff. For company bigwigs who get to do the hiring and firing, the seminar had value—especially when you consider that our incestuous boardsport industry often neglects concepts like employee development. But whether his speech connected with the entire audience wasn’t clear.

The main thrust of his presentation was aimed at upper-level management and posed the question, “When you’re gone, who’s going to run your company? Catlette focused on standard ideas like hiring from within, thinking outside the box, raising expectations, competency models, and not viewing people as commodities: “Do you see your employees as a source of opportunity, a strategic advantage, or nothing but a cost to be reckoned with come payday?

While some of it was clichéd manament talk, Catlette has provided employee development services for some great companies—including FedEx—and was able to roll out some interesting statistics: “CEOs who are directly involved in the process of renewing and developing talent enjoy a 27-percent advantage in total return to shareholders over the course of a three-year period.

He also described the importance for higher-ups to set a model example for everyone they’re leading, which seems like common-sense type information. Probably the best quote, though, was about how management can convince employees they’re valuable: “Tell them with your wallet, said Catlette. Hallelujah, brother. Okay, so there was more to it than that. “More importantly, tell them personally. That will mean more to them than the money.

Retail Strategies.
Is a broad look at U.S. retail relevant to specialty boardsports shops? At first you might think not, but Will Ander’s SIMA seminar on winning retail strategies did a surprisingly good job of turning a lot of faceless numbers and bar charts into useable data for the surf industry. It was also a good compliment to Marshall Cohen’s teen- and boardsports-specific research the day before.

Just consider these highlights: of people under 30, one in three belong to an ethnic group (Black, Hispanic, Asian, or American Indian). Another third of the population is over 50 years old. What portion of these demographics are buyers of surf goods? Probably just a sliver, and Ander claims this represents a big untapped market for the surf industry.

“I think you guys are going to have learn how to go after some grandparents, said Anders, only half jokingly, “because they’ve got an awful lot of money out there. Will the surf manufacturers take this to heart and go after these markets? Sure, Quiksilver has its QuikSilverEdition line, but a debut of a Fossil Edition probably isn’t in the cards.

Another interesting statistic Ander mentioned was the decline in mall shopping over the last decade. Ten years ago malls accounted for 40 percent of retail sales in the U.S. Now that number has dropped to twenty percent.

Take that bit of eye-popping data, couple it with McKnight’s keynote admonition that acquisitions are risky and hard, and spread it over a specialty retail market that hasn’t grown its number of doors and what are you left with? For some, it pointed clearly to the launch of more company stores from brands looking for growth—and these days, who isn’t?

So what’s a specialty store to do? A key strategy Ander cited for stores like specialty surf that focus on a lifestyle product was the importance of continually bringing in new product. Customers will make more visits to your store if they know you’re constantly getting new stuff in. In this way, the store becomes more of a destination, which is a direction that many specialty shops have been going toward.

Some non-surf retailers are taking this even further by offering not only products, but also services. PetSmart now offers pet grooming, training, and sitting. The point is, big-box retailers aren’t blundering idiots. They’re becoming increasingly savvy and specialty retailers need to constantly reexamine what they’re offering customers in order to compete.

Could similar service strategies work at surf retail? More shops used to do service-based things like ding repair and surf lessons, perhaps this is an area ripe for a comeback. The segment that many shops are expanding in though, and smartly, is in local promotional events. Skate demos, visits from pros, and equipment demos—all are great ways to reach more customers.

BRA Summit: Day Three
Mike Morgan, a one-time Gateway guru and friend of BRA Founder Roy Turner, kicked off day three of the BRA summit with a discussion of Gateway computer stores—which as of last month no longer exist. While he had plenty to say, his theories were a bit on the grandiose scale and may not trickle down to the singular retailer.

Morgan’s seminar spoke mostly to retailers unsatisfied with their current business model and hungry to make a drastic change. Unfortunately, his never-say-never mentality seems a credo of desperation, of someone on the last page of chapter ten, and his tactics smacked of an industry lacking heart.

Morgan explained that part of Gateway’s diversification strategy was to “just cut out the middleman and go straight to {our own} stores. However, Morgan was speaking to a room of 30 “middlemen, who ostensibly helped brands to prosper by supporting them throughout the past two decades.

Morgan’s presentation delved into the ten questions you should ask yourself before dramatically changing your retail strategy. The first item of business was to truly understand the concept of diversification. If your current product isn’t selling, practicality would dictate you carry something new—or something else.

When discussing the nature of competition, Morgan’s advice was to: “Forget the Ten Commandments here, steal all of the information that you can. The goal is to take what they do and do it better.

Morgan closed with a disclaimer: “I don’t have the answers, I am not a visionary. I believe in stealing ideas. The information he provided was entirely valuable, but only when filtered through our own business model. However, Morgan condoning the theft of ideas and other seemingly unscrupulous business tactics—even if in jest—seemed jarring in such a serene setting, where these so-called “competitors were much more likely to freely exchange information over a beer.

Private Labels.
When Rich Galligan took the podium on Saturday, he offered several reasons why retailers should look into—or dive more heartily into—the private-label market. Many of these reasons made perfect sense, such as they increase your net profit, reduce the overall cost of goods sold, and most importantly, can be a very useful marketing tool for increasing customer awareness of your shop.

Private labels are also more cost-effective for use in discounts, promos, and miscellaneous giveaways—better to part with a shirt that cost you four dollars than an eight-dollar one, right? No calculator necessary.

It’s even beneficial in providing your customers with a cheaper alternative to branded products—if you like that Indy belt (or comparable surf-example), but not the hefty price tag, private labeling can get you a near-identical one with your shop’s logo to boot!

It was mentioned that “You basically want to have this be the number-one label in your store, but the impact on other brands, the ones that allowed you to open the store, weren’t addressed. Of course, most retailers already are adept at walking that tightrope, and it clearly appears retailers are no longer asking, “Should I, or shouldn’t I, have a private label offering? The question today is, “How much should I focus on my private label offering?

Retailer Panel.
As the last item of the last day, the retailer panel discussion would serve as the culmination of Surf Summit 7. In the weeks before the event, there was a lot of backstage politicking about the topics and what would (and wouldn’t) be the focus of the 90-minute discussion.

In the end, Roy Turner gave a twenty-minute overview of the boardsports market, and then ASR Trade Show Director Kevin Flanagan fired questions at the panel of retailers that included George Leichtweis of the five-store Modern Skate & Surf chain in Michigan, John Hambleton of Florida’s Islander Surf & Sport, Jurgen Schultz of K-Five Boarding House, Steve Carlson of Central Coast Surfboards, and Tom Brown of 17th Street. Collectively the panel represented 129 years of surf-retail experience.

“The competitive edge of boardsports specialty retailers is being narrowed as increase in distribution and the counterfeiting of our look and lifestyle present a sameness to the youth of America, Turner began. “From Costco to Old Navy, everyone wants to be a surfrgan’s seminar spoke mostly to retailers unsatisfied with their current business model and hungry to make a drastic change. Unfortunately, his never-say-never mentality seems a credo of desperation, of someone on the last page of chapter ten, and his tactics smacked of an industry lacking heart.

Morgan explained that part of Gateway’s diversification strategy was to “just cut out the middleman and go straight to {our own} stores. However, Morgan was speaking to a room of 30 “middlemen, who ostensibly helped brands to prosper by supporting them throughout the past two decades.

Morgan’s presentation delved into the ten questions you should ask yourself before dramatically changing your retail strategy. The first item of business was to truly understand the concept of diversification. If your current product isn’t selling, practicality would dictate you carry something new—or something else.

When discussing the nature of competition, Morgan’s advice was to: “Forget the Ten Commandments here, steal all of the information that you can. The goal is to take what they do and do it better.

Morgan closed with a disclaimer: “I don’t have the answers, I am not a visionary. I believe in stealing ideas. The information he provided was entirely valuable, but only when filtered through our own business model. However, Morgan condoning the theft of ideas and other seemingly unscrupulous business tactics—even if in jest—seemed jarring in such a serene setting, where these so-called “competitors were much more likely to freely exchange information over a beer.

Private Labels.
When Rich Galligan took the podium on Saturday, he offered several reasons why retailers should look into—or dive more heartily into—the private-label market. Many of these reasons made perfect sense, such as they increase your net profit, reduce the overall cost of goods sold, and most importantly, can be a very useful marketing tool for increasing customer awareness of your shop.

Private labels are also more cost-effective for use in discounts, promos, and miscellaneous giveaways—better to part with a shirt that cost you four dollars than an eight-dollar one, right? No calculator necessary.

It’s even beneficial in providing your customers with a cheaper alternative to branded products—if you like that Indy belt (or comparable surf-example), but not the hefty price tag, private labeling can get you a near-identical one with your shop’s logo to boot!

It was mentioned that “You basically want to have this be the number-one label in your store, but the impact on other brands, the ones that allowed you to open the store, weren’t addressed. Of course, most retailers already are adept at walking that tightrope, and it clearly appears retailers are no longer asking, “Should I, or shouldn’t I, have a private label offering? The question today is, “How much should I focus on my private label offering?

Retailer Panel.
As the last item of the last day, the retailer panel discussion would serve as the culmination of Surf Summit 7. In the weeks before the event, there was a lot of backstage politicking about the topics and what would (and wouldn’t) be the focus of the 90-minute discussion.

In the end, Roy Turner gave a twenty-minute overview of the boardsports market, and then ASR Trade Show Director Kevin Flanagan fired questions at the panel of retailers that included George Leichtweis of the five-store Modern Skate & Surf chain in Michigan, John Hambleton of Florida’s Islander Surf & Sport, Jurgen Schultz of K-Five Boarding House, Steve Carlson of Central Coast Surfboards, and Tom Brown of 17th Street. Collectively the panel represented 129 years of surf-retail experience.

“The competitive edge of boardsports specialty retailers is being narrowed as increase in distribution and the counterfeiting of our look and lifestyle present a sameness to the youth of America, Turner began. “From Costco to Old Navy, everyone wants to be a surfer or a skater. Competition is fierce, and margins are narrowing.

But Turner said specialty stores love a good fight: “The average length of time the retailers in the audience have been in business is 25 years. So if you want to come play in the surf industry, then come and play, because we’ll kick your ass. We’re really good at what we do. It wasn’t clear if Turner was talking big-box wannabes like Hollister or brand-owned company stores—probably both.

Turner said that as suppliers spread their wings, core retailers are left with questions. “Are we your customer, partner, or competition? he asked. “Wherever your position falls, we are confident that we have a future in the industry because we supply the ride.

The panel discussion was an absolute highlight of Surf Summit 7 and covered company stores, in-store branded concept areas, Internet affiliate programs, production schedules and optimal buy-in times, the need for standardization when it comes to shipping, and more. It was a fascinating look into what’s on retailer’s minds—and ought to serve as fodder for many high-level discussions for months to come.

surfer or a skater. Competition is fierce, and margins are narrowing.

But Turner said specialty stores love a good fight: “The average length of time the retailers in the audience have been in business is 25 years. So if you want to come play in the surf industry, then come and play, because we’ll kick your ass. We’re really good at what we do. It wasn’t clear if Turner was talking big-box wannabes like Hollister or brand-owned company stores—probably both.

Turner said that as suppliers spread their wings, core retailers are left with questions. “Are we your customer, partner, or competition? he asked. “Wherever your position falls, we are confident that we have a future in the industry because we supply the ride.

The panel discussion was an absolute highlight of Surf Summit 7 and covered company stores, in-store branded concept areas, Internet affiliate programs, production schedules and optimal buy-in times, the need for standardization when it comes to shipping, and more. It was a fascinating look into what’s on retailer’s minds—and ought to serve as fodder for many high-level discussions for months to come.