Union Tribune Forecasts Action Sports Doom & Gloom

After hitting the ASR trade show floor yesterday and speaking with a number of industry members, San Diego Union-Tribune reporter Jennifer Davies penned an article with some scary prospects for the action sports industry. In her report she provides estimates that as many as 30 percent of action sports retailers could go extinct in 2009 and that independent surf board manufacturers could fare equally as bad.

While the story is generally gloomy, as most economic pieces are these days, it does contain some rays of optimism and leaves out the fact that numbers for some action sports retailers are remaining on par with last year, as well as the fact that recessions always offer opportunities.

Here’s excerpts from the article:

For the action sports industry in 2009, it’s all about keeping your head above water.

Already struggling with a glut of inventory, the $14.4 billion industry is forecasting sales to fall as much as 25 percent this year. Some surfboard makers say their business is down 30 percent to 40 percent as consumers put off larger purchases.

With numbers like that, industry insiders say some brands will disappear and the economic undertow will pull down a number of mom-and-pop shops, considered the backbone of the business because of their connection to the core action sports customer.

"There is no immunity idol on this island," said Doug Palladini, vice president of marketing at Vans, referring to the "Survivor" television show. "It can happen to anybody."

Shawn Shumacher, a domestic sales manager with Podium Distribution, which manufactures and distributes skate shoes and clothing, stood shaking his head at his company’s exhibit space, named Camp Recession and decked out to look a bit like a tent city.

"I’ve been in the business for 20 years, first on the retail side and now doing this, and it’s about the worst I’ve ever seen it," he said.

Smaller shops are trying to cut back orders they made for the spring and are reluctant to book big orders for the fall as the economy continues to worsen, said John Hackbarth, who also works at Podium Distribution.

Some industry insiders predicted that as many as 30 percent of all action sports retailers could go out of business in 2009. Melissa Clary, executive director of the Board Retailers Association trade group, said while many shops are facing tight times, she expects only about 20 stores nationally to close this year. She acknowledged, however, that Southern California shops were struggling more than their East Coast counterparts because of problems in the local housing market.

Lora Bodmer, a spokeswoman for the trade show, said she was surprised at how well the event was going despite the economic climate.

"We looked out over the show and said, ‘Hey, this isn’t so bad,’ " she said.

Despite that optimism, many brands are scaling back on the types and quantities of products they make. Some, such as Reef, are giving stores price breaks to help them bolster their margins, said Kevin Flanagan, vice president of marketing for the Carlsbad sandal and surf-wear company.

At Adio, a Carlsbad skate shoe company, the climate has meant a return to basics, with more limited shoe models, said Rudy Vasquez, the company’s marketing director.

"It’s not easy being what can be considered a luxury brand," he said. "Parents are making Johnny wear his shoes a little longer."

While every aspect of the business is suffering, local surfboard makers seem to be taking the biggest hit. Already battered by a surplus of products from overseas, small surfboard makers have seen demand plunge as customers put off big purchases.

"I don’t see it getting any better for anybody who is making surfboards," said Gary Linden, founder of Linden Surfboards in Oceanside.

That lifestyle and business model has been upended because of the global economy, said Gary Seagraves, a board shaper in La Jolla. He estimated his business is down as much as 40 percent.

"People need to stop buying stuff made in China and start buying stuff made in the U.S.," he said.

Still, it was not all doom and gloom at the trade show. Many in the business said the action sports industry is positioned to come out of the economic tailspin, both because of its target market – teens who tend to spend money on what they want – and because of the fierce passion of those who participate in action sports such as surfing, skateboarding and snowboarding.