Retail Profiles: 9 Star, Mission Viejo and L.A.

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9 Star
27741 Crown Valley Pkwy, Mission Viejo
11103 Olympic, Los Angeles

Matt Levenson, CEO and founder of 9 Star, first got the idea to open his own action sports store during business school. Growing up in Santa Barbara, which was home to only a few sole skate and surf shops like Church of Skatin' and Beach House, Levenson says he realized the need for a store that provided a wider variety of sports gear. But it wasn't until after he helped launch several start-up companies (including the now popular online ticketing giant Stubhub) that he finally acted on those plans, opening his own 10,000-square-foot shop, 9 Star, about five years ago in Los Angeles.

Today, the successful entrepreneur runs a second 9 Star location out of Mission Viejo's Kaleidoscope Center and says he's been able to build a successful multi-door business through careful and consistent training of staff and staying actively involved in the product buying process. On a recent Friday, TransWorld Business stopped in to talk with Levenson and 9 Star's Director of Merchandising, John Lohnas at the Mission Viejo location. It was clear that Levenson, who took a break from helping his team with daily tasks in order to answer a few of our questions, plays an integral role in the company both on and off the sales floor.

How big is the LA location compared to Mission Viejo?
ML: Both are about 10,000 square-feet of sales floor space and an extra 250 square feet for stock room.

What  products do you carry at the stores and what's the breakdown of your inventory looks like?
ML: We carry Surf, Skate, Snow and BMX.

JL: Hardgoods is 50% of our inventory with surf, skate and snow all equal. Men's apparel is 80% and boys 25% of that. Both of these categories are growing and comps are up. Juniors and women's apparel accounts for 20%. Footwear, including sandals, is about 10% of inventory. Five to ten percent of our inventory is accessories. We do good with sunglasses in the summer months but overall accessories is an under-penetrated category and we are trying to do better merchandising these items, such as belts and watches.

What are the stores' top three most profitable product categories and what are some of the stand-out brands?

ML: Our surf sales have been on the rise, with Rip Curl's H Bomb and O'Neill's Psycho Freak wetsuits doing really well, and also a lot of the new boards from Channel Islands. A lot of local brands mean a lot to customers here (Mission Viejo) but not up in LA, so we stock different brands accordingly at both stores, and we also stock a lot of different products within the brands. With boards, we sell more high performance models down here while in LA it's more of the weekend warrior type boards.

In skate, Girl and Chocolate boards are number one in LA because they are headquartered right there. Those brands aren't as dominant in Orange County but they still do very well at this store.  For footwear, éS and emerica are top brands in Orange County, but up in LA Nike SB is popular. We also don't bother carrying limited edition shoes down here, but up in LA we have more of the "sneakerhead" demographic so we do there. We have people who call in way ahead to pre-order their pair and we usually sell out of the popular ones within two or three days.

What stores are your closest competition in the area?
Up in LA, it's Sports Chalet, but we really tried to pick areas that weren't close to anyone else. For the Mission Viejo location, it's the Active Rideshop right up the street.

You carry a wider variety of products than a specialty shop and have multiple locations. You could be compared to the bigger action sports retailers such as Active, Zumiez and PacSun. What do you think sets you apart from those stores?
ML: I think Zumiez and PacSun really consider themselves teen retailers, where we are action sports retailers. Where they have some room to change, we go wherever action sports goes. The SKU cross over with PacSun is very low, less than 5%, and with Zumiez it's more like 15-20%.

JL: We do a huge business with Krew and Altamont, brands that you won't find in the mall. When kids can get a product down the street it's just not special anymore, so we try to avoid that. Another thing that sets us apart is even on Monday mornings when the registers might be slow, there are still kids hanging out in here, skating around and it really establishes that different type of atmosphere.

What are some of your marketing strategies, and how do you get the word out about your shops?
ML: We use our own email list to blast out event announcements. For events we partner with vendors, like last month C1RCA's Adrian Lopez was at the shop for "March Maddness" and we also host a "Game of Skate" event. We try to hold at least two events per month. We are all about the core participant. Word of mouth is really big – this isn't a very big industry and so word gets out.

Starting in October, instead of just events we've really been focusing on promotions to get kids and customers into the stores and we've found that whenever we've done that we've been successful. People have been tighter with their purse strings but by cranking up those promotions we've seen that we can really be successful.

Are you altering the way you buy for 2009? If so, how?
JL: We believe that being safe in this economy is not necessarily the right way to go. When times get tough people have fewer cash to spend, but what they do have they look at as much more special and they want to spend it on something that is just as special and meaningful to them. It's good to take smart risks. We are making sure that we are being real tight and narrowing core pieces, but we still want to stand for the same thing we always did before the turn of the economy, which is hot, new product and authenticity of the sports.

ML: We are still bringing on new brands. We've carried Comune and Insight in the past and we brought them on again, and we are also bringing on more urban, lifestyle brands such as 10 Deep. In surf, we are bringing on Super as a new brand for us this year. We've trimmed down a few national brands that you might find at a PacSun, but a lot of that is not driven by the economy, its driven by the customer demand and what fits our image.

Are you working closer with any particular brands?
Channel Islands – we've been working closer with them, and we've been laying groundwork to do special events with Burton.

We also work with Element on the artist series, and will feature Don Pendleton as our next artist. In the past we've worked with Comune's Corey Smith to create some big wall hangings around the store and original artwork for sale, with all proceeds going to the artist. We've also launched some limited edition product around it.

Does 9 Star have its own shop decks?
JL: We always have our own shop deck and put out a new one every 4 weeks. We also do collabs with other brands. It's really important in skate decks because they are a good price point and we've built a good following with kids.

ML: Kids are always waiting for the new 9 Star decks to drop. They like to rep their home base.