Foundation Stone: Whalebone Surf Shop Profile

Nags Head, North Carolina, was a sleepy resort town in 1975 when Jim Vaughn and his business partner opened a surf shop in a rented 800-square-foot house. Back then, the pace was slow and centered on surfing. Vaughn lived in the attic above the shop and spent any profits on winter-long surf trips to the Caribbean and Hawai’i. In the winter of ’76, Vaughn bought out his partner and changed the name of the shop to Whalebone Junction Surf Shop.

Since then, Whalebone’s growth has in many ways mirrored the growth of the surrounding community. But it’s never been easy. Half seriously, Vaughn jokes that, “If ‘core is poor and paying for stuff on time is cool, then we’re definitely ‘core and still trying to be cool.”

The Outer Banks now has close to 30 surf shops. Competition is fierce, the weather is fickle, and the peak sales period lasts only ten weeks. But with more than 25 years of heritage and two 4,000 square-foot stores now in operation — one in Nags Head and one in the suburbs of Virginia Beach, Virginia — Whalebone Surf Shop has become one of the surf industry’s Mid-Atlantic cornerstones.

TransWorld SURF Business caught up with Vaughn in the middle of the hectic summer season for a from-the-trenches view of retailing on the Outer Banks.

TransWorld SURF Business: What drew you to the Outer Banks?

Jim Vaughn: When I got out of school and moved back to Florida, I had a construction-office job making a lot of money. But I hated it and felt like a hypocrite because developers had trashed where I grew up. I wanted to run a surf shop and live in a small town that had surf, and the Outer Banks had that atmosphere.

TransWorld SURF Business: How long did it take before you turned to profit?

Jim Vaughn: I’m still waiting laughs. It was difficult. I used to sit in that shop during the winter and beat my head on the wall. Now you can buy a starter kit that explains retailing, or read TransWorld SURF Business, or go to the seminars at the Action Sports Retailer trade show. I could have used that type of help. Back then sales reps would spin you around in circles and think, “Well I’ll get as much money out of this chump as possible because he won’t make it another year.” It took me forever to learn what Eight/Ten EOM meant. Take eight percent off the price of the merchandise if the invoice is paid within ten days after the end of the month.

TransWorld SURF Business: How many stores do you have now?

Jim Vaughn: We have three, but we’re getting out of the one up the coast in Corolla North Carolina. It supposedly was a rich, touristy area, but the tourists are pretty tight and just want a disposable product. They’re here for a week and then may not come back for three years. They want stuff they can leave in the Dumpster at the end of the week, and that’s not our style.

TransWorld SURF Business: How do you position your store to be competitive?

Jim Vaughn: I’m here because I surf. Because of that, I want to carry the best boards available. I don’t manufacture boards, and I don’t have any boards with our name on them, because I respect the real shapers too much. I try to pick the best shapers in the world and highlight them. Because of that emphasis we’ve always been the first shop in the area to carry what’s new in the market. We were the first stores in the area to carry twin fins when they were hot and the first shop to carry tri fins. We were also the first shop on the East Coast to carry Morey Boogie Boards.

I’m behind this counter seven days a week, a minimum of ten hours a day. I’ve got to look people in the eye, so I want to be proud of what I’m selling. Fortunately, the surf industry has become known for the quality of its merchandise.

TransWorld SURF Business: Who is your competition?

Jim Vaughn: We’ve got 30,000 year-round residents and almost 30 surf shops on the Outer Banks. The seasonality of the business also makes it really competitive. You get two steps ahead in a good summer and lose one step in the winter. So if you had a bad summer, you’re immediately behind the eight ball. That’s why we opened our Virginia Beach location — to get some year-round traffic. I should have done it twenty years ago, but back then I was too worried about going surfing.

On the Outer Banks, you have ten weeks to make a living, so when out-of-town shops first opened up years ago, there were a lot of bad feelings. Now we just suck it up, but it isn’t easy. We’re not on a level playing field.

We were one of the first surf shops on the Outer Banks — if not the first — and every year since we’ve opened, one or two shops will open up. They may last a year or three years or ten, but each store causes the pie to be cut a little thinner.

TransWorld SURF Business: What makes retailing here different than elsewhere in the country?

Jim Vaughn: You have to take a shotgun approach to ordering. I’ll get hardcore surfers walking into the store along with somebody from Pittsburgh, Ohio, New Jersey, or wherever. So your customer service and your product selection has to be spot on. In Virginia Beach, a mom might come in a buy one style of walkshorts in every color for her son. In Nags Head, we’re more likely to get a family where every person wants to take home a souvenir.

TransWorld SURF Business: Do you find yourself kind of being schizophrenic as you manage the two locations?

Jim Vaughn: I’m so schizophrenic it’s crazy. In Nags Head the best days are like today, when it’s 95 degrees and 100-percent humidity. By 11:30 all the beachgoers are looking for some place air-conditioned. If it’s a really nice day here — 85 degrees with no humidity — they don’t come in off the beach and it really slows business.

Because we’re in a strip-mall location in Virginia Beach, we kill it on nice days. So, I’m completely schizophrenic because when one store is doing great, the weather’s probably hurting sales at the other location.

TransWorld SURF Business: What percentage of sales does each category in your store account for?

Jim Vaughn: Girls’ sportswear runs close to a third of the business, and we’ve had a great year in men’s sportswear — that’s probably 30 percent. In Virginia Beach the shoe category is important, but sandals are almost all we sell in Nags Head. Surfboards are very important in both stores as well.

TransWorld SURF Business: What are some of your best-selling brands?

Jim Vaughn: Roxy, Volcom, and Lucy Love are the best-selling lines in the girls’ department. For men’s, Quiksilver rules, then Volcom for its image, followed by Billabong, Hurley, Ezekiel. We probably carry a dozen brands of surfboards, but Channel Islands is kicking butt, followed by Sharp Eye and JC.

TransWorld SURF Business: Have you been reordering a particular item that sold better than you expected?

Jim Vaughn: The entire Rietveld line has done great, and that was a surprise. I ordered a few shirts, and figured that if I didn’t sell them I’d take some scissors, frame them, and sell them as artwork. It’s funny, when the order first came in, I had employees looking at me like I’d totally lost my mind. But everything’s checked, and I’ve been placing reorder after reorder.

TransWorld SURF Business: What do you wish the surf industry would do differently or better when it comes to servicing retailers?

Jim Vaughn: Years ago my answer would be a mile long, but the industry is probably as good as it’s ever been. My main complaints have nothing to do with the surf industry. We have a hundred days to make a living, and we’re at the mercy of the Weather Channel.

TransWorld SURF Business: How so?

Jim Vaughn: If the Weather Channel says on a Thursday that it’s going to rain on Saturday, people won’t drive down to the Outer Bank
s. Last year, the Weather Channel said for almost six weeks that there was a 70-percent chance of rain, and it never rained a drop. That really hurts. It used to be that if you had four bad-weather weekends, you were behind the eight ball. Now the Weather Channel comes in and they do a seven-day forecast — which is never accurate — and it kills business even if the sun’s out.

As far as the surf industry, some reps work really hard and are conscientious, but others pay a lot of lip service to me and don’t do much. I’ll ask for an RA return authorization, and they’ll never get back to me. Even worse are the ones who say, “I’ll write you a backup order, and you don’t have to take it, and we’ll call you before we ship.” Then you start getting stuff, so you call your rep and he says he’ll take care of it. But he doesn’t, and a few weeks go by and suddenly the finance people are screaming at you, and you’re trying to explain what the rep told you, and they’re treating you like you’re a liar. Suddenly they’re saying, “We need this, that, and the other thing or you’re going to go into collection.”

There needs to be a better way to communicate, and the reps and the finance guys need to get on the same page. I’ve said it before: if every rep could work behind the counter for a week, I’d get my RAs a whole lot faster.

TransWorld SURF Business: Is it hard being an East Coast shop when the companies are all based on the West Coast?

Jim Vaughn: That’s an understatement. We’re not the bros. I can’t take my van up to the warehouse and load up with all the good products. The bros don’t pay for shipping — just for gas — and they’re picking and choosing the good stuff. We’ve ordered six months in advance, gone to the trade shows, and done everything right, and still I’d get broken sizes and broken and substituted colors. And if the product is hot in California, I might never even get it.

TransWorld SURF Business: What helps a brand most: magazine advertising, its team, or product quality?

Jim Vaughn: I can’t answer that, and I’ve been asked that countless times before. I think it’s a combo. But one thing is for sure, the surf industry needs another hero like Slater, but beyond that I don’t know the answer to your question.

TransWorld SURF Business: How has the economy affected your business?

Jim Vaughn: I get up every day scared shitless, and yet we’ve had a very strong year. We still have to get through hurricane season, but spring and summer have been great so far.

TransWorld SURF Business: Do hurricanes help or hurt business?

Jim Vaughn: Once again, I think the Weather Channel has become too powerful on the East Coast. The Outer Banks are on one of the main hurricane paths, and if you want to talk about schizophrenia, you ought to see me when a hurricane is coming. Half of me is jumping for joy and the other half has a gun to my head.

About five or six years ago, I wrote a heavy letter to Meteorologist John Hooke about how he was ruining my life. There was a hurricane 200 miles southeast of Florida, and they were talking about evacuating the Outer Banks. There was no business for a week, the beaches were deserted, and the weather couldn’t have been better.

The point is, you say “hurricane” and a tourist’s knees get all rubbery. Fifteen years ago, August was one of my best months. Now it’s not nearly as strong because people are afraid of hurricanes, and I think the Weather Channel is to blame.TransWorld SURF Business: If you look into the future, how do you think the surf industry is going to change?

Jim Vaughn: More companies will go public. The industry seems to be strong — it’s still got the image, and as long as it doesn’t become too mainstream and keeps it’s mystique, I think it will stay that way.

I think we should do more to support surf camps, surf schools, and surf lessons. The look on somebody’s face when they catch their first wave and stand up is magical. It says that now they’re a surfer for the rest of their lives — even if they never see the ocean again. That’s the stoke, and if we can keep the feeling of that first wave alive, our industry is going to do great.