SURFWEAR: On Mighty Sales Wave, Companies Run Risk of Wipeout : On Mighty Sales Wave, Firms Run Risk of Wipeout
Catch a wave and you’re sittin’ on top of the world. --Brian Wilson of the Beach Boys
Remember all those laid-back loafers who used to hang out constantly at the beach and lived to surf?
Well, some of them didn’t turn out so bad.
A growing group of surfers are running their own surfwear companies. Though most started on a shoestring, they now collectively generate sales estimated at more than $1 billion per year by plastering windsurfing lizards and sharks with shades onto skate- and boogie-boarding kids.
Nearly one-third of the estimated 300 to 400 intensely competitive surfwear companies nationwide are based in Orange County’s beach towns--creating a Silicon Valley of rad threads.
But the sales boom has happened so fast that the companies are afraid of losing touch with their original beach following, even as they are gaining the serious attention of the fashion world.
The industry leader in sales is 15-year-old Ocean Pacific Sunwear Ltd., but OP’s popularity and influence among Southern California’s trend-setting teens seems to have been dwarfed by a half dozen smaller competitors. On the beach, surfers are buying names such as Gotcha Sportswear, Quiksilver USA, Catchit and Maui & Sons.
The increasingly crowded field, not surprisingly, also has spawned some intense rivalry among surfing entrepreneurs who started out struggling together on the beach but now are intent on maintaining their market shares.
“It’s become very competitive,” noted Nat Norfleet of Norfleet Hawaii, an Irvine-based surfwear company that began in Hawaii. “We used to say, ‘Hey, let’s all go surfing together.’ Now we all go surfing alone.”
According to industry estimates, surfwear sales have been increasing nationally at the same time that swimwear sales have steadily declined for several years.
Surfwear--as opposed to swimwear--generally means sturdier trunks designed for surfing, as well as the clothes that go with the beachy, surfer look. A real surfer--or at least a kid who looks like a surfer is supposed to look--has to have his or her well-fitted surf trunks, warpaint-printed baggies and geometric T-shirts in blinding, off-primary colors.
The $1-billion specialized surfwear market is a growing part of the $15.9 billion spent annually for casual apparel, according to Monica Montavan, international trade specialist with the Commerce Department’s office of textiles and apparel. But surfwear dollars have become so enticing that major mainstream sportswear manufacturers such as Generra, Union Bay and Catalina have ventured into the market.
Bill Blass has introduced a surfwear line, and even such high-fashion designers as Armani and Donna Karan have recently designed bathing suits that, according to Interview magazine fashion editor Wilfredo Rogado, “were definitely influenced by the beachwear look.”
“It’s no longer just a fad,” noted Peter Townend, 1976 world surfing champion and advertising director of Surfing magazine, a publication that expects to book about $2.5 million in advertising revenue from surfwear companies this year. “There’s been a dramatic increase because of the explosion of beach fashion as a legitimate resource.”
Frank Podbelsek, an analyst with Wedbush Securities in Los Angeles, said surfwear fits in with the trend to more casual clothing. “The surfer conveys a sense of escapism. . . . That’s where the whole look gets its popularity.”
Another indication of the industry’s rapid growth was reflected last month at the Action Sports Retailer Trade Show in Long Beach, where more than 700 makers of surfwear and beach accessories showed off their wares, compared to just 185 partcipants six years ago when the show started.
The commercial activity is there now because even a kid in snowbound Pennsylvania these days wants to look like a surfer just as much as someone who lives next to a sunny beach.
Rick Kaufman of Sharon, Pa., for example, bought a surfer shirt for his son back home the other day in Costa Mesa’s Newport Surf Co. during a break in a business trip. The reason was simple: “The one thing he wanted from California was a surfboard to use in the (neighborhood) park pool,” said Kaufman. A surfboard was out of the question for the 10-year-old, so a shirt by Quiksilver USA was the next best thing, Kaufman said.
But surfwear’s new national popularity and commercial success isn’t necessarily viewed as all good by industry insiders.
The problem is that the surfer look has become so successful that surfer entrepreneurs are worried just as much about overexposure as they are about sales.
It’s cool to be different. It’s not cool to be wearing the same thing as any geek kid who shovels snow back East, industry executives explained.
So while most of the surfwear companies, in fact, get at least half their business from the Eastern seaboard, Florida and Texas, the veteran surfers who run many of the surfwear companies see the problem that it causes.
“If the kids see something a lot, it’s no longer cool. It’s a very difficult balance to maintain,” said Ian Foreman, president and founder of Catchit, a Tustin-based surfwear company. “You do your damnedest to prevent overexposure and at the same time to increase sales as well. You’re caught between a rock and hard spot.”
Know What They Want
It’s gotten so that executives at companies such as Catchit and its Costa Mesa-based competitors, Gotcha Sportswear and Quiksilver, brag about how few major retailers they sell to--rather than how many.
Young surfwear consumers “know what’s hot and if you don’t have it, they walk,” explained Debbie Elland, an active-wear buyer for 21 Bullock’s stores in California, Las Vegas and Scottsdale, Ariz. “They don’t just ask, ‘Where’s the surf trunks?’ They want to know, ‘Where’s the Quicksilver?’ ‘Where’s the Jimmy’z?’ . . . It’s become a lot more evident in the last couple years.”
The point was made crystal clear to some shoppers last weekend at Newport Surf & Sport, one of the “hard-core” surf specialty shops.
After an hourlong hunt, Beverly Davis of Newport Beach, who was there with her 12-year-old son, Paul, paid $113.44 for two pairs of shark-adorned Maui & Sons shorts, a third pair by Costa Mesa-based Billabong USA and one bright, geometric Gotcha shirt--all among the hottest names.
“And we would have bought more if they’d had it,” she said. “Don’t let anybody tell you (that only) girls are into fashion,” said Davis.”He (Paul) knows the brands.”
The importance of “hot” brand names has led Tustin-based Ocean Pacific Sunwear Ltd.--by far the leading clothier of the casual beach set--to create a new label, K-38, to appeal to the surfer specialty stores that abandoned OP when it expanded into major retail chains. K-38 takes its name from a surfing spot 38 kilometers south of the border in Mexico’s Baja California, that only an aficionado would know.
Ignored Key Surfing Stores
Among its competitors, OP’s experience is considered a prime example of how widespread success can hurt a surfwear company.
The company had sales of less than $59,000 in 1972 when it began selling shirts in specialty surf stores. This year, with products in department stores nationwide, OP expects international sales of $402 million, up 39.1% from last year’s $298 million.
What’s wrong with that?
Perhaps not much. But Bob McKnight, a surfer and president of competitor Quiksilver, believes that OP might have had annual sales of $600 million if it had not ignored Southern California’s trend-setting surfwear stores.
Major retailers, McKnight explained, check with specialty merchants about each brand’s popularity. “After he hears a couple times that the happening labels are Quiksilver and Maui, he starts watching it more and more. The next thing, he buys OP less and less. We’re in and they’re out.”
OP concedes that it is hard to serve a large consumer base and remain attractive to the hard core of the market. “I think there was, perhaps, a lapse in our attention to the grass roots,” said Jerry Crosby, executive vice president of marketing and advertising for OP.
Dick Metz, a surfer and co-owner of the Hobie Sports retail chain, offers the “breaking wave” theory as another explanation.
“The wave breaks in California. The line becomes very popular, so it crosses (Pacific) Coast Highway and goes inland. But there aren’t any surfing shops in San Bernardino, Pomona and Whittier, so the line gets sold by Bullock’s, May Co. and the Broadway,” Metz said. “By then, the wave is building and goes to Salt Lake, Denver, Cleveland, Chicago and New York. It goes east, but it’s already collapsed and flat in Southern California.”
Flat in Southern California or not, OP continues to thrive.
Firms Are Relocating
And the dangers of commercial success have not deterred an influx into Orange County of surfwear makers hoping to start their own trendy surfer looks.
Within the next four months, two more surfwear companies are relocating. Putting a West Coast headquarters and warehouse in Irvine is Instinct Sportswear, the trendy Alexandria, Va.-based firm founded by world-class surfing champion Shaun Thomson. And looking for a spot in Costa Mesa is Island Gecko Maui, a fledgling company with $600,000 in gross sales that began on Maui, Hawaii.
Like other surfwear companies, these two are opening offices in Orange County for several simple reasons: Their customers and competition are there, and, perhaps most important, so is the image they are trying to sell.
“We’re selling California,” noted retailer Kirk Cottrell, of Island Water Sports of Deerfield Beach, Fla. He doesn’t buy from East Coast surfwear companies because “California has all the hot manufacturing trends.”
Orange County is also nicely situated between the retail, financial and garment centers of San Diego and Los Angeles, the companies say. And it is the home of Surfer and Surfing magazines, two publications for surfers--and surfer-look fans--that are like Vogue and Women’s Wear Daily wrapped into one. Their coverage can make or break a product line.
And, of course, the beaches are there for breaks and before- and after-hours visits.
Began in Orange County
At the Quiksilver warehouse, for example, life-sized posters of surfers adorn the walls, and there are surfboards scattered around--for use during breaks. Everybody wears the company clothes.
“At lunchtime, when the whistle blows, everybody goes surfing,” McKnight said.
The Orange County beaches, after all, are where the industry began. Waves of water brought waves of people to Huntington Pier, Trestles, Cotton’s Point, Salt Creek and Laguna’s Brooks Street beach about 25 years ago, along with a national craze that included the surf fantasy songs of the Beach Boys.
Now, members of the original Beach Boys, like a good number of their contemporaries at the beach, are among the partners in a Newport Beach surfwear company that licenses the Beach Boys designs.
How the surfing fad first flooded the United States is anyone’s guess, but there are legends.
Some say surfwear began when a sail maker made the first pair of surfing trunks from long-lasting canvas. Others claim that the design was imported from Hawaii, where a one-legged Chinese tailor sewed surf trunks for visitors from the mainland.
The surfwear industry left the cottage when surfers themselves started their own companies, usually with little money. The industry pioneers included Hang Ten, Lightning Bolt and Ocean Pacific--all widely known, even if not as cool as they once were.
“We were living off the land,” recalled Metz--”maybe taking off surfing to go to work.”
Ocean Pacific, started by two surfers out of a small shop in Encinitas, gained popularity in the 1970s with beltless, corduroy shorts with pockets.
“Anything we got from them was like gold. It went flying out the door,” said Paul Heussenstamm, owner of Newport Surf & Sport Inc.
Successful Operations
By 1981, other now-major surfer-run companies had entered the field. Some of the most successful include:
- Gotcha Sportswear, which has gone from sales of a few hundred thousand dollars in 1979, its first year, to an expected $70 million this year, according to President Mike Tomson, a former fifth-ranked world professional surfer. The company caters to the hard-core surfer but also has expanded its line to attract the “weekend warrior” with trunks, walking shorts, jackets, pants and T-shirts.
- Catchit, a six-year-old company founded by Ian Foreman, who started out as a distributor for Gotcha. Foreman began Catchit in his garage, selling surf trunks, walking shorts and T-shirts. Catchit has since expanded into sportswear for boys and toddlers and created a separate women’s line, Haute Rush, that has quickly emerged as one of the hottest in the business. The company went from $250,000 in sales in 1981 to an expected $20 million this year.
- Quiksilver USA, which began 10 years ago when Bob McKnight, aformer USC student, “thought it would be a good way to stay near the beach and go surfing.” McKnight and partner Jeff Hackman, a longtime professional surfer, bought the American rights to an Australian surfing trunk, bought some fabric on credit and started selling their product door-to-door. They now run a company that had $18.6 million in sales for the fiscal year ending Oct. 31.
Quiksilver went public in December, with eight shareholders selling a 50% stake in the company for $16.25 million.
- Maui & Sons, an Irvine-based company begun five years ago by Jeffrey Yokoyama and Steve Prested, started making madras plaid shorts. The company is projecting 1987 sales of about $19 million. So far, Maui & Sons has avoided selling to major chains, with the lone exception of Macy’s in San Francisco.
Others that have done well are Billabong, which first became known for its Australian-made surf trunks and Jimmy’z, which sells pants with Velcro waistbands and flies and is mostly known for its slogan: “E-Z in, E-Z out. . . . The sound of Velcro opening is the mating call of the ‘80s.”
Analyst Podbelsek said the market will continue to expand for the next year or so, but then will come an inevitable shakeout. “A core market will remain,” he said. “It will be much smaller, but it will be there.”
Surfing entrepreneurs have also come up with some innovative marketing tactics on their own.
One method has been to diversify product lines. Catchit, for example, has added a line for skateboarders called SK-8. Ocean Pacific has developed a Newport Blue line for older customers aged 24 to 40.
And most surfwear companies make sizable profits selling fleecy, winter jackets and stickers with the company name.
Promotion is usually in the form of sponsoring surf events and star surfers or teams of surfers who use surfboards emblazoned with company logos.
Gotcha, for example, this year plans to spend $500,000 for surfing contests and the endorsements of 70 surfers and skateboarders. Ocean Pacific spends about $300,000 per year. Of that, a reported $100,000 goes for the endorsement of Tommy Curran, the world’s top-ranked surfer.
The idea is to convince young consumers that the companies are serious about surfing. The strategy seems to work.
The companies and the clothes that 19-year-old Jimmy Wilson wants are those by “people who are really into surfing and who aren’t fake.” Wilson, during a shopping excursion with four friends at Newport Surf & Sport, said that is why he looks for companies that sponsor surfers. “They should be legit and they should be around for a while.”
And, of course, legitimately cool.
