Brands and retailers are paddling extra hard to stay afloat in the surf market, even though the look has gone mainstream.
The boardsports clothing sector has been riding a wave of popularity during the past decade, straddling the hardcore sports and fashion sectors with great success.
However, this month’s figures from Blacks Leisure Group revealed that its boardsports division, which includes the UK’s biggest boardsports chain, Freespirit, had experienced a drop in like-for-like sales of more than 15%.
While many observers have been predicting that the surfwear boom is coming to an end, boardsports brands and retailers have recently been working extra hard to make sure the credit crunch does not wipe out their customer base and sector.
The surfwear look – board shorts, loose denim and washed-out polos and T-shirts – has well and truly worked its way into the mainstream fashion sector – just look at Marks & Spencer’s hugely successful Blue Harbour sub-brand. The association with a lifestyle based around sport, sunshine and beaches proved a winning pitch to UK shoppers (at first mostly men), and the look has entered many a fashion retailer’s offer.
At the volume end of the market, the likes of White Stuff and Fat Face have built up a big business selling the active lifestyle dream to an older, more affluent shopper in towns across the UK.
Fat Face last month reported flat EBITDA of £26.6 million for the year to May 31. But the chain, owned by private equity firm Bridgepoint Capital, opened 12 shops during the period and more are planned. Meanwhile, White Stuff this week ditched plans to sell a minority stake in the business to a private equity firm. The company said it would continue to go it alone as like-for-like retail sales for the quarter to July 31 rose 15%.
However, independent stores – the grassroots and originators of the surfwear scene – are faring less well in these days of the credit crunch, which seems to have well and truly bitten. Although some smaller retailers in coastal towns are experiencing an uplift, as cash-strapped Brits decide it is cheaper to holiday at home, this has not stopped high-profile indies in surfing’s heartlands in the West Country closing in recent months.
These indie businesses are where brands build up their surf credibility. Dan Alliston, UK and Republic of Ireland sales manager for boardsports brand Oxbow, which now has about 150 doors in the UK, says: “We’ve had good benchmark retailers cancelling some orders. It’s only hardware that is showing growth at the moment. If people are doing the activity, then the equipment, such as the surfboard or the wetsuit, is what they need.
“If you just want the look, you can wait longer to get another T-shirt. And there’s a lot of competition when you can get the look in the likes of Primark.”
It is not just the smaller businesses that are feeling the strain. Alliston says that across the market, brands and retailers are battening down the hatches in preparation for tough times.
“They are very nervous, even in the more affluent towns,” he says. “The big guys stick to what they know. Some of the bigger brands have been discounting early, so I can’t imagine how they are going to hit their targets. Some UK brands, such as Fox, Animal and Reef, are holding their own a little better because they are not being hit by the strength of the euro, and will have a healthier order book.”
Alliston says that in keeping with the rest of the clothing sector, online operations are reporting growing sales. Etailers such as Surfdome and XSFashion have seen double-digit sales growth on the previous year. Retailers that were prudent enough to set up some kind of online operation attached to their store are reaping the benefits of the online boom.
The decline in the number of indies and the consolidation in the sports market – which has seen mid-sized chains such as Hargreaves Sports, Gilesports and Streetwise Sports all swallowed up by Sports Direct, and Allsports rescued by JD Sports Fashion – means that boardsports brands are putting much more focus on retail.
UK surfwear brand Animal has been following an aggressive store opening programme, which has seen it become one of the best-known brands and leading players in its market, not just in the UK but internationally, with a substantial wholesale network and a growing portfolio of more than 60 stores.
Managing director Kevin Keaney says sales in its standalone stores are up 30% like-for-like for the first 28 weeks of the year compared with a year ago. He says the combination of retail and wholesale is a good one if the balance is right, and it also ensures the brand maintains its credibility by having total control over brand presentation.
“We were a wholesale business first and then went to retail, so we have a brand mentality and are paranoid about not selling out,” says Keaney. “We need to protect the brand. We don’t sell in supermarkets or Argos. We want volume but not at any price. Expansion will be prudent and not at the same rate as a company such as Fat Face.”
The Animal business is more than 20 years old and although it is still chasing its core 18- to 24-year-old customers, there is a group of consumers who have grown up with the brand.
“There is an older, more affluent consumer buying into the brand,” says Keaney. In May we are launching a Classic collection in our stores, aimed at a guy in his 30s, which features more tailored styles. Boardsports clothing has crossed over into fashion – you can wear a jacket doing sport and it will still look good in the pub.
“One of the biggest advantages we have, compared with Quiksilver or Billabong, for example, is that we are a UK company. We’re a little sharper price-wise and offer good value for money. Also, we understand the UK customer, who has a different attitude in terms of product and style.”
As well as expansion at home, inter-national expansion is also part of the business plan. Animal has about 20 company- owned stores and the rest are operated by businesses which once stocked Animal as part of a multi-brand offer but have now become Animal franchise stores. The business also has standalone stores in Spain, Belgium, Dubai and Singapore.
Expansion into airports is also on the cards. Animal already has a shop at Gatwick, which Keaney says is doing very well.
Animal, along with other key surfwear brands, is also part of the portfolio at Blacks Leisure’s Freespirit chain. But the crossover appeal of surfwear labels means that distribution avenues such as Debenhams and John Lewis, where Animal is going into more stores, are also creating additional mainstream growth.
The current trading climate is undoubtedly not the best for anyone new who wants to break into the surfwear market. However, this has not stopped former Mambo marketing manager and international retail manager Brian MacShane from setting up his own label, Four Holes. The label has opened accounts in Japan, Scandinavia and the Republic of Ireland, and MacShane is now working on the UK market. He sees the current trading climate as an opportunity.
“Boardsports is not an easy task when times are tough. Independent businesses are closing down. Because we’re based in the UK, I’m hearing from retailers that they want something new. There’s complacency in the market. Some people are buying safely, but the best operators are looking for new young brands and I think we can take advantage of that,” he says.