California Apparel News

Swim retailers weather a stormy economic year by keeping focused and lean—with an eye out for new opportunities on the horizon.

This might be the year swim retailers throw their rule books away.

The rough economy is forcing many swim retailers to re-examine the way they do business and even seek ways to reinvent their stores.

“It’s a new world. It’s a new reality,” said Dave Hollander, president and co-owner of Becker Surfboards, a prominent six-store surfwear chain based in Hermosa Beach, Calif. “We had to change our whole business model.”

It’s been hard for swim manufacturers, too, said Alex Bhathal, co-president of Tustin, Calif.–based Raj Manufacturing. “We are definitely in a new world,” he said. “The old ways of business aren’t working, and we are constantly challenging our team to think differently.”

While many in the swim business are hanging tough and waiting for the economic storm to pass, others are plunging into new business opportunities.

Becker Surfboards’ Hollander is experimenting with outlet stores. In April, he turned his chain’s Huntington Beach, Calif., location into Becker Basement. It’s a place where surfers on a budget can get 25 percent off full price for popular items such as boardshorts by RVCA and Hurley. “The place has the best margin of any of my stores, but it’s a work in progress,” Hollander said.

He said he is being besieged by calls from commercial real estate brokers hoping he will open more Becker Basements, but Hollander leaves the question in the air when asked whether he’d debut more of the surf outlet stores. He’s leery of opening any more stores in a battered economy.

For Angela Chittenden, the rough economic times seemed like the perfect conditions in which to open boutiques for Beach Bunny Swimwear, her fashion swim label. Her 4-year-old label has been on a growth spurt, she said. She has hired six employees since the beginning of the year. In February, she opened a Beach Bunny boutique in Scottsdale, Ariz. On April 7, she opened the 1,000-square-foot Newport Beach, Calif., boutique for her swim line, which is inspired by sexy lingerie.

“Some of my family thinks I’m crazy,” Chittenden said of her decision to open a boutique when many have been closing. “But sales kept increasing. This company has not hit its peak yet. If I scale back now, it wouldn’t grow.”

Chittenden is considering opening an overseas store in Dubai Mall, the United Arab Emirates retail center that, according to The Economist magazine, covers an area equivalent to 50 soccer fields. However, by spring 2010, she is also planning on adding a Beach Bunny line for women who can’t afford her $200 swimsuits or perhaps want something designed for more-athletic activity. Changing tack

The search for new ways to do business started when the economy first began to falter in 2008 and many consumers cut their spending. According to market-research company NPD Group, American swimwear sales declined 9.6 percent from April 2008 to May of 2009 compared with the same 12-month period in 2007/2008.

The decline took place just before summer swimwear’s traditional peak season, when many swim stores earn much of their profit for the year.

Diane Biggs has been working in swim retail since 1962. She said her colleagues have been struggling against unusually tough obstacles recently. While she said the profits for her Torrance, Calif.–based chain, Diane’s Beachwear, are even compared with those of the previous year, 2009 has been the toughest time for business that she can remember.

“We look at our numbers every week and ask, ’What’s going on?’” Biggs said.

The poor 2008 holiday season was tough enough for all retailers. But hard times continued for those running swim boutiques in California. Sales declined after the first of the year when the travel business declined. People cut down on their winter cruises and trips to Mexico and the Caribbean in late 2008 and 2009, Biggs said.

Later, California seemed to hit a cold snap. The cloudy days of Southern California’s “June gloom” season made the region’s weather cool. It put a damper on what retailers count on as the spike of spring-break sales, according to Julie Wilkinson, co-owner of Pilar’s Beachwear, a high-profile swim boutique in San Diego.

“We’ve had good weekends here and there,” Wilkinson said. “The first really good day was Father’s Day.” Father’s Day fell on June 21, and weather on San Diego’s beaches hovered around a nice 70 degrees, according to CBS8, the CBS affiliate in California’s second-largest city.

Tough economic times pushed Biggs into being even more of a stickler for details. Before this year, she perused monthly reports of what was selling in her 18-store chain. In the past six months, she has looked at what is moving every two weeks. Margins have become tighter. She’s reordering the top 10 percent of 90 percent of what was in her inventory, whereas in the past, she ordered the top 20 percent of the 80 percent of what was in her inventory.

Marketing has taken an added urgency in a tough economy. For 60-store chain Everything But Water, occasional trunk show/store parties have attracted more customers to the store. The first one was the chain store–wide “Girls Night Out” party in November 2008. Pilar’s Beachwear’s Wilkinson said she hopes to attract more business by sending more personal e-mail pitches to loyal customers and occasionally offering them store coupons of $20 off for every $100 spent at the store.

Everything But Water President Sheila Arnold said it is crucial for retailers and manufacturers to keep looking for that “it” product. “If it is something the customer does not have, they will respond positively,” she said.Quality, not quantity

If it looked like nothing was cooperating with swimwear retailers this year, specialty swim retailers could rely on this: Many women show no signs of ending their affair with fashion swimwear, according to Biggs. “Women who trade down are shopping in Target,” she said. “My customer is shopping for quality.”

Core price points at Diane’s Beachwear are $130 to $140 for women’s fashion bikinis. Juniors swimwear price points range from $80 to $100. The highest-priced item at Diane’s is a $500 bikini by Italian fashion house La Perla. Diane’s top-selling brands include L*Space, Vix, Sunsets, Beach Bunny Swimwear and La Blanca.

Becker Surfboards’ Hollander tells a similar story for men’s boardshorts. Consumer traffic shows no decline at his six stores. They’re still buying the top-of-the-line performance boardshorts, such as Hurley’s Phantom. But sales have dropped. Instead of buying three pairs of boardshorts, many of Becker’s customers are just buying one pair, he said.

However, success with e-commerce has carried over into these tough times, retailers said. “The Web site is a gift,” Biggs said. “It’s gotten new customers who can’t come to us.”

She did not give numbers to how sales have increased in the past year at her e-commerce site (www.dianesbeachwear.com). Hollander did not quantify how his company’s Web site (www.beckersurf.com) was growing, but he did say the potential of e-commerce continues to increase where physical stores have hit walls. “We figured out categories and sizes which people can’t get,” Hollander said of his e-commerce strategy. “We got a lot more to grow.”

Hollander said he thinks the swim industry is serving its public as best as it can. “You could have someone wear a clown suit on the corner and beg people to come in. But people are not going to spend more money. We got to survive on less sales. There’s only so much you can do,” he said.

But behind that sobering truth is a silver lining: A poor economy can teach valuable lessons, Biggs said. “When the economy picks up, business will run better than in the past,” she said.