SUP Business on THE PROFIT this Tuesday

[ericmichaels]

I have been very curious about the business of SUP/Surf shops. I took note when West Coast Paddle Sports in SD was up for sale recently but I was not in position to look at it in depth. I have been curious if a SUP/Surf shop is a good business to be in. The popularity is increasing but I wondered if the easy money had already been made but I wasn't sure.

I might have my answer coming up. About 2 weeks ago I walked into my local Paddle Sports store in Chicago called Windward Sports to look at the SUP paddles they had in stock. I had bought a paddle from them previously but never a board. They have a store in the city and one in the North Shore suburbs and have been around about 20+ years. They used to be big in windsurfing stuff (hence the name) but had transitioned to more SUP in the past several years.

I was shocked to walk in and see no boards of any kind. No paddles, no wetsuits. I didn't even see skateboards which they were known for but looking at their website they are still carrying skateboards and snowboards. It was all surf/skate style clothes. The whole store. I asked and they said no more SUP at either store. I didn't even bother to look around but I really didn't notice the GoPros they used to have or any of the other products I remembered. Just apparel. I guess Chicago isn't the hottest SUP market but they had no other competition outside of West Marine, and we do have a big lake and a big boating market. Over the years, I had been frustrated that they never really ran demo days or held races or evening group paddles, or made it easy to try boards or paddles. I always thought they could have done well with those. Maybe, maybe not.

Anyway, I thought it was weird. I remembered that they had closed for "remodeling" for a time over the winter but hadn't thought that very unusual. I knew they had gotten new ownership several years ago from the original windsurfing guy. Then I saw an ad on CNBC that Windward Sports was the subject on the next episode of THE PROFIT and I realized what had happened. Marcus on the show is famous for going in and wiping out low margin products and pushing high margin items....so I kind of got my answer I guess on the economics of selling SUP's. Anyway, I am looking forward to the episode to learn more but am kind of bummed out at losing my local shop.
http://www.chicagotribune.com/bluesky/originals/ct-bsi-profit-windward-marcus-lemonis-20170607-story.html

[SaMoSUP]

Should be interesting. Be curious to see if Marcus picks up on the community aspect of SUP and board shops. The shops that are still in business around my area are the ones that have built a community around the sport or have a lot of money behind them. Otherwise it's all about Groupon customers. I'm skeptical about the show since they call it upright paddle board.

[surf4food]

There are two other SUP business in Chicago that do both demos and lessons.
Chicago Paddle Company:
http://www.chicagopaddlecompany.com/
SUP Chicago:
https://www.chicagosup.com/

The overall growth of the sports seems to have plateaued a bit and the Midwest didn't quite turn out to be the so called "sleeping giant" the SUP industry was predicting (or trying to create), but I have a feeling Windward Board Sports may have shot themselves in the foot with this decision.  I know a lot of people who live in the Chicago Area and while not all of them SUP, all of them at least knows someone who does.  Chicago is a very metropolitan city with a large physically active population (weather permitting).  Snowboarding is on the decline (though it's not going the way of the dodo bird) so the shop is concentrating on that just seems odd.  Then again maybe there's just too much competition from the two other shops I listed.
Surf apparel has really dropped in popularity even in areas that large surfing populations.  I would imagine even more so in the Chicago area, but what do I know? 
All that being said, SUP shops that do well still don't make huge profit margins.  Like SaMoSUP said, it's all about building a community. Too bad Windward didn't take that into consideration. 

[krash]

Will watch it.. but have watched that show before and its usually a struggling business that really needs help and most are bad decisions made by the owner that put the business in the position in the first place. The idea/episode would not have made the airing had the dude Marcus is in the business of making $$$, and he does not care that owner may want to stick it out and try to make it based on his personal opinions.

[surf4food]

Here's an interesting interview with the owner of Chicago SUP from last month:  http://voyagechicago.com/interview/meet-ian-jacobson-chicago-sup-lincoln-park/

[ericmichaels]

Yeah, I was thinking surf shops...those other 2 businesses are just rental places.  They don't carry new, high quality equipment and offer demos of those. They will let you rent a board. Good for them, but it doesn't promote the local SUP community. I think one of them does host a very small charity race the past couple of years.

And they do say they hold group paddles, etc but it is not a community building thing, it is a business thing. They want to still charge me the $35 if I bring my board and want to paddle with someone. And because it is geared toward renters, they cancel the paddle at the slightest weather.

That is not what I am looking for. I don't want to paddle with newbie renters and often tourists....I want to meet other Chicago people really into SUP.

[surf4food]

Yeah, I was thinking surf shops...those other 2 businesses are just rental places.  They don't carry new, high quality equipment and offer demos of those. They will let you rent a board. Good for them, but it doesn't promote the local SUP community. I think one of them does host a very small charity race the past couple of years.

And they do say they hold group paddles, etc but it is not a community building thing, it is a business thing. They want to still charge me the $35 if I bring my board and want to paddle with someone. And because it is geared toward renters, they cancel the paddle at the slightest weather.

That is not what I am looking for. I don't want to paddle with newbie renters and often tourists....I want to meet other Chicago people really into SUP.

That's too bad.  Hopefully someone will open up a proper retail shop with a focus on building the SUP community in Chicago.

[surf4food]

Will watch it.. but have watched that show before and its usually a struggling business that really needs help and most are bad decisions made by the owner that put the business in the position in the first place. The idea/episode would not have made the airing had the dude Marcus is in the business of making $$$, and he does not care that owner may want to stick it out and try to make it based on his personal opinions.

That seems to be the case with Windward:  http://www.cnbc.com/2017/06/08/first-look-marcus-tries-to-keep-windward-baordshop-from-going-downhill.html

I'm guessing Marcus knows little to nothing about board sports and board sport culture, and that can be a liability on it's very own.  Will be interesting to see how his investment pans out in the long run.

[PonoBill]

Unquestionably any businessperson looking at only profit, analyzing a 3500 square foot store in an urban environment would never devote serious space to real sports equipment of any kind, especially SUP. You might hae some representative stock to take advantage of the "real" cachet, but basically, you'd focus on stuff that goes in a bag and walks out the door with at least a 50% market--generally better. End of story.

Out in the burbs, or in less expensive retail environments, you might make a go if it while the equipment is new in the market and hasn't shifted to big box and online. But later on the secondary market nukes to top end products, and the bottom end products come from big box and online. True for any equipment company. You have to adjust to that reality. The reason the women's section was so small was NOT that it's some guy buying the stock, it's because the early adopter equipment market is male. They didn't follow the shift to lifestyle, so they're sucking wind.

[robcasey]

A few things that strongly affect success in the sup businesses that we've seen..
1. Online or costco. the majority of buyers of sup are not the people we see on this forum or at the races, maliku, etc.  They're everyday joe's and jane's with/or without families. They want a deal not a $3k SIC or Allstar.  Weekly in Spring-Summer people ask me (or I overhear) "Do you think that Costco inflatable for $495 that comes with a paddle, bag etc is for me?  I've heard it 2x this week already (it's only tuesday).  So that's the volume sales. No loyalty to shops or the local market. 

I tried to sell a few boards last year. Students told me to hold boards for them but ended up going to rei (online), amazon or costco for a deal, even though our boards were actually cheaper. Backlash to online is you can't try before you buy so there's a lot of returns.

If you're a brick mortar shop, your best bet to sales is building a strong community so folks respect your input and advice and only buy from you. In Seattle UrbanSurf has done a great job doing this by offering weekly summer races (40+ attend), good advice, they have a race team and good gear. At my monday night race last night, 90% of the participants have starboards they bought from Urban (or from friends who originally got it at urban).  I tried to sell Imagine's last year but the loyalty to their shop was so strong.. well long story I chose not to go the retail route. 

2. Don't just sell sups and find winter/off season business.  Urban's owner and many of their employees are kiters, so that's their winter backup business. And they sell traditional surf boards so that crowd comes in as well.  Another local shop is busy doing kayaks/sup in summer (and rentals) but also has a busy ski shop, ski outfit/repair and ski bus in winter. Urban also sells summer swimwear which does well in winter for those going to warmer places on vacation. 

3. Lastly, i've seen businesses go out of business for scaling too quickly on day one.  One guy is in a small town on an island and started out with a huge trailer with big logos on the side, 20 boards, paddles etc - but had no initial business.  He priced low for his market going for the groupon or volume model but as a summer only business, closed a few months ago, only 3yrs in.  Another started small in a tiny rural retirement town and is now closed as he got little business. And one big kayak/sup rental place in seattle did stellar for years, even with 1k people days in summer. but is now slow as we're having cooler weather. their only clients were sunny day folks. they have no wetsuits and didn't provide training or insight on cool day paddling. they're currently 50% down and have brought me in to offer sup/kayak instruction (previously they were only rentals and tours with minimal instruction and no retail).  REI stores would sell more but they don't train their sale staff, as far as we can tell. so the more experienced local paddlers generally don't buy there. A shop that does do well and advertises on here, Blue Planet, is in a tropical destination, has his own line of boards plus others, has a strong community, good instruction, well trained and knowledgable staff (weekly dw group sessions) etc - super busy shop. 

[PonoBill]

Oops, I meant 50% markup, not market.

[surf4food]

Well I just finished watching the Profit episode.  Definitely interesting.  The failure of the Highland Park location (despite it's affluence) based on the average age of it's residents is defiantly a contrast to San Diego where it's very common for people over 40 to to snowboard, skateboard (at least longboard) and of course SUP (which I would think would be a very popular activity in that area).  Illinois is not California.  If snowboarding is just too "juvenile" for HP what about skiing?  So now that location is closed and it's all consolidated back to the original downtown location.  It's too bad the decision was made to drop SUPs all together.  That could pretty much be a devastating blow to the SUP scene in Chicago as far as retail and having  good boards available for those who want to purchase one.  Hopefully another business will fill that void.  I know there's an REI in Lincoln Park but do the carry boards? Perhaps your right ericmichaels about SUP just not being a big think in Chicago.

[surf4food]

I also found it interesting how Marcus was perplexed that a "boardsport business" would be at a boat trade show.  It was obvious how unfamiliar he is with the sport (and not really that interested in it) because he would otherwise know that a boating trade show, (especially in a landlocked non surfing city) would be exactly the appropriate place to promote a paddleboard business.  That being said, the set up was rather lame.  Overall I respect him because I think he really did make some good decisions despite his unfamiliarity with "action/extreme" sports.  I wish the shop well but I'm still bummed they decided to drop SUP altogether.   

[SaMoSUP]

I hope the SUP manufacturers watch this show. Marcus gave a really good outside-in perspective.

I thought it was funny that although Windward dropped their SUP category, they kept a Naish board as a lighting fixture for their remodel as if it were a relic of the past.