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The Honolulu Advertiser
Posted on: Sunday, August 12, 2007

Hawaii surf industry riding big retail wave

By Greg Wiles
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Neal Kido runs his surfing enterprise and Web site from his parents' home in Manoa.

JEFF WIDENER | The Honolulu Advertiser

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Modern-day moondoggie

A profile from Scarborough Research, a consumer research firm owned by the Nielsen Co. and Arbitron Inc., belies the old notion of surfers as airheads or slackers not motivated by work or family.

63,125

or 9 percent, of O'ahu's 700,554 adults have ridden waves at least once in the past year. Nearly two out of every five surfers are women.

70 percent

are college grads or attended college. That compares to 58 percent of the overall adult population.

6 out of 10

surfers have full-time jobs. In the overall adult population, it's 52 percent.

24 percent

of surfer households have income of $100,000 or more. It's 20 percent for the general population.

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Hawaii news photo - The Honolulu Advertiser

Neal Kido runs a surfboard marketplace at www.surfboardshack.com. But the world surfing "industry" is much wider, with consumers who don't go into the ocean snapping up surfer lifestyle merchandise.

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As a surfer, Neal Kido has a familiar lament about the increasingly crowded waves at his favorite O'ahu surf spots. As a businessman running a Web site targeted at surfers, his refrain is different.

"It's just hard to surf with a lot of people," said Kido, honcho of www.surfboardshack.com, a free online marketplace for surfboard sellers that attracts up to 2,000 unique visitors daily.

"But if it weren't for those people I wouldn't have sales."

Indeed, Kido may be a victim of his own and the surfing industry's success. The Surf Industry Manufacturers Association last month reported that retail sales of surf/skate products climbed 14.5 percent from 2004 to 2006, when receipts totaled an estimated $7.48 billion. That's more than three times the sales related to the snow sports of skiing and snowboarding.

The 400-page report included Hawai'i in its surveys but didn't break out specific numbers for the state. But anecdotally, there is ample evidence the industry is on an upward arc, from crowded surfing spots to wave reports becoming a staple of evening television newscasts and collector surfboards selling for as much as $33,000 at a surf memorabilia auction last month at the Blaisdell Center.

Trends found on the Mainland, such as the emergence of a women's and teen female market, aging baby boomers staying with the sport and higher Web store sales, are happening in Hawai'i. So is the non-surfer market that's driven to some extent by the sport's higher media profile. This includes one of the bigger movie releases of the summer, Sony Pictures' "Surf's Up." HBO's "John From Cincinnati" series, revolving around Southern California surfers, debuted recently in Sunday prime time.

"It's just really popular right now," said Sean Wingate, managing director of the Triple Crown of Surfing, a trio of North Shore surfing men's and women's contests that are among the most prestigious in the world. Last year, more than 3 million unique visitors watched those broadcasts online during the six-week contest season.

"Everybody wants to enjoy that type of lifestyle, whether they live in the middle of Kansas or Southern California. It's the in thing."

Indeed, during the past decade the number of surf shops in Waikiki has about tripled, with some retailers having multiple locations (Town & Country Surf Designs has stores on Kalakaua and Kuhio avenues) catering to tourists seeking surfwear and other local mementos.

Nationally, the rise of surfing has spawned at least one billion-dollar company, California-based Quiksilver Inc., which sells under its namesake and Roxy brands. Moreover, Billabong International Inc. is on track to top the $1 billion sales mark this year. Surfwear sections can be found in department stores, while other non-surfing corporations have taken notice.

"Surfing has gone from a low-key rebel pastime for high school dropouts ... to just another healthy fun sport that everyone likes to do," said Mike Latronic, publisher of Free Surf magazine and producer of Board Stories Television. He's now selling up to 2,000 copies of his magazine at Barnes & Noble Inc. bookshops on the Mainland. That's in addition to the 20,000 copies of each edition he prints and gives away locally.

"There's a lot of competition in the surf media, and to try and sell a magazine for $4 or $5 isn't easy. But the interest in it is great."

In 2002, sports footwear maker Nike Inc. bought surfwear maker Hurley after identifying it as a growth opportunity. Seven years ago Abercrombie & Fitch Co., a New Albany, Ohio, clothing company, was struggling to increase sales of its maturing brand and hooked into the California surfer image with a new chain of stores, Hollister.

The Hollister chain grew to more than 390 locations nationwide during its latest fiscal year and produced sales of $1.36 billion. While same-store sales growth at Hollister has been uneven lately, Abercrombie's stock price has more than quadrupled since the chain's introduction. Abercrombie is considering expanding the brand to Japan.

"They clearly saw an opportunity," said Adam Borrello, director of marketing at Town & Country, one of Hawai'i's largest surf companies.

"There's a willingness to consume this lifestyle by people who have never seen the ocean. Whether you surf or not is becoming less relevant to whether you are a consumer of surf lifestyle products."

The Surf Industry Manufacturers Association said the industry shows no signs of slowing down, despite some earlier prognostications about the business hitting a plateau. U.S. retailing as a whole has had worries about how high gasoline prices and the slowing housing market might affect consumer spending.

Locally, industry observers said business hasn't had the robust growth of some parts of the Mainland, but that it has been solid, if not steady.

"Only recently have we become what I believe people refer to as an industry," said Borrello, noting his company has done well of late with international licensee agreements. "We have a positive outlook for the future."

Moreover, the state retains its hallowed status as the birthplace of the sport. It's also a place where big surf companies test new products and designs and build brands by sending sponsored professional surfers to ride O'ahu's winter waves.

"It's the image engine of the whole industry," said Duncan Campbell, co-owner with wife Jacquie of Cafe Hale'iwa, a North Shore eatery that's been featured twice on the Food Network as a waveriders' haunt. It counts famous surfers and Oscar-winning producer Brian Grazer among its regular customers. (Grazer in part is responsible for the sport's current popularity, having produced "Blue Crush," a 2002 summer movie hit about female surfers on the North Shore.)

"Without Hawai'i there's a big gap in surf culture and competitive surfing."

In the 1970s, Campbell was the co-creator of the Bonzer surfboard, a three-fin, double-concave-bottomed board that attracted a cult following. Since that time he's seen the business go through at least two boom and bust periods. He believes there are enough people surfing now to prevent the business from collapsing again.

As such, Campbell is opening a surf shop with his daughter Megan a few doors down from his Kamehameha Highway restaurant. It will take advantage of the growing industry and the current popularity of retro surfboards.

The 1,200-square-foot shop, Bonzer Front, will open in time for the winter surf traffic.

"I don't see that it's one of those industries that will go through one of those cataclysms again," Campbell said.

"It's a real thing now."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.

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