Mitch’s has been a fixture in the San Diego surfing community since 1967. Mitch’s North, the second shop is located on Pacific Coast Highway in north Solana Beach, between Fletcher’s Cove and Swami’s surf break. They provide anything and everything surf to the surfing community, from the most famous surfboard shapes to a new board for today’s beginners. Mitch’s also carries blanks and board making materials, and design custom surfboards.

With a surfboard stock that includes shapes by Takayama, Gato Heroi, Campbell Brothers, Tudor (as in Joel Tudor) Rainbow, Bing, Christensen,Mandala and many more, plus a wide selection of blanks that attracts the best shapers around, “For surfers” absolutely defines Mitch’s surf shop. Walking into the shop feels like being a kid and entering a house of a real surfer. There are boards and blanks everywhere.

They carry a unique selection of brands like Ando, Matuse,  Mattix, Sanuk sandals and Creatures of Leisure traction and leashes. They have a fully stocked wetsuit department, even carrying 4/3 for women. Here is a shop that caters to the surfer, male or female, that surfs year-round.

There are two Mitch’s surf shops, both next to classic surf spots. One store is in La Jolla just up the street from Wind n’ Sea and one is in Solana Beach down the street from Swamis and Seaside Reef. While stopping in the store, it is not uncommon to overhear the employees talk of a recent session at their local spot. These guys really surf a lot, so they know their equipment and it is the perfect place to buy a board. Since Mitch’s is surrounded by giants, like Surfride and Hansen’s, I was curious how they stay afloat and if the Internet helps business.

Mitch’s employee, Juice, who is in charge of figuring out what the shop needs to stay up on current trends, answered core questions. He said his main goal is to keep it a core shop, basically a shop for surfers.

Do you have a website?

Yes. It is used mostly for sales. The in-shop soft goods like t-shirt are available on there. I have a lot of boards on there, but in the shop I can tell you more about the shaper and what goes into making the board and what kind of board you should get for your height, weight and ability.

How does the website do?

It does really good. We sell a lot of surfboards off of it.

Do you update the website regularly?

The website is updated daily. The blog is updated about once a week or we try to.

What is your blog about?

It chronicles what happens in the shop and the new items that we get in. We have a lot of blanks that we get in, a lot of different surfboards. On the blog we feature the newest arrivals like from Christensen and Mandala and Fine Line and all of those guys. It is on mitchsnorth.blogspot.com

What are your techniques for dealing with a bad economy?

We just try to stay true to what the shop originally was back in 1967 which is to keep it for surfers. We keep our prices as low as possible. It is still a surf shop and there are famous shapers who come in daily to buy blanks from us. It keeps our shop catered to surfers rather than tourists.

I noticed the brands you carry are a little more unique than your average surf shop. Can you explain that decision?

We carry a lot of the shaper t-shirts and Matuse. We do a lot of stuff with Ando (Andy Davis). That stuff is always going to be loved by the surfing community since most surfers like to stay more “artsy” with their stuff.

When Don Hansen originally started his surf board business on Oahu’s legendary North Shore in 1961, he probably didn’t expect that 45 years later it would be one of the largest surf and snow retailers in San Diego. But, in 1962, Don moved the small shack across the Pacific and landed in Cardiff-by-the-Sea, across the street from the Cardiff Reef, where his shaping business began to grow. Soon he was shipping boards all over the world, and eventually Hansen transitioned from a small surf shop owner to a major retailer. Today, Hansen’s carries over 700 surfboards and every beach related item imaginable.

With the poor economy still shuttering surf shops, even long-time shops like Star Surfing Co, we wanted to talk to retailers that are surviving the downturn. Since it is always wise to learn from the best, we visited Hansen’s to talk about business.

One key to Hansen’s continued success is their staff. Hansen’s employees are friendly, live the beach lifestyle that they sell and they are treated well, so most people work for many years, giving the place even more of a family feel. Employee Nicole Falco says, "I walk to work and I surf on my lunch break.

These relationships with their employees extends into their relationships with their vendors and suppliers. Longtime employee, manager and surfer, Mike Koffman said, “All of the companies work well with Hansen’s because Hansen’s has established a history of paying it’s bills. Once you build a relationship, companies will work with you.”

He also said that Hansen has an online business. He said, "Burton-Channel Islands Surboards is the only company that updates their product on our website automatically. When you look at their products on our site, they are very current"

Of course even a larger surf shop feels a down economy. Koffman reflects, “This is the first time in Hansen’s entire existence that we will not be up this year.” They are able to deal with it better than most shops because of their cash reserve and their experience on how much to buy. He says, “We are a little down money wise but margin wise we are buying accordingly. We watch inventory levels and keep margins decent. Since volume is lower we are not doing as much dollars. Hansen’s and bigger stores can fall back on their cash reserves to weather hard times.”

Economic uncertainties and advancing technologies have retailers wondering:  should they replace their stores with e-commerce sites? According to IBISWorld, an industry research firm, e-commerce and online auctions will see a 16.9% revenue growth by the end of 2009. However, a variety of factors are causing this growth. Could it be because retailers are leaving their stores behind and saving money by going online, or could it be because consumers are cutting back on gas and other expenses by shopping online? According to Raquel Guardia of BagItGirl Boutique, it’s both.

Guardia believes that leaving her storefront and going online was one of the best decisions she could have made for her business. At her physical location, she saw "a great influx of sales coming in.” However, after the economic downturn she decided to go strictly online and mobile, which allowed her to change her price structure dramatically. “The difference between our store compared to other stores is that we are able to sell below retail, and at 20 to 70 percent below retail we have new items that come in just like other stores do. So in this economic downturn we have actually seen a growth in sales versus a downturn in sales because of our price structure," says Guardia.

Of course, going online is just the first step in restructuring a retail business to turn a profit. BagItGirl Boutique is not only an online store, but also a mobile store. Guardia strongly believes that a combination of her online presence and community awareness has helped BagItGirl succeed. "Because we do charity events and private showings for women in their homes, we’re finding that we don’t have as much overhead," says Guardia. "So certain things that were associated with traditional retail we were able to get rid of. In this downturn retailers really have to look at things differently, including their square footage. An online presence, rather than a typical store front, is where I’m seeing the market going toward because people are not driving as much." Guardia believes the online fever is catching on, and even the wholesalers she’s working with have gotten involved. “I even got an e-mail from one of my wholesalers who is doing a webinar so their retailers will know what to do and how they can have a successful business during this economic downturn."

However, no matter how much technology changes the way she does business, Guardia has some traditional advice for other retailers. "The number one thing is to listen to your customer and always change it up. And two, you are the market: really do your research and get your name out there; that’s the most important thing. And remember customer service! Customer service gets the customer back to you."

Lean times drive savvy businesspeople to reassess every aspect of their businesses, and Brian Hill of Femme Athletic in Phoenix, Arizona, is a prime example. Hill designs the apparel, promotes his line to other stores, deals one-on-one with manufacturers and fabric suppliers, and markets his products online at http://www.femmeathletic.com. Hill started Femme Athletic on the campus of Arizona State University over nine years ago to provide high-quality sportswear for active women, and experience tells him that constant improvement is a requirement for staying in business. 

Hill knows exactly how to get additional support from retailers, line reps, and manufacturers to help cut costs. According to Hill, “Everyone from the cost side of things…[has] been more lenient with our terms….just giving us added value, covering shipping, adding extra catalogs in, giving us ideas…that can help us stay in business. It seems like all these people…are trying to help each other stay in business.”

His key to success is simple: organization. “Organizing really helped because we figured out what we might’ve done better last year and focused in on the things that were successful and that had the best margins.” Asked about the burden of “doing it all,” Hill replies that the economic downturn means that everyone needs as much revenue as possible.

A strong proponent of the Internet and technology, Hill believes that better automation is essential to Femme Athletic’s continued success. He’s also a proponent of networking, both online and offline. In addition to being Director of Phoenix Fashion Week (www.phoenixfashionweek.com) and founder of a local group called Fashion Arizona Meetup (http://www.meetup.com/fashionarizona/),  he uses MySpace, Facebook, and Twitter to increase his business’ online presence. According to Hill, the ability to operate from any laptop in the nation and do business with people around the world gives Femme Athletic an advantage in an increasingly competitive marketplace.

Hill’s advice to other retailers: "Keep your costs as low as possible. Keep your margins as high as possible. Sell as many of the same products as you can. Keep your offerings more narrow as opposed to wide, sell through as many times as you can, and keep your costs down"anything from paper products to fabrics to your online presence…even your payroll. Keep everything really, really tight. And then conversely, watch your cash flow."

Another “do it all” online retailer is Eric Torres, founder of Different Trends, a unique online store that showcases diverse handpicked designers and sells everything from gothic art to Ed Hardy-inspired apparel. Torres sees this economy as an opportunity. “I believe in my business,” Torres proudly states. “The more creative you are, the more your business is going to last. I got a ton of designers and a ton of ideas, and since I am small enough I can move faster than just about anybody else out there.” 

Like Brian Hill, Torres advocates a strong online presence. He believes that investing in the functionality of his website was one of the best business decisions he ever made. “I make it easy for people to get the products they want, and sales increase when businesses make shopping easier."

As professional as Torres is with his business strategy, he is like a father with his designers. The designers who meet his high standards have earned his respect; he connects with them. According to Torres, his hot designer right now is Misguided Creativity. “He is an ex-tattoo guy gone graphic designer…..his stuff is really impressing everyone in the store." Torres provides his designers with reports on the number of hits everyone gets, which spurs a friendly competition to be number one.

When it comes to handling all aspects of a business, Torres really does do it all. He manages a number of designers, runs a successful online store, organizes fashion shows, goes to trade shows, manages social media marketing, and volunteers with the local Fashion Weeks. His advice for conquering that long to-do list when outsourcing may be too expensive? “Start partnering up. If a retailer wanted to buy a couple of my products I could go as little as a dozen products…I don’t need to sell them 100. So I can bring traffic to their store and they can bring traffic to me….I mean, the little guys have to stay together and watch out for each other.”

Successful retailers are reevaluating every aspect of their businesses, paying special attention to inventory management. Why? Because improper planning leads to overstocking, heavy markdowns, and serious cash flow problems"mistakes that can be the death of a business in a poor economy. 

As a result, many successful retailers today ensure that inventory management is not an issue by keeping a close eye on their merchandise in addition to continually improving the customer’s experience. 

Hilda Bourdamis, owner of Classy Jazzy Boutique, understands the importance of high-quality, unique, affordable inventory. Classy Jazzy sells gifts and accessories for "divas and dogs""women and their pets. Hilda has seen much of her high-end competition fade away because of high-priced merchandise. "It’s easier for you to spend around $100 or $200 than spending around $2,000," says Hilda.

Classy Jazzy’s distinctive inventory keeps customers coming back. Hilda’s best sellers include personalized products and American-made products, because both have specific appeal to her customers. Hilda also uses in-store events and citywide partnerships to promote her store and move her inventory.  "I think it’s the events that bring people over here. I brought in so many charities, and I work with the city a lot. They help me because they want retailers to promote the street." 

Classy Jazzy has stayed ahead of market changes by quickly identifying inventory failures and disappointing trends. "What I’m not selling well, I put it on sale," explains Hilda. "For example, the extra-large bed for dogs didn’t do well because people don’t buy much for big, big dogs." Learning from her mistakes has helped Hilda make inventory choices more carefully.

Katie Wilson is another independent retailer who understands the importance of getting inventory right the first time. She owns Garage Boutique, a children’s apparel store in The Mix, a shopping center in Scottsdale, Arizona. The Mix focuses on stylish one-of-a-kind restaurants, trendsetting independent boutiques, and eclectic shops, all hand-picked by successful retailer Jennifer Croll. Garage Boutique is a "body shop" for kids, with an emphasis on international fashions.

Garage Boutique is considered one of Scottsdale’s most fashionable spots for children; Katie attributes their reputation to keeping fresh and trendy merchandise. "The biggest change that I have made is in offering domestic lines as well as ramping up our gifts that we sell in the store. So we are becoming a retail store that people can visit on a weekly basis for a birthday party, for a shower gift, or for a simple Valentine’s gift for their child. So what I’m trying to create is an experience for people to come in on a regular basis, not just when they’re looking for that holiday gear," explains Katie. "So three dollars later they’ve spent time browsing in the store. They can see the new merchandise. It’s a very comfortable environment for them, and it’s not intimidating, so they don’t feel a need to come buy something, but they can come in and there’s a lot to see here."

Katie has been very conservative with her spending by staying on top of Garage Boutique’s orders and taking advantage of free shipping and longer terms. "I’ve been willing to take in the goods but wanting 60-90 days instead of 30-day net terms," she says. Also, Katie has been a lot harder on vendors to make sure she’s getting quality service and quality inventory. According to Katie, retailers need to focus more time on inventory and vendor relationships, "I think focusing on landing fresh merchandise is key for retailers; moving things around so that if you’ve got something, even if you’ve only got your existing customers coming through the door right now, it looks different for them every time they visit your shop, even if you don’t have anything new."

Both Hilda and Katie understand that inventory is not just stocking your store with the latest merchandise and hoping it will sell. Understanding trends, focusing on vendor relationships, keeping store design fresh, and creating a positive shopping experience for customers are important details often missed by retailers today.

When Aimee Moss founded Bluebird Showroom in 2004, she didn’t know she was crafting a new direction for the apparel industry and its use of technology. But five years later, Bluebird Showroom is notable not only for the lines it carries and the strong relationship it has with its buyers, but also for its extensive use of Internet technology. Unlike many companies that use technology to insulate themselves from customers, Bluebird Showroom uses the web to build relationships, not to avoid them.
The Bluebird Showroom website has two parts: the public pages presenting the look of the lines they carry and introducing potential buyers to the showroom and its staff, and a private area serving as a virtual showroom for buyers. Between the two parts is a relationship between the buyer and the showroom that is established the traditional way"with phone calls, in-person meetings, and the occasional e-mail.

The public pages of the website are very well-designed, setting the proper tone for the showroom’s market niche. The excellent website design of bluebirdshowroom.com instantly establishes the feel of the showroom on the Home page with a slide show of high-quality images for each of the lines they carry.

The Collections page shows logos for 12 lines, and the Press page is a scrapbook that includes scans of offline magazines and screen shots of websites that have featured the lines they carry.

The most interesting public page is the About page, the first About page we’ve seen that is entirely a video. The video instantly humanizes the showroom owner and staff, giving buyers who have never visited the showroom or met any of the staff the feeling they are already acquainted. Because of the video, Bluebird Showroom quickly shifts from being a corporation to being a local business that is run by people the buyer already knows and likes.

The private pages are only accessible after a buyer has contacted the showroom and the showroom staff has gotten to know the buyer. These internal pages give buyers access to line sheets, order forms, photographs, and video of the lines: much of the material that other showrooms still communicate though mail and fax machines.

The showroom also has a MySpace page that has links to the pages of many of their lines and retailers.

Despite the well-developed website, Moss isn’t a technologist who puts computers before people. She prefers to build a business on relationships, so the website doesn’t give too much information away. Moss would rather use the site to start a relationship with the buyer, not to substitute for a relationship, and developing and maintaining relationships is the core of Moss’ business. “Relationships are the crux of any great showroom hoping to maintain their brands’ appeal over time,” says Moss, who sees herself as “a diplomat, a liaison between my lines and buyers.”

Bluebird has established its business on a combination of tradition and innovation, a critical combination in a 180-year-old industry that is just beginning to address the Internet era. In an industry as large and fragmented as the apparel industry, with 41,000 apparel manufacturers and 91,000 clothing stores, developing and maintaining relationships is a requirement for conducting business. Because they have to work between the manufacturers and retailers, the best line reps are masters of building relationships, and Moss and Bluebird are a great example of how to incorporate relationships with technology, and a pointer to the future of sales in the apparel industry. 

Lily Norman, owner of Anastasia’s, understands that a downturn in the economy does not mean the end of retailing. She believes that by maintaining a unique inventory and a confident outlook, Anastasia’s will be better able to survive compared to other retailers in the area.

According to Lily, “The economy has certainly slowed sales, and other stores are struggling a little bit. In comparison, I think that we’re doing all right. We have really unique products, and I think that’s one of the things that keeps us fresh and new in comparison to other businesses.”

Anastasia’s is a boudoir boutique that sells high-end European lingerie as well as luxury bath and beauty products, bedroom accessories, jewelry, and gifts. The buzz that luxury items will soon be the hardest hit during the decline has not fallen on deaf ears. Lily has made some big changes to make sure her business stays on top during the recession. A major focus has been paying more attention to what her customers have to say.

“I’m listening to my customers. My customers tell me they want unique lingerie that’s not too expensive….that’s what I’m searching for when I go to market or when I get online. So really, I’m listening to the customers, and I’m taking into account what they can afford and what’s important to them in addition to sticking with our mission for the shop, which is always to have very unique and very exceptional lingerie," says Lily.

For future trade shows Lily plans to be “more and more selective” due to slower sales. Being selective in her buying assures Lily that she will make “a good buy” rather than something that isn’t going to move. The inspiration here is to make sure her products are so unique that her customers will be willing to pay full price so she doesn’t have to discount them to get them sold.

It’s not surprising that Lily has strategically implemented this strategy. Her innate sense of originality is so strong that she actually hand-decorated her entire boutique, which looks as if she spent thousands of dollars on an interior decorator. Her advice for new retailers, or those struggling right now, is to network with their customers and their business contacts.

“I would say…talk to other people. The more I talk to other business owners, or the more I get to converse with my customers and get to know my customers as individual people, the more I am complimented about my business. That makes me feel good and gives me a sense of confidence and more energy…to make it better, to keep it going. The other thing is that the more I talk to other people, the more networking I get and the more referrals I get. You share business and ideas with people. You never know what doors are going to open to you.”

Watching inventory and implementing sensible prices that aren’t outrageously low or high seems to be a tactic that most retailers are following, especially Danica Coral, owner of Pink House Boutique.

During the 2008 holiday season, her obligation to keep quality inventory while staying connected to her customers paid off. According to Danica, “My customers have really come out and supported our store. For example, during the holidays they chose to shop with us versus with the big stores at the mall, with the chain stores. They really came out here and made an effort to support us.”

Keeping her customers pleased has been her major strategy in keeping her store flourishing last year and this year. “We’re continuing to look for great fashion, really trendy pieces, good quality, but we have to make sure that we keep our prices reasonable. And what changes are we doing? We’re just continuing to focus on what people want. We ask our customers what they want. They tell us what lines they want or what styles they want, and we just continue to keep up with what they’re asking for,” says Danica. 

However, marketing has also played a major role in staying afloat. While other retailers cut their advertising budgets, Dancia kept hers the same. She also started implementing a weekly e-mail blast to her customers. Danica strongly believes “you can’t stop telling people that you are around” because they won’t remember you, they won’t remember your store, and they won’t come shop with you. She uses that same approach when it comes to online advertising by focusing on social media as well as e-mail marketing. She looks for new customers through MySpace, Facebook, and Yelp, and she revamped the Pink House Boutique website to make it a better tool for her customers.

But the most insightful piece of advice Danica has for retailers is simply to work hard. As a first-generation American, Danica believes that watching her parents work hard is what has motivated her to be successful today: "You know, only you can make it happen for yourself. That means, learn as much as you can. Read books, visit websites, competitively shop, get informed, read the right magazines, and be creative.”

Beyond the gloom of relentless retail layoffs and abysmal revenue reports is a surprising find: retailers that are reporting solid sales in December and January. Retailing Together visited some of these extraordinary businesses to discover how they were bucking the recession. How are they generating respectable sales while nationwide retail trade sales are down 2.7% from November 2008, 10.8% below last year?  And why are some independent retailers calling this the best period of business they have seen in years?

Lisa Zajdel, owner of Sassy Sarongs,  is a confident business owner with a bright smile and a fierce dedication to her business who sees this downturn as an opportunity to grow her business, despite the fact that other retailers "might be retracting." 

Like most successful retailers, Lisa knows that recessions are part of a cycle, and good times follow the bad, but solid management is always a requirement. Rather than hunkering down, she’s changing her business to fit new realities and prepare for the recovery. 

"I’ve actually stepped up my advertising and changed my pricing strategy to be more promotional," reports Lisa.  She’s reaching out to bloggers, advertising on other websites, using Google Ad Words more, and expanding her online advertising. And her consumers are responding. While larger chains are struggling and laying off employees, many independent retailers have adapted, and some are thriving.

Lisa also recommends that other retailers be very careful with merchandising and avoid "overbuying products." Overbuying products "will slow your turn and also tie up your financial resources." 

Fortunately, manufacturers are changing their business practices to accommodate retailers’ new merchandising needs. Many manufacturers are lenient with canceled orders and are allowing retailers to buy more immediates, making small, frequent orders a practice that significantly improves retailers’ cash flow, if the retailer is good at moving the product. Lisa explains: “the manufacturers really understand the environment and have stepped up.”

Another major change is that Lisa is not going to trade shows this year. She’s asked manufacturers to send buyers’ packets, samples, and swatches for first and second quarter. She expects to return to the trade shows by next year to stay abreast of new lines and trends but will be saving both time and money during the downturn.

Patrice Sanders talked about similar struggles and challenges at her store, Stefan Mann. Stefan Mann, voted "Best Bags" by Phoenix Magazine in 2005, has been a fixture in Scottsdale, Arizona, for over 25 years, and the main focus of the boutique is to find unique handbags and accessories for its customers. Handmade inventory from Paris, Milan, Czech Republic, Italy, China, and many more exotic places decorates the store in the middle of the  el Pedregal outdoor shopping villa.

To owner Patrice Mann, this economy is nothing new. "When we came through 9/11 it took everything we had.  We had to buy things on credit and it was very very difficult. We did what was necessary, but at that point my husband decided that he never wanted to get into that situation again. So we established budgets and we are very grateful because we could see a recession starting last year around the holidays.”

By establishing budgets and controlling their inventory, Patrice developed a solid merchandising strategy that paid off when the economy soured, and merchandising has long been a strength of Stefan Mann.  The boutique was one of the first accounts for Dooney & Bourke, and Kate Adair, the designer for Desperate Housewives, will be bringing in her collection this year.

But most of their best lines come from suggestions from their customers.  "Our customer base"they are just so wonderful"they will drive up from Tucson or down from Flagstaff or from across the nation," says Patrice while smiling at her best friend and employee Victoria Macy.

Patrice has a stern warning for retailers starting out now: wait for conditions to improve before buying or building a store.  She compares buying or building a store in this economy to "buying a house with debt" because of the cost of construction and inventory. ”I think you really have to pay attention to that now, because people don’t have the resources."

Both Patrice and Lisa have demonstrated that independent retailers can survive if they adopt solid business practices. Like many successful retailers, they addressed the recession by reorganizing their strategies, increasing customer service, increasing their promotion budgets, and keeping close watch on inventory. Patrice and Lisa have decided to face this economy like any other business challenge and have found an opportunity for growth.

Swell.com is an online surf and skate retailer based in San Juan Capistrano. They primarily sell apparel but also have some hard goods. We’re interested in them because they have an excellent web presence.

Their home page is a familar surf website design, very similar to surf retailers like Ron Jon Surf Shop and other online retailers that cater to the same demographic. The design is comfortable, not challenging or edgy like skate shop Web design. The design doesn’t get in the way. 

What we really like is the content,  which not only has the traditional departments for “Guys,” “Girls,” and “Gear,” but also includes a Team section for their sponsored surfers, a blog, a side scrolling lookbook, and a digital catalog. 

The company also has a social media presence, including a Twitter account, @swelldotcom, and a Facebook page with nearly 1,500 fans. 

You can be certain that all of that content is not cheap, but would you expect a low-budget site to be able to buy the domain name “swell.com”? In March, the company, Swell Commerce, leased 34,000 square feet of office space for $1.6M over five years, so we can probably assume they aren’t a typical independent retailer.  Even so, Swell.com’s website is worth studying.