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.

10 Minute Boardshop is  new service that we ( one of the authors of this site ) have developed for retailers to get their board shops online more quickly.  10 Minute Boardshop allows retailers to quickly create basic sites for their stores by collaborating with their manufacturers.

Using this service, retailers create microsites for each of their brands. The microsite shows the products that the retailer sells for that one brand, and the site is search-engine-optimized for local searches. For example, the Creatures at Mitch’s Surf Shop shows all of the Creatures of Leisure products that Mitch’s surf shop sells.  You can see an index of all of our websites at index.minuteboardshop.com.

Using a site like this, the  surf shop owner can get search traffic without a lot of work, because most of the  content from the site is provided by the manufacturers, so retailers don’t have to locate product photographs are type in product information. Because the site includes products, unlike like business directory listings, consumers who are doing local searches for brands will find the sites.

10 Minute Boardshop is currently in private beta, and will launch publicly later in 2010.

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.”

This advertisement, placed in the San Diego Convention Center,  is for  the Seaport Village shopping center in San Diego. While the advertisement probably works well for the general tourists, it is conspicuously ironic when the convention happens to be ASR, the main west coast trade show for the Surfing industry.

Like virtually everything written by Trout and Ries, Positioning: The Battle for Your Mind is a foundational text; it expands on concepts the authors published in 1972 after a decade of work.

As legendary adman David Oglivy wrote in his 1971 New York Times article, outlining 38 things he had learned about creating advertising:

1. The most important decision. We have learned that the effect of your advertising on your sales depends more on this decision than on any other: How should you position your product?

Positioning has since become one of the most important concepts in marketing. Every strong company today has also created a strong market position.

Positioning: The Battle for Your Mind is the the most through and most accessible discussion of what positioning is, how it works, and how to use it in your business.The book is oriented toward advertising, but the concept of positioning extends far beyond advertising, even to the core operations of a business.

As we describe in our brief guide to positioning, a company’s market position is the idea that the company wants to associate with itself in the minds of customers. A company’s tagline often indicates its position: Fedex guarantees overnight delivery, Verizon assures us that its network is continually improving, and Miller Lite promises great taste in a light beer.

More than simply a guide to the concept, Positioning provides examples of a broad range of marketing challenges, including the positioning of companies, products, services, the country of Belgium, and even the Catholic Church. While it doesn’t provide detailed instructions for positioning and the writing style is terse (but pithy), the many examples all have an unexpected complication with a creative solution. And, since the book also serves to sell Trout and Ries’ marketing services, each example is notably successful for the client.

Although it does not demonstrate the rigor of other marketing books and the examples are most appropriate for the large clients that Trout and Ries serves, Positioning is an essential introduction to one of the most important concepts in marketing, and it should be required reading for owners of businesses of any size.

Many small, entrepreneurial retailers struggle with cash flow. Seasonal retailers in particular are confronted with the challenge of stretching their cash through slow periods and then coming up with the cash to build fresh stocks leading back into their busiest periods.

As a result, many small retailers find themselves having to finance these seasonal cash needs using a line of credit and having to secure the loan with collateral. Lenders typically require a personal guarantee from the borrower, but they also require tangible assets to be pledged as collateral. For most retailers, inventory is the only tangible asset significant enough to secure a line of credit.

These types of loans are frequently called asset-based loans. Most small retail loans are asset-based, secured by inventory. There are some retailers, primarily businesses that are a mix of retail and wholesale, that may carry significant accounts receivable balances; for those businesses, the accounts receivables may also be used to secure the loan.

In very simple terms, here’s how most asset-based loans work for retailers. The lender (often with the assistance of an inventory appraisal firm) evaluates the quantity and quality of the inventory. The fundamental question they want to answer is: "If I had to call this loan and liquidate the collateral, how much could I get for the inventory in a liquidation sale?" (This often infuriates a retailer seeking a larger line of credit. "My inventory is worth a lot more than that! Why are they valuing my inventory based on liquidating it? I’m not going out of business!!")

To do this, the lender segregates the inventory to exclude items or categories they don’t want to collateralize, sets aside any additional dollar reserves, and arrives at what is called an advance rate. An advance rate is the percentage of the cost value of the inventory that the lender will lend. Once the advance rate has been set, the amount that may be outstanding on the loan will vary with the amount of inventory on hand.

After arriving at the advance rate, lenders may further cap the outstanding balance on the loan in order to limit their exposure. In addition, they will likely impose a set of financial covenants that the retailer must meet.

For lenders, collateralizing the inventory secures the loan, but for retailers, these loans create a perverse set of incentives"incentives that are often at odds with prudent management decisions. Clearly, a retailer applying for an asset-based loan requires a cash infusion. It’s possible that they are short on cash due to ill-advised capital expenditures or cash withdrawals from the business. More likely, it’s because inventory has built up and is tying up valuable cash, meaning that some portion is excess inventory. Instead of encouraging retailers to address their seasonal cash requirements by tightening up inventories and freeing up that cash, an asset-based loan can actually exacerbate the problem and further weaken the retailer.

For a cash-strapped retailer, an asset-based loan looks like the way to go because it is a way to immediately generate much-needed cash. Once in place, however, an asset-based loan often leads to a problematic mindset: "The more inventory I have, the more I can borrow, and the more I can borrow, the more cash I have." Even worse, it can leave a retailer that’s fully drawn in a real bind: "I have to keep my inventory high (and run up my payables, if necessary) or I’m going to have to pay down my outstanding balance with cash I don’t have." At its most insidious, an asset-based loan can actually lead a retailer to decide not to address the very situation that created the problem in the first place.

For these reasons, the imperative for most small, entrepreneurial retailers is to self-finance as much of their seasonal cash needs as possible. The cash flow generated from each season needs to be used to internally finance the next season’s purchases rather than pay off the loans that financed the previous season’s purchases.

This is where a cash flow plan can really help alter the basic financial structure of the business. It won’t happen overnight, but if each season is planned to continually increase the ending cash flow balance, that will leave an ever-increasing amount of cash available to self-finance the next season. This incrementally reduces the amount that needs to be borrowed, until, in the best-case scenario, the business can ultimately completely self-finance its seasonal cash needs. If unavoidable, an asset-based loan should be narrowly viewed as providing a short-term window of opportunity to finally get the financial structure of the business back on a sustainable footing.

An asset-based loan may not start you on a downward spiral, but all too often it can exacerbate it by leading you to take your eye off the real work that needs to be done to correct the problems that have led to the cash flow crunch in the first place. It’s one thing to have a line of credit available if you need it, but it’s another thing entirely if you find yourself relying on it.

An asset-based loan may make sense if you are looking to invest the proceeds in a way that will genuinely grow your revenue. If, however, like many small, entrepreneurial retailers, you find yourself considering an asset-based loan to finance your seasonal cash needs, it should be a wake-up call that you have serious work to do on your cash flow.

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."

With a similar idea to  ecommr, which we profiled last month, the eCommerce Gallery presents well-design e-commerce websites. We haven’t  purchased  anything from the featured sites, but the site assures us that the criteria for inclusion involve   attractive design, search engine optimization and good consumer experience. If you are designing e-commerce websites, this is another place to turn for inspiration.

Now is the time when successful retailers set themselves up for future success.

The economic recovery is coming. Really. You heard it here first.

The only question is when it’s coming. So far this year, business certainly suggests that it’s still not here, but I can assure you it is on the way.

Actually, there is a second question, and it’s a question that all small retailers need to be asking themselves. When the recovery comes, will you be ready? Will you be ready to take advantage of all the breaks that appear when a down economy turns back up?

During difficult economic times, farsighted companies reinvest in their businesses and prepare to fully capitalize on the opportunities that present themselves when the customer comes back out of hiding. Consider Walmart. In the late ’70s Walmart was a successful midsized southern retailer. By the time the recession of the early ’80s was over, Walmart had built the infrastructure to expand confidently from its southern base into every corner of the country and, ultimately, around the world.

You may have more modest objectives, but the lesson remains. Are you preparing now for the coming recovery? When it arrives, will you be prepared to fully capitalize on the new opportunities?

Here are a few thoughts on what you can do to prepare your business for the coming recovery.

Update your customer e-mail list. There are many small retailers who have never found the time to update their e-mail lists. I know from experience. Many retailers are still sending out postcards to communicate with their best customers, a timely and expensive way to stay in touch. Now is the time to contact the customers for whom you have no e-mail addresses. When the recovery arrives, you’ll want to be able to announce its arrival.

Update your website. A new era is about to dawn, and when it does, you don’t want your website stuck in the previous era. Maybe it needs a full makeover, or maybe you merely need to improve navigation. Perhaps you need to put more of your items on the site to increase your units and dollars per order. Or maybe you need to provide more product information or rewrite your text for better search engine optimization. Whatever your website needs in order to be generate more business, now is the time to get after it.

Invest in your salespeople’s skills. For small retailers, the personal touch is becoming an ever more important point of differentiation with the competition, large and small. Now is the time to invest in the training programs to improve your salespeople’s selling skills and help them connect more effectively with your customers. Now is also the time to schedule those seminars for your salespeople to update their accumulated product knowledge so that it remains state of the art.

Go shopping. When business is good, it’s easy to get all wrapped up in it. Now is the time to break out of the cocoon and go shopping. Shop your competition, shop everybody else, and look for those innovative ideas that you can apply to your own business. Shop the market to include vendors you might have passed by or overlooked in the past. Do they have items or categories that you might have missed, or new items or categories that you need to jump on?

Review your assortments. There are very few clients that I’ve worked with who didn’t need to tighten their assortments. When times are good, assortments have a habit of growing. When there’s more money circulating, marginal items and categories appear to have more potential than they really do. Now is the time to carefully review your assortments, tighten them up where necessary, and cull out and liquidate the deadwood.

Improve the customer experience. When your customers walk through your door, what do they experience? Are you exceeding their expectations and surprising them with things they never thought to expect in the first place? What new services can you develop that can address your customers’ needs, perhaps needs they didn’t even know they have? What capabilities, expertise, and skills do you possess that you can leverage to further distinguish yourself in your customers’ minds?

Give yourself a makeover. Stores have a way of growing stale right under your feet. Walls get dingy and carpets wear thin. Lighting that you thought was fresh and bright several years ago just doesn’t illuminate the merchandise like it once seemed to. Display fixtures start to feel dated, and the cash wrap starts to show its mileage. As you look at your store, inside and out, what needs to be done to make it feel new, fresh, and exciting again?

Think outside the box. A recession like this one represents not just a natural retrenchment of an overextended economy, but also a certain staleness in thinking. In a macro sense, the current approaches are no longer as compelling as they once were. This is a moment for fresh thinking, for reinvention, reinvigoration. Come at it from your customers’ perspective: think in terms of reconnecting with your customer. Which products, services, and experiences would capture their imaginations as they begin to venture forth from their bunkers?

Through it all, of course, you’ll have to budget carefully for whatever you decide needs to be done and then continue to keep a close eye on your cash. It is a recession, after all. But now is the time when successful retailers set themselves up for future success. Now is the time when savvy retailers reinvent themselves to offer customers a fresh and compelling experience once the gray clouds have given way to blue skies again.

Retailing Together has been slacking on the posts lately, but for a really good reason. Rather than just talking about how retailers and manufacturers can work together online, we’re doing something about it, building software that will make it much easier for manufacturers to collaborate with retailers on Internet Marketing.

The core problem we are working to solve is that few independent retailers have high-quality websites that are valuable for Internet marketing. This deficit isn’t too surprising, considering that for an independent, retailing is a full-time job, leaving little time to learn about constructing websites and Internet marketing, must less for doing any of it.  The result is that when independent  retailers do have web sites, they are often not maintained and not promoted, so the site isn’t very valuable.

A poor website is a problem for a retailer, but also for a retailer’s manufacturers: when a manufacturer’s retailers aren’t promoting themselves online, they are also not promoting the manufacturer’s products online. So, manufacturers should be concerned about this problem as well, and we think they should be part of the solution.

Our solution is for the manufacturer to help the retailer with website development, maintenance and  promotion. Retailers get high-quality, easy to deploy and maintain websites, and the manufacturers get  a much broader web presences. Consumer’s benefit because they can find products online and locate the local retailers that sell them.

The software is going into demos in the next few weeks, and we will announce the demos here. We’re looking forward to your feedback on how we can make it easier to be an independent retailer.