Our Favorite Interview of the Year
It’s usually hard to pick the favorite interview of the year.
By when I thought about 2021, one immediately came to mind – my talk with Wavelines Owner Tim Kirkpatrick.
He’s a single door operator in inland San Diego and I spent a few hours with him in the spring walking the store and talking about business.
Tim gave a very honest description about what it has been like to be a core retailer during Covid – especially a smaller retailer who does not have a big staff. The crazy demand, the product shortages, the shipping problems, the lack of visibility – the wild mix of both great opportunities and real challenges.
I followed up with Tim this week to get an update on how the year turned out for him and how some of the issues we talked about have evolved.
Here’s a quick update, followed by a repost of the original interview, which first ran in July.
Is 2021 going to beat 2022?
Tim Kirkpatrick: Yes, 2021 will beat 2020, mostly because we were so far ahead by June 1 even as things normalized during summer and fall.
June through October was up from a normal year but down from 2020, as I expected. But we were up slightly for November vs. 2020 and we are currently up for December, which surprises me since last December was my best month in my 28-year history.
Have you made any changes as far as what brands get wall sections?
Tim Kirkpatrick: No. My bandwidth for anything other than essential business is exactly zero. Dealing with inventory and day-to-day issues takes up all my time.
Have you expanded any brands significantly?
Tim Kirkpatrick: Vuori has been a great add this year, and we brought in a couple small brands during summer that have proven to be worthwhile such as Seager and skate softgoods.
Are Boardriders’ shipping problems better? Are O’Neill’s wetsuit issues better?
Tim Kirkpatrick: Boardriders improved steadily all summer and fall and in December they have been crushing it. Re-orders are arriving in three to four days.
O’Neill Wetsuits is still upside down in terms of inventory and visibility, but I pumped the breaks this fall on my own inventory buys. Surf hardgoods really work for me in the summer in a typical year, and the return of school and sports created less demand for an inland shop like me in the fall and winter months in 2021 compared to when school was remote and sports were cancelled.
How is the snow season going so far?
Tim Kirkpatrick: The snow season is awesome. A lot of product is running late or was cancelled, so I will leave tons of dollars on the table. But it’s hard to be disappointed since we are lucky enough to be in an industry that has benefited from all of the current madness.
Long story short, I’m having a great start to the season. I expect it to be a banner year, it could have been better if everything fell in line, but I’m happy!
Original Story Posted in July 2021
THE REALITIES OF CORE RETAIL AT A TIME OF HUGE DEMAND
When SES toured stores in San Diego in May, one of the interesting conversations we had was with Tim Kirkpatrick, the owner of Wavelines Surf Snow Skate.
Tim has deep roots in the industry and started working as a teenager at Clairemont Surf Shop with coworkers such as John Wilson and Jimmy Schulte.
Clairemont owner Steve O’Connell helped Tim open Wavelines 27 years ago, essentially owning the shop until Tim learned the backend of the business and bought it from him. While the stores aren’t officially connected anymore, Tim remains very close to Steve’s son, Danny, who has taken over Clairemont.
I have talked to a lot of retailers about the challenges of getting product these days and dealing with shipping issues, but Tim provided the best description yet about what that means for a retailer on a day-to-day basis – especially for a smaller store with a small staff.
Wavelines is located in a busy shopping center in inland North County, San Diego, about 20 minutes from the beach. It’s an area with high incomes and lots of families.
The store has a large skate business because it’s inland and wetsuits and fins also sell well all year. Surfboards typically sell well in the summer months. However, last year, all the surf categories were on fire the whole year.
“Typically surf just stops out here when kids go back to traditional sports and school,” he said. “But last year, we were selling surfboards and other surf hardgoods in a season when we never used to. And then as soon as snow landed, people were amped because they didn’t get to go the year before. It was all systems go.”
All of that means that Wavelines had its best year ever in 2020.
“It was our best year by a mile – and we were closed for six weeks,” Tim said. “And the idea that we were chasing product from July last year until now – it’s crazy and a blessing at the same.”
The Shipping and Inventory Nightmares
All those sales meant that he needed a lot of goods to sell. That became Tim’s biggest headache for several reasons, including a surge in global demand for surf and skate, global supply chain issues due to the pandemic, the internal warehouse problems that some companies had, and the limited space in his 3,500 square foot store.
One great example Tim gave about how he has changed his buying patterns is around a staple like Independent trucks. Normally, Tim would keep 100 trucks on hand for his skate section. Now he keeps 1,000.
“We were out of them for half of last summer, which means I have PTSD,” Tim said. “So, once they said, ‘We have Independents back in stock,’ I’m like boom, let’s do this. I’m not going to run out again. Before, with so many categories, you could order something on a Monday, and it would take three days to get here. Now it could take a month or more. It was embarrassing to me that I didn’t have a six-foot leash to sell. I didn’t have a wetsuit bootie all freakin’ winter. There’s certain categories that you just feel stupid you don’t have even though it’s out of your hands.”
Tim is only making big bets on things that are his top-selling, staple product. And because he doesn’t have a large stock room, he had to rent an off-site warehouse to store the extra goods.
During the pandemic, Tim really came to love smaller brands who were able to ship efficiently and accurately, brands such as Rainbow, Vissla, Slowtide and protective gear brands such as 187 and Triple Eight, which all really came through for Wavelines.
“Brands that had actual human beings in their warehouse filling the orders could actually turn product and get it out,” he said.
“The other brands are so much work. With Boardriders, you get one lifeguard hat in a box. It’s $14 to ship the box. Then you get three more boxes the next day for the same order. Then you’re missing a box. It’s just the sheer labor that’s involved for me. You get an invoice the night before the product lands. But they’ll be two units on an invoice, and you’ll get like 14 invoices of two units each, all from the same PO. It’s just the paper trail, the freight deductions that we have to take when we pay our bills. I really feel badly for their poor customer service people and their reps.”
While Boardriders seems to have had the worst internal problems as far as getting product out of its warehouse, other companies are having supply chain challenges mixed with unheard of levels of demand that sometimes can make Tim’s daily work life a trial.
He gave another example – O’Neill wetsuits.
“You’re trying to write orders and forecast what you’ll need three months out, but you’re getting back orders from last summer and stuff’s coming at you from both directions,” he said. “You have no visibility – you are making decisions with no knowledge. I’ll have someone tell me, ‘We’ve got a ton of wetsuits in the pipeline. You should be getting a big hit this week.’ Then I get like four suits. Or I’ll ask, ‘Where’s that special order I made three weeks ago?’ And they’ll say, ‘You probably won’t get it for a month or two.’ Then it comes two days later. Not every company is that upside down, it’s just an example of how hard it is to make a buying decision. You’re just flying blind.”
That said, Tim is very grateful that strong sales have continued so far in 2021. The first half of the year has gone so well, including a great snow season, that Wavelines might beat 2020’s spectacular numbers by the time the end of the year rolls around.
“The first part of the year has been that good,” he said.
The Expansion Dilemma
Given the store’s space constraints and the strong sales right now, I asked Tim if he would ever expand. He said he never thought about it until this year.
“Rent is expensive out here and we had a tough time in 2008 like everybody else,” he said. “Since surviving that, my game plan has been to not get cocky. While it would be nice to have more space, now I have more storage. And the categories I’d like to grow, I don’t think the party is going to last forever. This fall, when regular school is back, things will probably normalize somewhat. We’ll have a little boost from the new customers, but I don’t think the demand will be to the same level.”
Brand and Categories that are Working
Here is a roundup of brands and categories that Tim mentioned when we talked:
Wavelines is limited on how many surfboard brands it can carry because of space. So, Tim focuses on Torq, the Wavelines brand and soft tops. “We sell a lot of them,” he said. “If I had more space, I’d sell more.”
When it comes to men’s apparel, Wavelines carries the most goods from Quiksilver, Billabong, RVCA, Volcom and O’Neill. Those brands have buildouts.
Brands that do very well for the store on smaller gondola racks include Salty Crew, Vissla and Patagonia.
“Vissla did really well last year because they were shipping, so they picked up sales because they could actually fill orders,” Tim said. “Same with Salty Crew. Patagonia had a really, really hard time fulfilling orders. We could have sold 10 times as much outerwear this winter if they would’ve had it.”
Tim echoed something I have heard from many retailers: RVCA’s Yogger program is “insane.” RVCA overall continues to be very strong for Wavelines. “I don’t know why, it’s not like they are new. But they continue to do really well for me.”
Salty Crew “for a while felt like it was ‘been there, done that,’ but they had a really big resurgence last year. Before it was really ‘nichey’ then all of a sudden, boom. That brand is really strong again.”
Skate has boomed at Wavelines, just as it has for most other shops. Skate is in such demand, Wavelines had to build racks on all the slat walls to hold the inventory. There’s been a huge resurgence in cruiser boards, and any brand the store gets in, sells. Because the store is inland, street skate is also strong for Wavelines – plus there’s not as many skate shops to compete with as in the past. Entire families are coming in and buying boards, and Tim really likes that Impala now has a line of skateboards for girls. “It’s great, we can outfit a young girl in a feminine looking skateboard with a pink helmet and pads. Most completes are from these skate companies that have skulls on them. It’s kind of hard to buy that for a 7-year-old girl.”
Loading up early on hot selling categories paid off for Tim last year, and is still paying off, he said. Last summer he saw what was happening with boogie boards, surfboards, fins – anything having to do with the beach – and stocked up early. “We ran out like everyone else, but we didn’t run out until much later. This year, we’ve had people coming in saying we have a better full wetsuit selection than some of the coastal shops.”
Wavelines had a great snow season this past winter. With huge demand and much less competition now that big retailers like Sports Authority and Sport Chalet have gone out of business and some other core retailers have dropped snow, it’s a healthy business again, Tim said.
“In the old model you would have to match price with these knuckleheads that just put it on sale on Dec. 26 and you’re like, ‘what are you doing? It hasn’t snowed yet.’ Now there’s like four of us left in town and we don’t put it on sale.”
Demand in snow started early this season, and Wavelines ran out of hardgoods early. “I can’t even imagine how good of a season we could have had if we had more stuff to sell,” he said. For the coming season, he booked orders at a much higher level based on how well last season went. Plus, he has the extra storage space now so he can backstock more. But he’s only being aggressive on his No. 1 styles like Vans and Burton boots, bindings, “the stuff that is a no brainer” so he can carry it over if he ends up with too much. In outerwear, he sticks to surf brands and carries mainly Quiksilver, Roxy, Billabong and Volcom. In hardgoods, his main brands are Burton, Capita, Union, Vans and Lib Tech.
In women’s apparel, Wavelines focuses on three main brands – Roxy, Billabong Women’s, and O’Neill Women’s, in addition to a private label program and a small selection from Vuori and Patagonia.
Pura Vida continues to do well for Wavelines. In fact, there are some months when the bracelet brand outsells one of the three major women’s clothing brands that has a buildout at the store – all from a little fixture on the counter.
All About the Relationships
Tim admits his long-term relationships with many reps influence what he carries. “I’m just a loyal guy,” he said.
Also, the big brands provide so many incentives that they make it worthwhile to keep a major presence in the store even when the brands aren’t performing.
“Honestly, some of the brands on our gondola racks probably deserve a wall space, but who is going to get cut back?” he said. “The big brands are really great about if they aren’t performing on the front end, they perform really well on the backend, so you still make money on the brand. They make themselves user friendly. They give us markdown credit. It’s like whatever the brands used to do with major retailers like department stores, it’s trickled down to surf shops.”
“So, It makes it harder to kick them to the curb.”
I asked Tim if he thinks he will ever give some of those smaller brands that are performing so well more space.
“Yes, I think they’ve earned it,” he said. “It’s just earning it and me making a hard decision with my friends are two different things.”
The Hardgoods Halo
Tim is super optimistic about the business prospects for core retailers for the next couple of years, mainly due to the resurgence of hardgoods.
“You can get sad when you look at the bigger picture of our industry – it’s so grown up and adult versus what it was like when I got into it in the 80s,” Tim said. “The brands were run by surfers then and the decisions were made in a different way.”
“I think now with hardgoods being relevant again, we can all calm down a bit about where it’s going. I think anyone with a hardgoods centric store can feel like we’re building again rather than fighting for scraps on the same softgoods thing.”
“The upside economically is really solid,” he added. “And it’s mentally rewarding to see people hanging out with their kids and being active. It confirms all my parenting instincts that I’ve been telling my friends for years. ‘You should really dial back Little League and get into some stuff you can do together. It goes by so fast, and you’ll be wondering why you spent so much time watching Little League versus doing something active with your kids.’ “