MOSS ADAMS: Networking reception at MAGIC.
KNOWSHOW: Boat party on July 29 to celebrate the trade show's 10th anniversary.
Details on Industry Insight.
I often see Global Surf Industries Managing Director Mark Kelly at industry conferences and events, but have never written about his surfboard manufacturing and distribution company.
Based in Manly, Australia, GSI sells 11 brands of surfboards in 52 countries around the world. It makes the boards in foreign factories, a controversial production method for some in the surf world.
One of GSI's core beliefs is that it makes boards for everyone who wants to surf, and that surfboards must be profitable for all parties, both manufacturers and retailers.
"Surfboards are no longer the hobby of the surf industry," the company's website says. "By ensuring our retailers increase their profitability we are insuring our business long term."
I asked Mark via email how business is going so far in 2009, what category of board is selling well, what is the company's biggest challenge and where GSI expects to be in five years.
We're half way through 2009. How is business going so far this year? Do you expect revenue to grow for the full year?
Mark Kelly: We budgeted for flat year-on-year sales from 2008 to 2009. We budgeted also to reduce our expenses by a double-digit percentage; we are looking OK at the present time.
Business is a little tough; lots of retailers are gun shy about stocking up, it seems to be a double- edged sword, though the stores that are being brave are doing OK. A positive attitude at retail is required for sure; retailers stuck in the doom-and-gloom cycle aren't creating any excitement for their retail customers to experience. Others are selling the escapism of surfing and I can see these stores doing well in this economic climate.
Are there any styles or specific price points of boards that are doing particularly well?
Mark: It is a bit of a mixed bag, the price-point, entry-level stuff is doing well due to the tight purse strings, but lots of our new models are sold out currently. The new Walden Carbon rail longboard has done well, the exciting new Thomas Meyerhoffer Modern longboard is getting heaps of PR and selling well at retail. Other than that we seem to be sold out of the stand up paddle boards we carry all the time as well.
What is GSI's biggest challenge at the moment?
Mark: I think it is making sure the retailers keep their racks updated with new inventory, getting them to be positive and sell the escapism that surfing offers people. You really see huge differences in the success of various retailers purely on how they operate their business and how their positive attitude affects their staff, their customers and ultimately their success. Other than that, there seems to be a lot of inventory going out from other suppliers at low prices or with extended terms or just plain "pay us when you sell it" terms. All of this will probably lead to a cleaner marketplace in the medium term.
The real winner now, if there is one, is the consumer, who can get some crazy deals for their cash due to the massive inventory reduction by some of our competitors. We did this last year because we could see what was coming; our current inventory has never been cleaner, which is pretty comforting to me.
Any new strategies/products on the horizon?
Mark: We are constantly fine-tuning our game, the product life cycle and where the gaps in the market are. Our current strategy is to ramp up our research and development ability.
My goal is to change the mindset of GSI from a board distribution company to a truly focused surfboard company. This requires us to really own the development of the product lines, work closer with the various designers we have in our portfolio. I would like to see GSI take a leadership mindset as far as implementing new product executions to the general surfing public and inspire them to buy into the new products, thus igniting the retailers' interest in hardware and the potentially fantastic benefits hardware offers their stores.
What country/region is performing well right now?
Mark: Some of the countries in Europe are seeing constant growth, Australia is holding its own. Other than that, the distributors in Central America seems to be rolling along as surfing develops down there.
Where do you want your company to be in five years?
Mark: I would like to see GSI continue on the path it has been already, we do things as we see the need for them. Our guidance comes from listening to our retailers, if we can provide them with what they think they need to be successful then we will be successful. I would like GSI to be a truly inspiration company - our mantra "Life is better when you surf" means a lot of all of us and really living this out is one of our key drivers for our success. Get people to buy into the mantra, surf more and we are building a strong foundation for our future.
What do you say to critics who complain about factory, foreign-made boards?
Mark: I think after seven years, many of the original critics are actually making boards overseas. The custom domestic markets around the world are still going. GSI sells boards in 52 countries now and we get our boards made in the best factory that we know can handle our production needs.
How did you get the idea to start GSI?
Mark: I was trying to work out what my niche could be with the resources I had, I visualized what the industry would be like in 10 years, and with the resources and contacts I had what parts of what I saw could I make happen infive5 years. To me the surfboard side of the industry was dying, the retail part of it was not in good shape. From this GSI was born.
What has been the key to the company's success?
Mark: I think having a plan from the beginning that was well thought out and researched, selling that plan rather than selling individual products to retailers showing them that we have retail empathy and understanding of their needs.
Other than that it is probably the fantastic staff we have and the way we run the business. We still don't have any offices - everyone works from home. I truly believe in work/life balance and that we as a company must have a core set of values and beliefs that we run the company by.
My goal is always to have the biggest / smallest company we can have. This allows us a different mentality and keeps things simple, not only to manage, but also simple for everyone to be a part of and for our customers and the surfing public to understand what we are really all about which is our mantra - Life is better when you surf.
How do you see business unfolding in 2010?
Mark: I can see a number of markets starting to turn around, but the US is the grey area for sure. Retailers who survive the next 12 months will be well placed to enjoy some success but it will be because of their hard work between now and then that will make the difference.