Surf Dreams

Surf Dreams Trying to avoid a wipeout in the Panama City Beach surfing business By Tony Bridges

Panama City Beach isn’t exactly known for its intense surfing action.

Sure, there are some good, consistent swells off the jetty at St. Andrews State Park, especially during hurricane season. But generally, Gulf waters are relatively calm and don’t build up the kind of thrill rides that surfers can get in, say, Huntington Beach, Calif., or the North Shore in Hawaii.

The business of surfing, however, is a different matter.

There is money to be made in Panama City Beach selling the lifestyle and the accouterments of the sport. It just isn’t easy money, especially in the current economy. Nearly a half-dozen local businesses have gone under in the past year, while those that have survived, as well as those just opening, have had to learn creative new ways of generating sales.

What has been primarily a retail business — selling sunglasses, surfboards and T-shirts — is readjusting in the face of slow sales, with shops either cutting stock to run as leanly as possible or branching out to sell not just surfing gear, but the experience of surfing, too.

"You can’t run a business like you used to run a business," said Tony Johnson, owner of Mr. Surf’s Surf Shop. "The only constant is change."


Surf’s up in PCB

The surfing season in Panama City Beach usually starts in the fall, around the end of hurricane season, and runs through the winter.

Storms out in the Gulf of Mexico send in swells that pile up in the pass between St. Andrews and Shell Island, an area known to surfers as "Amazons," and in the sandbars off the city pier at Pier Park. On any given day, there might be as many 40 surfers in the water at the state park, with dozens of others at surfing spots scattered between there and the pier.

Get a good hurricane passing through the Gulf, and surfers start showing up from all over the Southeast to ride the waves at St. Andrews.

When Hurricane Gustav approached the Gulf Coast in late August 2008, professional surfers descended on Panama City Beach in droves for what was expected to be some of the best waves in recent Florida memory. It didn’t really pan out that way, but Surfing Magazine reported that 200 to 300 people were in the water at Amazons for the 4- to 6-foot swells.

Unfortunately for Panama City Beach surf shops, the occasional winter storm surge and relatively small local surf community don’t add up to much of a market.

Avi Tuvyana, owner of Liquid Dream Surf Shop, laughed when asked if local surfers were enough to support his business.

Remembering his days as a young surfer, he said, "If I lived on people like me when I was a kid, I’d be starving."

Instead, surf shops rely mainly on tourists to help them pay the bills.

Tuvyana said that he carries boards but sells very few of them. The majority of his business — about 95 percent — comes from selling Billabong T-shirts and other gear to beach visitors who want to look like surfers without actually riding any waves.

Johnson’s store, Mr. Surf’s, is more of a true surf shop, where customers can get expert advice on buying boards and even log on to the store Web site for a daily surf report. But Johnson acknowledges that vacationers keep his business going, too.

"Without our tourist base, we wouldn’t survive," he said.

But whether the customers are tourists or locals, the surfing business is all about retail. And retail is highly competitive, especially if your main stock consists of beach wear in a beach town.

Tuvyana said that the way it once was, if you wanted to surf, you had to go to a surf shop in a surfing community. Now, though, "the surfing industry has changed" and you can buy surfing gear anywhere.

Locally, surf shops find themselves competing against dozens of retailers, from Alvin’s Island to Wal-Mart.

"Everybody that carries a T-shirt is my competition," Johnson said.

The opening of Pier Park, which includes a new Ron Jon Surf Shop among its retail stores, and the ongoing economic recession have combined to put a "double whammy" on stores like his. Retail sales are down about 40 percent, he said.

"If you’re going to open a surf shop right now, you’re crazy," he said. "Everybody is in survival mode."


Trying new ideas

Keith and Angela Johnson (no relation to Tony Johnson) are so convinced there is room for growth that they’ve put $1.3 million of their own money into a new surfing business.

"This is a long-term investment for us," Keith Johnson said.

But it isn’t just another surf shop; theirs is an indoor surfing/skimboarding facility.

Their daughter brought the idea to them after a friend — skimboarder Corbin Dull — visited a similar facility in San Diego.

The Johnsons said they liked it because there is so little for young people to do in Panama City Beach other than visit the beach. They conducted a market study to determine whether the area would support such a business and concluded that it would.

Their Shubee Flowrider, anticipated to open by Spring Break in 2010, will feature two WaveLoch machines that will allow up to 24 people at a time to ride artificially generated waves. The Johnsons plan to sell 30-minute sessions for $20 each and hope to attract more-skilled surfers to a Knight Riders club that will use the machines after hours for a discounted rate.

They studied other surf shops that have gone out of business — including the Blue Room and LA Board Shop — and concluded that part of the problem was obscure locations. The Johnsons decided to build on Middle Beach Road, across from Super Wal-Mart, on a piece of land where they already have offices for their general contracting business.

And while the facility will have 2,700 square feet of retail space selling skimboards, surfboards and clothing, they already know that their success depends on selling indoor surfing, not retail items.

"You’re not going to compete against Pier Park," Keith Johnson said.

They intend to cater to both tourists and locals. The idea is to make the Flowrider a place to hang out — with a concession stand, skimboard competitions and regular movie nights — and to offer package deals for corporate events, birthday parties and youth groups.

That is exactly the kind of approach that has saved Tony Johnson at Mr. Surf’s.

As his retail sales began to decline, he started brainstorming on new ways to generate business. What he settled on was a business model that emphasized surfing services instead of retail.

"I thought, I’ve got all these surfboards that I can’t sell, so why not rent them out," he said. "I might as well make some money off of them."

He began renting the boards to out-of-town surfers for $50 a day, then took it a step further and created a membership club that reduced the rate to $10 a day for members.

Then, when a regular customer who has a condo in Panama City Beach but lives out of town bought a new board and asked if he could store it at the shop, "boom, a light bulb went off," Johnson said. Now, he offers a surfboard storage service at $10 a month.

Finally, he began selling "surfing parties" — complete with music, games and, of course, surfboards — for birthdays and children’s groups, such as the Girl Scouts. Johnson was booked every weekend in August for the events.

The result of this new approach? While the retail side of his business is down, the non-retail side has increased 300 percent, he said.

"It’s times like these that you have to rethink," Johnson said. "It’s getting us through the recession."

Tuvyana, at Liquid Dream, said that so far, he is sticking to the retail model. But he said these tough times have actually benefited him.

"If you’re not good, you’re going out of business," he said. "I like it; it’s made me a better retailer."

He has learned to keep less stock on hand so that it moves more quickly, putting cash in his pocket, rather than sitting on the shelves. And, he has been forced to work harder, to get more done with less help.

Still, Tuvyana has some advice for anyone looking to make money in the surfing business:

"Put your money in real estate," he said. "Take your money from clothing and put it into real estate."