When Billabong stunned the New Zealand retail community by acquiring NZ retail chain Amazon there were an inevitable series of aftershocks. Across Amazon’s 19 stores the brand mix slowly but surely skewed towards Billabong’s proprietary labels, tightening the noose on its competitors’ presence on the shelves. There was a widespread expectation that other majors would follow suit. Some owner/operators saw themselves as targets, and waited for the call from the big brands. But NZ’s second largest retail chain, Backdoor, simply got to work. Expanding its stranglehold on the North Island, Backdoor has six stores, including a presence in the giant Sylvia Park complex and the newly acquired Assault Boardriders at Mount Maunganui. All told, Backdoor boasts an impressive 2400 square metres of floorspace in the North Island’s fertile surf retail scene. Owner Geoff ‘Hutch’ Hutchison recently took back a significant partnership stake in the company he started, arming himself with unassailable control over its destiny. By his own admission, the former NZ surfing champ is in it for the long haul.
They greeted us with fireworks. As ASB’s crack South Pacific bureau touched down at Auckland International, the night sky was festooned with pyrotechnics. Some said it was Guy Fawkes night. Maybe it was just good manners. Obviously they weren’t holding Trevor Chappell against us.
After collecting the corporate wheels and regrouping for a night in Auckland, ASBheaded south, already deeply grateful to our prospective interviewee, a man gracious enough to offer: “Why interview me at work? We could just hook up at Raglan for a wave.” Whatever hackneyed labels are attached to New Zealand for promotional purposes –“laidback” or the condescending “sleepy” – it was immediately apparent that they don’t apply to the North Island surf scene. Creative energy and a positive spirit of competition seem to flow through the place, all of it personified by Hutch.
It’s possible that no-one alive has surfed Raglan’s Manu Bay more times than this bloke. Tall and affable, Hutch’s got a smile and a greeting for every surfer in the line-up, but he’s pure intent on a wave – even the three-foot slop on offer the day he paddled out with ASB–compressing and telescoping his lanky frame into a series of vertical backhand hooks down the line of the famous left-hander. Out of the water, Hutch talks with considerable passion about the business of retailing and about the potential he sees in the future of this coast and its surfers.
As a young school leaver, Hutch surfed circuit events around New Zealand for years after school, before striking upon an odd kind of seed capital; his employer, the New Zealand Railways, made him redundant and paid him out. He was 24, obsessed by surfing and suddenly loaded, so he took the only sensible road – he went surfing for a year. On his return in 1988, he bought the Hamilton surf shop Backdoor for $12,000. “It was only a tiny 40 square metre store down the back of a real B grade arcade,” he recalls. “It had very little foot traffic and, by today’s standards, a poor fit-out. But it was reasonable at the time for a core store.”
From the outset, Hutch applied to retailing the same barely contained aggression which characterises his surfing. “I hired people before I could afford them,” he laughs. In 1989, New Zealand legislated to allow Sunday trading, and Hutch took it on. “We started doing Sundays fairly soon after their introduction, mainly due to my mall-based competitor being open. We had one staff member who was keen to work it and we basically did around $600 average on a Sunday for the first 2 years. It’s grown to now be our second biggest day. When I first started Saturdays were also only open from 10am-12 noon, so we hardly did any business those days either, and you could go surf for the rest of the day. But Saturday also gradually grew to the point where it was the largest day of the week.”
Just as the Backdoor empire was finding its feet, the North Island was struck by a massive cyclone and the entire nation was plunged into economic darkness by a recession. “I remember the year the cyclone hit,” recalls Hutch. “I took a surf trip down to Mahia, south of Gisborne, a week after and I couldn’t believe the devastation of farms and forests. So much of the land was covered in about a metre of silt.”Undeterred by storm and famine, Backdoor’s new owner was busy making plans. In his first year, his turnover was $200,000; then it was $400k, then $500k, then $700k. “That was right through the recession time,” he says. “We were growing with the brands.” 1989-91, he reasons, were the years that surfing took off in New Zealand, as droves of unemployed locals signed on for the dole and surfed away the bad times. Only an optimist would recall a national recession as the good old days, but that’s how Hutch looks back at it “There were a hundred guys on the dole at Raglan in those days”, he says. “I reckon there’s three now.”
By 1990, unemployment was running at 7.4%, meaning nearly 200,000 New Zealanders were out of work. Hutch responded by stepping up to bigger premises. By 1993 he’d moved the store again, to the Worley Place premises, which it continues to occupy today. And 14 years of steady work have added stores in Takapuna, Matamata, Mount Maunganui (formerly Assault Boardriders) and Sylvia Park to the stable.
Surf Culture – the Tasman Divide
Understanding the success of Backdoor’s expansion requires a little study of the differences between the Australian and Kiwi markets. Hutch sees it this way: “The surf culture in NZ is derivative of Australian surf culture, but it’s just not as strong. My wife’s from the Gold Coast, so I spend a fair bit of time there. Just about every tradie on the Australian coast seems to wear boardshorts and surf gear, whereas in New Zealand you don’t see that. The average guy in New Zealand at 20-25 years old just doesn’t wear surf gear. Well, maybe boardies to the beach at Christmas time, but that’s it. Maybe New Zealand’s always been too small for the major surf brands to give it any focus anyway – so they’ve dropped down the pecking order in retail. It’s allowed the local brands to flourish. And there’s been a really strong local push in the last three to four years… ‘Made in NZ’ and all that.”
One Kiwi industry figure puts it this way: “We do have our own urban surf/skate market in NZ, which is different to Australia. It’s definitely a lot darker in colours, with baggier fits over here. NZ hasn’t caught on to the whole gay metro fluoro craze – NZ youth are more hardcore with their look, which is very urban. If anything, it follows more of the Californian surf street fashion style.”
What emerges is a fairly subtle marketing exercise. Backdoor is proudly “core” in its outlook (one wholesaler who spoke to ASB pointed out that: “You can always walk in and find a surfer on duty in his stores who can fit you out with a wetsuit and a board. That for me is what has separated it from the others who have tried to model the Backdoor recipe.”), but has to accommodate the parochialism and street fashion leanings of the Kiwi youth market. Hutch is not averse to giving brands from outside a push, but occasionally finds the results frustrating: “I do pick up ideas when I do a Goldy run, but brands such as say Rhythm, the really fresh ones, take years to get any traction here. Some time ago we started running some street stuff.”
RPM director Mike Smith observes: “Surfing doesn’t hold the same weight that it does in Aussie. There are pockets of strong surf culture around the country, but generally NZ youth fashion is more integrated with boarding culture and music based trends. I reckon the three surf majors are still the most seen brands on kids and teens, but beyond this age it’s a far broader spectrum.”
The New Zealand market has reflected the global trend in recent years towards the emergence of stores that are, in Hutch’s carefully chosen words, “not really core surf”. Among these, he lists Amazon and North Beach – rather than dealing him any knock-out blow, he sees these retailers as having “taken some of the cream off the market”. Backdoor’s response has been to find a new niche in brands which don’t appear in those stores, like Huffer, RPM, Lower and the very fashion-driven Federation. For a brand like Huffer, the fit with New Zealand is much closer than anything they’ve achieved in the Australian market. Hutch says these brands were born out of the street scene and had always commanded a higher price point. “It wouldn’t happen in Australia” he adds. “They’ve been selling fleeced hood tops at about $160, about one and a half times the price of Rip Curl.” Owing to the differences between the markets, it’s hard to think of a direct analogy on the other side of the Tasman – General Pants might be the nearest thing. Backdoor’s slogan “Surf/Snow/Earth” sits well with these brands. RPM emerged from the snowboard scene, but to emulate the pricing of the major surf brands. Huffer and Federation hadn’t, but are both now starting to make product in China, thus bringing their pricing back towards the median.
Retail… and detail
The Backdoor empire spans a number of quite distinct retail settings, from the conventional shopfront to high gloss, aesthetically-driven mall stores. While Hutch ripped the backs out of a few lefts at Manu in November, he was waiting for the builders to complete a long-planned renovation of the Hamilton store, within the crucial window before Christmas trading kicked in.
Meanwhile, the Takapuna store, on Auckland’s North Shore, is locked in fierce competition with the company owned stores, particularly Amazon. Hutch has responded to a competitive environment by going on the attack, recently completing the purchase of the iconic Assault Boardriders store at Mount Maunganui. A 25-year institution on the Mount, the acquisition of Assault in November this year will do no harm to Backdoor’s core credibility. Their media release proudly crows: “Assault fits in well with the Backdoor model of being a hardware based store that concentrates on surf, snow and skate.” Hutch views the purchase as a conservative move: “Our growth plan is more around existing stores than new opportunities. With an existing one, you’re buying a turnover – you don’t have to guess it.”
But perhaps the most fascinating of Backdoor’s current projects is Sylvia Park. In a limited surf market, how do you position a core surf store in Auckland’s biggest shopping centre? “There wasn’t anywhere south of the harbour bridge doing core surf,” says Hutch. “The numbers were good, so we thought, let’s have a go. It’s been open since the end of March, and it’s sold as many boards as all our other stores, so it’s working.” Probably the steepest learning curve for Hutch in the mall scene has been the lease terms. “Attention to detail in malls is a real issue. Tiny things, the stuff we get away with in Hamilton, we don’t get away with in Sylvia Park. The management want everything finished just so…”
Despite being situated deep in a mall, Hutch notes that his customers at Sylvia Park are “just your general Auckland surfer”. “It’s guys after boards – and they want to ride what the pros ride. The epoxy guys, the Surftech mob have done a great marketing job on the NZ surfing public.” He says Backdoor has tried carrying local shapers, but moved off them about 2-3 years ago, “because again, your average to good Kiwi surfers want to ride the boards they see the pros on. And none of the pros are riding Kiwi shapers.” The mass-produced pop-outs came and went. “We jumped on the Chinese boards pretty quickly, had one good summer and then got stuck with heaps of them.” Since then, the focus at Sylvia Park has been on top end boardmakers, including JS, Firewire, and the South African brand Spider. Hutch rides a Spider himself, having met South African Rod Stanton while coaching juniors for the NZ team.
Competition on the North Island is picking up, as North Beach gather momentum at Hamilton, and the effects of the Billabong takeover of Amazon continue to be felt. “North Beach Hamilton is supposed to be the biggest surf store in Australasia,” Hutch explains. “It’s got waterfalls and trees and all sorts of stuff in it. But they do a lot of sale product… they profess not to be a factory outlet, but more like a warehouse style store. They’ve had their stock on sale all winter, and it’s knocked our turnover by half a million bucks.” On the other hand, Hutch is untroubled by the presence of Amazon. “They operate according to normal retail principles… they don’t discount or anything.” He recalls a widespread “wait and see” approach among retailers when Billabong took them over. “They rang me as soon as the deal was about to be done, just to tell me. I said to them, ‘Good on you, makes sense to me, smart move. You’ve cornered the New Zealand market, and mortally wounded your major competitors!’ (cue the sadistic laughter).”
But behind the bluster, the Hutchison commercial brain whirrs away: “The whole vibe coming out of Rip Curl and Quiksilver was ‘we’ll be OK, nothing’s going to change’, but they didn’t buy it just to keep it at only 20% Billabong product. They’ll skew it to 50 or 60 or 70%. Anyway we’ve said to them, ‘we’ll still back your brand, no problem, but the minute you start to roll out more Amazons against existing businesses, people are going to start getting scared of your brand and shifting off it’.”
RPM’s Mike Smith has watched Backdoor and North Island surf retail landscape very closely. “Recently I’ve seen one of two things happen to businesses on the North Island,” Smith explains. “One is they’ve expanded and opened new stores. Or secondly, they’ve carried on as per same old, and been interfered with by the business mentioned in ‘one’. As a market matures and becomes more competitive, success is determined by an awareness of the environment and being able to take the required action to ensure longevity. Backdoor has proven to have such an awareness and ability to act.”
As Backdoor verges upon twenty years of almost continuous retail expansion, it seems reasonable to ask: where’s all this going? Hutch owns 77% of the business (his brother in law Cam Cutmore owns the other 23%), and recently bought back a 7.5% stake owned by partners in Auckland. The expansion of the brand to date has been done in strict adherence to Backdoor’s “core” philosophy. “There have been others who have moved faster with expansion,” says a local industry figure. “But not always following the core model as Hutch has done. And he’s stuck it. Others move in and out as soon as the category doesn’t return for them.” Further expansion into the world of mall trading, however, seems unlikely: “We’re paying about $750 per square metre at Sylvia, and some recent deals have been structured at $1200 per square metre. I just don’t think the margins are there.” Viewed in this context, the Assault Boardriders purchase looks like a sound move.
Perched over a coffee on Raglan’s main drag, Hutch is defiant at the suggestion he might put the entire brand on the market. The cup goes down, and the big man leans way back in his chair, pausing for emphasis. “It’s not something we’re relying on,” he concludes. “The impression we get is that New Zealand doesn’t particularly matter to the majors. Having said that, there are blokes in NZ waiting for the tap on the shoulder, but heck, I’m not. Do they reallywant to buy a core store? The tap might never come. You can be waiting for something that’ll never happen. A lot of owner operators who’ve been in the game as long as me, they’re tired and they’re waiting for the tap. We’re reasonably keen to tap a few people ourselves. Sure, you need an exit strategy, and there’s plenty of options… selling the stores off one by one might be an exit strategy one day. But since we bought Mount Maunganui, I’ve had five or six calls from other stores saying, er, what about me?”
ASB’s afternoon with Hutch is any indication, he’s got the work/life balance about right. “I really don’t know how he is so successful with the amount of surfing he does,” said an envious supplier.He still surfs with obscene frequency and astonishing power. He still competes in the Masters and the Nationals, maybe three events a year, and even lines up for the Open division in the Raglan comps. He still makes “the odd final” at Raglan, presumably against blokes half his age. Mike Smith puts it down to Hutch’s positive nature: “While much of the old guard at Rags act like surfing there has become an insufferable battle against the rest of the world, Hutch is always cheerful and friendly, even when he’s dropping in on you.”
Out of the water, Hutch can chat with candour and enthusiasm about his business and the wider industry, and enjoys a rare level of respect among suppliers and competitors. “He’s a values-based guy and runs his life and business accordingly,” says BJ Smith of Seasons. “Aggressive but rational,” was one source’s assessment. “It’s made for a good working relationship from a wholesaler’s point of view.” Another insider listed “passion, drive and a willingness to want the best hardcore surf/skate/snow stores in the country”.Justin Souter, national sales manager at Huffer, described Hutch as “just a big grommet, really, but a natural entrepreneur”. “He keeps a close eye on what’s going on in the NZ board sports market and adapts well”.
Casting an eye over Backdoor’s recent burst of expansion, at Sylvia Park, at Hamilton and at the Mount, there’s a sense that Hutch is entrenching his presence on the North Island. It’s an impression he readily endorses. “All the signs point to the fact that I’m in it for the long haul. I’m not looking for an exit. I’m happy with the amount of time I’m spending on the road, and I’m still surfing enough.”
After the big man has gone back to work, and the firecrackers have faded to a fizzle, ASB’s crack South Pacific unit retires for the night. Settling into a restless slumber between the board bags in the back of the corporate wheels, the reverie is broken by an SMS from ASB’s correspondent on the scene in Brazil: ‘Fanning’s won, it’s going to be a BIG night in Florianopolis’. Stoked on the news, story in the bag and a fresh groundswell sweeping the fabled lefthander outside, we drift back to sleep, two men in a Wucked van, snoring in the quiet streets of Raglan. Mission accomplished.
Words: Jock Serong Photos : Damien Van Der Vlist