Retail is undergoing the biggest change it has seen in more than a generation as demographics shift, mobile devices are increasingly used for shopping and millennials enter the work force.
Those shifts in consumers, their ages and their spending habits are requiring retailers to change the way they do business, says Matt Hyde, CEO of West Marine, a company that has undergone dramatic change in the past few years and has plans for more.
“We’ve never seen so much change in the retail industry,” says Hyde, who took over as CEO in May 2012. “For the first time in any of our lives, the baby boomer is no longer the largest generation. In the next three or four years 75 percent of the work force will be millennials, and they will be the dominant spenders. Where I think a lot of retailers get confused is, they confuse their average customer with their target customer, and you have to be clear about both of those categories.”
When companies confuse those things they perpetuate the unchanging age demographics in their business, Hyde says. So West Marine is targeting people who don’t look like members of the traditional boating community while maintaining a focus on its core customer, the committed boater.
The company’s new-customer counts are up 12 percent during the past two years — “in retail, that’s a bit of a standout,” Hyde says — and are skewing slightly younger and more toward women.
“Having worked in retail my whole life, moving your average age as a retailer has been stubbornly difficult,” says Hyde, who comes most recently from REI Outdoor Stores. “But our new customers are slightly younger and have slightly better gender diversification.”
Hyde attributes the gains to three strategies West Marine has implemented in the past two years. The company has pared its store count, but the remaining physical stores have, in many cases, been expanded. It has ramped up its online presence. And its marketing materials have become more inclusive, often featuring West Marine employees and staff.
“For the first time in years we’re seeing dramatic customer growth in the toughest retail environment we’ve seen in a long time,” Hyde says. “Nobody’s seeing the kind of customer growth that we’re seeing when I talk to other CEOs in retail. On the flip side, are we changing brand so much that we’re offending our core customer? Our biggest area of business is Port Supply, and Port Supply had its biggest year ever last year — and that was on top of another good year.”
Port Supply is West Marine’s wholesale division. It is one of the world’s largest wholesale distributors of marine supplies and accessories, with products from more than 1,000 vendors.
An on-ramp to ownership
Catering to people who already own boats is hugely important, Hyde emphasizes, but it is also important to get people moving in the direction of boat ownership. “New or used, people owning boats matters a lot to our company, so I don’t want to sound like it’s not,” he says. “That is super-clear to me. But what I didn’t see when I stepped into West Marine years ago was an on-ramp to people who have no idea they want to boat or don’t have a boat yet and give them a way to participate.”
For parents with young children who might not have the time or the resources to buy a boat, it’s important to draw them into the lifestyle through fishing or kayaking so that once those families are able to make an investment, a boat will be top of mind, Hyde says. At the same time people who embrace the boating lifestyle want to have the feeling of the water and the lifestyle, even while they’re at work.
“A boat is a huge commitment. Even for those of us who have a boat sitting in a slip and it’s pretty close to our homes and we live in a climate with good weather, we don’t get to use a boat all the time,” Hyde says. “When you really take a look at how many days you use a boat and the complexity of it, you really realize it’s a commitment and a lifestyle. So we’re trying to tap into that commitment and lifestyle and passion, setting aside the boat part of it.”
Boating participation numbers continue to be strong, Hyde says, with 82 million people going boating last year, according to National Marine Manufacturers Association data. The company is trying to determine who those people are and get them to start engaging with West Marine and “start finding ways to make their time on the water more enjoyable as an entry to the marine industry.”
“There are not enough people getting off the couch and buying a boat,” Hyde says. “So what are the multiple ways we can help people get a connection with recreating on and around the water that are achievable and approachable and accessible to a broad set of customers, despite age or income level? I think those are very important pieces of the puzzle. We need to not try to get people off the couch and buying a boat. We need to get them off the couch to recreate on and around the water, and that’s going to serve the overall industry in the long run.”
From boat store to lifestyle store
West Marine is offering water lifestyle experience options for those who may not yet own boats. It also is seeking to tap into that younger consumer who is looking for an emotional connection and experience, even if it lies outside boat ownership for the time being.
“We have gone through and made some pretty dramatic changes with the number of our stores that we call Water Life stores,” Hyde says. “We have 63 today and plan to do work on about 12 more this year. Those stores are really redefining what a marine chandlery is, if you will. They’re designed to be more of a retailer that speaks to that customer’s life on the water, and getting a sense of experience and excitement when you walk into a store matters to the customer a lot, specifically those target customers.”
The company has brought in several new products, many of which would have been outside the company’s traditional offerings, to speak to people’s entire life on the water, not just what is needed to fix boats, including apparel, stand-up paddleboards, kayaks and swimwear.
“There is a huge shift in clothing and apparel this spring,” Hyde says. “Keep-dry and quick-dry brands that have an affinity to the water. We’ve skewed our brands a little bit younger to appeal to that target customer and look at how we can bring that customer into West Marine.” There had been a “fair amount of resistance from the vendor community,” Hyde says, but most come around once they realize the company remains committed to boat repair supplies.
More inclusive, more online
West Marine also has been changing who is depicted in images online and in mailers, brochures and other marketing materials. “If I’m being a little bit critical of the marine industry, I’d say, when I look at magazines that we present to the public, they don’t match the emerging demographics,” Hyde says. “They’re very homogenous, very Caucasian. We know the millennials are the most diverse of any generation preceding it. What we’re trying to do at West Marine is, we’re trying to be very welcoming to new customers. We’re changing who’s in the imagery, which makes a lot of difference. When I walked into West Marine a few years ago, I said then, ‘We’re going to be an industry leader when it comes to diversity,’ and we’ve since had African American women gracing covers of our catalogs and we bring our associates into ads.”
The company wants to make boating and the recreational piece around it seem more accessible and welcoming than it previously was, Hyde says. “I think the marine industry has a little bit of an image problem, and the image is you have to be rich and you have to be white and male, and we have to reposition ourselves.”
Looking at the climbing age of boat owners, “in any industry you’d look at this and say this is a crisis for us,” Hyde says. “We know who the average customer is, and I think there was fear we would offend them with our new store formats. In the early 2000s similar conversations were happening regarding our crisis in the outdoor industry — fear that if we didn’t place images of our average customers in catalogs they were going to be offended. And they’re not.”
Moving into interactivity
West Marine is also offering more experiences in its effort to reach new demographics. A new electronics expo series (see facing page) is designed to give boaters a chance to use electronics in that rapidly evolving segment while providing experts from manufacturers to demonstrate and answer questions.
The sixth annual West Marine Carolina Cup is expected to attract thousands of paddlers who compete in races and events designed to test and engage all paddling skill levels. The “Graveyard” course is considered one of the toughest 13 miles of water in paddling, the company says. Last year’s event was the largest, and this year’s is shaping up to be bigger. Paddlers from California, Hawaii, New Zealand, Australia and Europe are slated to participate.
“That’s important to millennials, that whole experience piece, as well,” Hyde says.
This article originally appeared in the June 2016 issue.