Matt Hyde worked at REI, a national outdoor products retailer, for 26 years before taking over West Marine in June 2012. In the last four years, Hyde has engineered a fairly radical evolution within the world’s largest boating retail chain.
West Marine is now focused on larger “Waterlife” stores with more interactive, experiential displays, which have a wider product range of soft goods and clothing, and a broader Internet presence. After several years, the growth strategies seem to be working: 2015 revenues were up 5.4% over 2014, while net income jumped 132%, with same-store sales up 6%.
You came from REI before West Marine. How did that prepare you for the boating industry?
I worked at REI for 26 years, starting when they were a US$100m company and exiting as executive vice president when the company reached US$1.8bn in sales. During that time, I had the opportunity to oversee or lead nearly every division.
There are more similarities between the boating and specialty outdoor industries than differences. REI sells a recreational lifestyle that is similar to boat ownership. Clearly, my experience at REI has shaped our direction of selling core boating items and everything else a person might want for recreational use on and around the water.
What are the similarities between the two industries?
It’s all about discretionary spending. There’s nothing in a West Marine or REI store that anyone has to have. We’re competing broadly with discretionary spending. Ultimately, the customer has to decide whether a new fishfinder or a cell phone will bring them more joy. They’re deciding whether to spend time watching the game with friends or go boating.
Overall, I’m not convinced that the boating industry is winning this battle, which is why we’re investing in getting youth on and around the water through our BlueFuture Program. About a quarter of what we sell is what we call “merchandise expansion”. This includes things like clothing, fishing, coolers, kayaks, etc., so these are many of the same products that you find in the outdoors industry, but for customers who recreate on and around the water.
The boat parts side of our business has little crossover with the outdoor industry.
Are there any other differences?
If we limit our view of the boating industry only to people who own boats, the main differences are that the boating industry is an older demographic, has a much higher average household income, is much slower growing and is not as agile with product development.
We take a much broader view of our industry and count our customers as anyone who enjoys recreating on and around the water - including boaters. We know that a boat owner is our most valuable customer.
But consider this: Today, how is the industry talking to the person who decides to buy their first boat next week? The industry isn’t talking to that person until the customer takes steps to initiate researching boats.
That’s where West Marine comes in. Most new boat owners started by having a passion for the water. Maybe they spent time on a friend’s boat. Or maybe they’ve graduated from owning a kayak.
In any case, we want to welcome these folks, invite them into the industry, supply them with great products, and be there the day they decide to buy their first boat. I believe that we play an important role in talking to and serving the next generation of boat owners.
What are your main initiatives for modernising West Marine?
We’ve been very focused on three strategies:
1. Building the industry’s leading eCommerce site.
2. Optimising our markets by evolving to fewer, better stores.
3. Dramatically changing our product assortments by maintaining our focus on core boat parts, but adding new categories such as clothing, fishing, paddlesports, etc.
Do you expect to keep adding stores to the West Marine network?
Our focus is on transforming much of our store fleet from more traditional boat parts stores to Waterlife stores. These are our new experience stores that are between 12,000ft2 and 25,000ft2 in size. There’s no shortage of competition. Bass Pro Shops builds nice stores, we have some local competition, and online, Amazon is the monster to watch. We’ve carved out a position in a crowded retail marketplace that’s differentiated from our competition and embraced by our customers.
Have your growth initiatives worked?
We’ve iterated on nearly every initiative that we’ve taken on to grow the company. This helped us dial in the performance of our three strategies. I’m pleased to report that each of these strategies is working. At the end of Q1 our 64 Waterlife stores (our larger, new model stores) and eCommerce website, www.westmarine.com, have done about two-thirds of the total company business and were responsible for nearly all of West Marine’s growth. The remaining 190 traditional stores have done one-third of the business. So our initiatives really are working. We’re growing the business while attracting new customers.
Have you given up on maintaining a large retail presence outside of the USA after exiting Canada?
We’re transforming the retail experience at West Marine. This is hard, and it’s taken a lot of capital. Canada needed investments, and our decision was simply a matter of focus - we can’t do everything at once. It’s possible we’ll return to Canada. When we do that, it will be with our new Waterlife stores.
How about Turkey?
Turkey was a franchise operation with a handful of stores. Those stores are no longer a part of West Marine. However, we do sell them some items on a wholesale account.
How did sales break down regionally across the US this year?
A We were pleased that every district grew in 2015. We’re typically seeing stronger growth where we invest in Waterlife stores. This year we’re making some changes in the San Francisco Bay area, including a new store in Santa Cruz. This is our backyard, and it feels great to build stores that our customers and associates deserve.