Another LDS Out of Business

[diverrex]

There's a lot of things at play here with why all these dive shops are failing.

High rents in California and greedy landlords.

I think the core problem is the astronomical rents they pay. It seems like internet stores are mostly back east where property is cheap so their overhead is much lower.

Landlords charge what the market will bear, you don't get a discount just because you are in the dive business.

Scuba.com is in Irvine.

 

[masterdiverzen]

Sure I am new to scuba board. I have no reason to libal anyone. I only like facts and truth. I realize it is hard to believe that a landlord would charge this much for the barely 4,000 square ft. unit that is still available. I have enquired as to what would it take to move in. I have met with the owner of the property and so have other owners of Currently still open Dive shops. Ask the land lord yourself. He wants $3.50 a square ft. plus .33 a square ft. for maintenance and security and he also wants a percentage of the gross sales. The landlord will let anyone move in for a few months free even. Matt was taken to court after not paying rent. They may have paid rent before but after no $ for a unknown period of time The landlord took Liburdis to court. The Judge decided to allow Liburdis to stay because of the Pool investment Liburdis made. This was Liburdis chance to make good on the past rent and keep up with current rent. Apparently that did not happen and the landlord told them after a additional year that they have to leave or a Marshall would lock the doors. Much of this Information comes from the land lord himself. As well Jim the last manager who worked there and other part time instructors and customers.

 

[merxlin]

Thanks for the clarification.

 

[Clammy]

There's a lot of things at play here with why all these dive shops are failing.

High rents in California and greedy landlords.
Inability or unwillingness for most of these shops to carry the gear more advanced divers move into.
Inability or unwillingness for dive shops to drop prices to compete with internet stores and go for volume sales instead of high priced once in a while sales. The economy has to be in pristine shape for people not to care and pay full bore for something they could get for almost half off the internet.
The diving public is not growing at the rate that small LDS's need to stay alive.
There has not been any TV shows or movies related to diving in a long time so there's nothing to spark the imaginations of millions of young americans to get into diving.

The shops might have been able to exist barely with the old archaic business model that they use when times were good but all it takes is a little decline and there's no room to ride out a slump. Combine this with an unlevel playing field from the internet and shops go out of business.

I think the core problem is the astronomical rents they pay. It seems like internet stores are mostly back east where property is cheap so their overhead is much lower.

Also, Leisure pro is in Manhattan, definitely not cheap there.

 

[fnfalman]

I shop out of Sea D Sea in Redondo Beach. Barry had been there forever and is a fount of information, which you cannot get via internet purchases. He gave me a pretty good chunk of discount (as much as what I would pay for LeisurePro's stuff), but then I bought everything at his shop. And instead of trying to sell a typical diver the latest & greatest at umpteenth amounts of dollars, Barry would actually take the time and talk to the prospective customers and see if he could persuade them to buy certain items of certain price ranges and performances that correspond with both their diving abilities and their pocketbooks.

It doesn't get better than that. I'd rue the day that Barry retires - he's getting up there with age.

 

[Clammy]

I shop out of Sea D Sea in Redondo Beach. Barry had been there forever and is a fount of information, which you cannot get via internet purchases. He gave me a pretty good chunk of discount (as much as what I would pay for LeisurePro's stuff), but then I bought everything at his shop. And instead of trying to sell a typical diver the latest & greatest at umpteenth amounts of dollars, Barry would actually take the time and talk to the prospective customers and see if he could persuade them to buy certain items of certain price ranges and performances that correspond with both their diving abilities and their pocketbooks.

It doesn't get better than that. I'd rue the day that Barry retires - he's getting up there with age.

Carter over at Malibu Divers does the same thing. He'll show you the cool more expensive stuff, but he'll recommend whatever the best in your price range is in terms of performance, pros and cons, etc.

 

[Ken Kurtis]

Also, Leisure pro is in Manhattan, definitely not cheap there.

I may be the only guy on this board (and I'm willing to bet one of the few retailers anywhere) who's actually visited Leisure Pro when I was in NYC.

I have no idea what they pay for rent and my assumption is that they own the building. They're on the fourth floor of a building on 18th Street between Park & 8th. Not the greatest (nor most expensive) area in Manhattan.

They're also owned by the same guys who own Adorama, a large camera internet retailer, who's in the same building on the first floor or two.

And that means they fall into the same rent model for many stores nationwide. There's either a sweetheart deal on rent or they own the place and either don't charge themselves at all or charge a minimal amount.

At Reef Seekers we paid about $5000/month for 2500sf in Beverly Hills (and not even the GOOD section of retail Beverly Hills). I know of another dive store (none of these are in BH) that's paying about $5K for 1500sf, another that pays $2500 for 1000sf, and yet another that pays $2K for 4000sf. Those numbers make a huge difference in your bottom line.

I have been told that Liburdi's was paying upwards of $15,000/month which is in line with the numbers quoted previously. So that's $10K more PER MONTH than I was paying. That's $120K per year in profit you have to generate to cover that additional rent. At a 40% margin that means you have to increase your gross sales (assuming it's all equipment) by $300,000 annually JUST TO STAY EVEN. In this industry, that's a recipe for disaster.

Back to Leisure Pro, my guess would be that the store itself is less than 1000sf. My recollection is that it was long and narrow. Lots of stuff hanging on the walls and lots of OLD stuff that they were still selling as new.

I was there in 2001 and my favorite memory was seeing an Orca Delphi computer being sold as new, and coveniently omitting the fact that the units had ceased to be manufactured almost 10 years prior (replaced by the Phoenix).

Now I'm not saying that the unit wasn't new-in-the-box, simply that places like Leisure Pro get stuff from wherever they can and they're going to sell it eventually to someone and will hang on to it until they do so.

The two guys working the store were very nice and polite, even after I told them who I was. We chatted a bit and that was that.

I know that Leisure Pro and other on-line retailers can be a thorn in the side of some brick-and-mortar retailers. It's easy to overlook your own shortcomings and blame it all on someone who's simply selling it cheaper. But one of the Leisure Pro buyers made what I think is a valid comment years ago during a retailers meeting when people were complaining about Leisure Pro's prices. He said, "You guys who are retailers all had first shot at these people. We didn't steal them from you. They came to us for whatever reason. You need to really look and see why you couldn't close the deal with them at your store instead of just blaming us." Wise words.

Retailing's pretty simple: Meet needs of your customers. That might be defined as price, service, selection, acitivites, attitude, or any other myriad of things. It's rarely ONE thing. And while there can be other factors that come in to play, if you fail that basic test, you'll be gone.

- Ken

 

[Clammy]

I may be the only guy on this board (and I'm willing to bet one of the few retailers anywhere) who's actually visited Leisure Pro when I was in NYC.

I have no idea what they pay for rent and my assumption is that they own the building. They're on the fourth floor of a building on 18th Street between Park & 8th. Not the greatest (nor most expensive) area in Manhattan.

They're also owned by the same guys who own Adorama, a large camera internet retailer, who's in the same building on the first floor or two.

And that means they fall into the same rent model for many stores nationwide. There's either a sweetheart deal on rent or they own the place and either don't charge themselves at all or charge a minimal amount.

At Reef Seekers we paid about $5000/month for 2500sf in Beverly Hills (and not even the GOOD section of retail Beverly Hills). I know of another dive store (none of these are in BH) that's paying about $5K for 1500sf, another that pays $2500 for 1000sf, and yet another that pays $2K for 4000sf. Those numbers make a huge difference in your bottom line.

I have been told that Liburdi's was paying upwards of $15,000/month which is in line with the numbers quoted previously. So that's $10K more PER MONTH than I was paying. That's $120K per year in profit you have to generate to cover that additional rent. At a 40% margin that means you have to increase your gross sales (assuming it's all equipment) by $300,000 annually JUST TO STAY EVEN. In this industry, that's a recipe for disaster.

Back to Leisure Pro, my guess would be that the store itself is less than 1000sf. My recollection is that it was long and narrow. Lots of stuff hanging on the walls and lots of OLD stuff that they were still selling as new.

I was there in 2001 and my favorite memory was seeing an Orca Delphi computer being sold as new, and coveniently omitting the fact that the units had ceased to be manufactured almost 10 years prior (replaced by the Phoenix).

Now I'm not saying that the unit wasn't new-in-the-box, simply that places like Leisure Pro get stuff from wherever they can and they're going to sell it eventually to someone and will hang on to it until they do so.

The two guys working the store were very nice and polite, even after I told them who I was. We chatted a bit and that was that.

I know that Leisure Pro and other on-line retailers can be a thorn in the side of some brick-and-mortar retailers. It's easy to overlook your own shortcomings and blame it all on someone who's simply selling it cheaper. But one of the Leisure Pro buyers made what I think is a valid comment years ago during a retailers meeting when people were complaining about Leisure Pro's prices. He said, "You guys who are retailers all had first shot at these people. We didn't steal them from you. They came to us for whatever reason. You need to really look and see why you couldn't close the deal with them at your store instead of just blaming us." Wise words.

Retailing's pretty simple: Meet needs of your customers. That might be defined as price, service, selection, acitivites, attitude, or any other myriad of things. It's rarely ONE thing. And while there can be other factors that come in to play, if you fail that basic test, you'll be gone.

- Ken

I was just in there a few months ago during a business trip to NYC. I'd say 1000 square ft is generous, well if you consider just the floor space that a customer can walk around in. I know LP and Adorama are the same, but I didn't think they owned the entire building. The actual area you can walk around in is tiny. However, they obviously have the rest of the floor for storage or something because if you could find it online, it was there somewhere.

 

[paradicio]

Hey Ken,

I actually visited Leisure Pro when I was in NYC as well, I also went to BH Photo but that's a different story for a different day.

The guys that worked there were nice and answered my questions, they seemed to be helpful to other customers in the shop as well. I ended up buying a $20 mask.

But honestly when I'm looking to buy gear or take a class or spend any amount of money I head to my LDS and I buy from them almost ($20 mask not included) exclusively.

Why? Well, to refer to what LP's buyer said...they meet my needs. They answer my questions, they take my returns (should I need to return something), they service my gear, they fill my tanks, they sit and chat about diving with me for hours, they attend our dive club meetings, and they dive with me. There's not an online store out there that's going to accomplish all of that.

I've been to more than one dive shop that could learn a thing or two about customer service, and honestly I'd go online before visiting them again.

I'm not an LP hater, honestly it's nice to have options, but I really would like to see my LDS stay in business during these tough economic times, and anything I can do to help...well I will do it.