Frank Gunion was studying international relations in college in 1968 when he decided to open a small surf shack at the beach. He sold handmade surfboards and a few swimsuits.
Today, the small wood hut he called South Moon Under has grown into an upscale retail chain popular with the young and trendy and known for its sophisticated fashion.
Gunion never planned to stay in Ocean City that summer after his freshman year at George Washington University. But by fall, he'd begun to think he was on to something. After a few years, he sought to fill what he saw as a void in the beach town, and began offering men's and women's clothing as well as the swimsuits. He kept adding to the mix, expanding into home decor and jewelry.
The store thrived as a single shop, but several events propelled its growth. In the early 1970s, the retailer ordered 1,000 pairs of the then-popular Levi's 505 brand jeans and had them washed and bleached, giving them a worn look. Consumers took to the broken-in jeans, and they sold out in a few weeks.
Around the same time, South Moon Under designed a men's swimsuit called "Rainbow Trunks" and had it made by Sundek. It became a best seller with national appeal, and still sells today.
South Moon Under expanded into Rehoboth Beach, then, in 1989, went urban with a Bethesda location.
The privately owned chain, now with 21 stores on the East Coast, is still growing. It remains based on the Eastern Shore, with corporate offices near its Ocean City roots in Berlin.
This summer, Gunion was named Ernst & Young Entrepreneur of the Year for Maryland in the retail and consumer products category. The award recognizes high-growth entrepreneurs with a flair for innovation.
So how did a college student studying international relations end up opening a surf shop? Did you see it as a career at the time?
Sitting in a class on Russian and U.S. Cold War relations, and hearing that we had thousands of nukes aimed at them and they had thousands aimed at us, and in the context of the assassinations of President [John F.] Kennedy and Robert Kennedy and Martin Luther King, and civil rights injustices in our own country, and the Vietnam War, and being a surfer who was enthralled with the energy you feel when riding a wave, I decided to take a break and spend a year indulging my sports passion.
At the time, I didn't know I wouldn't come back to school. So, needing to make a living for that year and having a budding entrepreneurial spirit, I opened a very small surf shop in Ocean City for the summer. We did $25,000 that first summer, which isn't much by today's standards. But to an 18-year-old surfer, it felt great. Seeing the positive reaction by the public that first summer is what really pushed me toward making it a career.
What's behind the South Moon Under name? What type of consumer are you targeting with your merchandise mix?
The name is an historic term used to describe the position of the moon. This relates to surfing, as the moon affects tides and certain tides create better wave conditions. Fortunately, I didn't name the business Frank's Surf Shop.
Having a name like South Moon Under allowed us to build our own definition of what the brand was and has allowed us to evolve completely away from the surf shop and into the men's and women's contemporary-clothing store that we are today.
We don't set limits on who should be our customer. We have teenagers on up. Generally, our customer wants two things: interesting style that expresses their personality, and good quality.
How have you been able to compete for so long against the bigger players in the world of fashion retailing?
Of highest importance is our selection. We cherry-pick from the best companies in the world so that our customer sees an edited selection that doesn't waste their time by having to wade through racks of uninteresting clothes. Our buyers work incredibly hard at finding and designing the right clothes and then having another group of the right items coming in just a few weeks later so that our selection is always fresh. This is not easy.
And then we deliver it in a no-pressure, fun environment, delivering what we call "unexpected service," which also is not easy.
What's the biggest difference in the challenges that faced retailers in the 1970s versus the challenges today?
Every year of every decade has different challenges. For example, there was a period when inflation was in double digits and loans were costing 15 to 18 percent and we were rationing gas in the U.S. because of an oil embargo. The mayor in Ocean City bought gas tankers so he could guarantee tourists [that] if they made it to O.C., they would be able to get gas to go home.
For us, it was obviously a lot easier to operate one or two small stores back in the late '60s than it is to operate 21 stores and e-commerce today. Back then, it was a cigar box cash register. Today, it is point-of-sale by computer. I am a fan of change and growth, so I like today as much as I did the '60s.
What is something few people know about you?
While I am not a Buddhist, I've studied Buddhism and I identify with a lot of the teachings, especially those about how the mind works.