South Moon Under opens Salisbury distribution hub

Berlin-based retailer South Moon Under has opened a 25,000-square-foot retail distribution center in Salisbury to keep up with the company's continued expansion.

"We're on a growth trajectory," said owner and founder Frank Gunion. "We have stores now ranging from Connecticut to Richmond, and we plan to expand up and down the coast more. We had to lay the groundwork for that. And e-commerce, of course, is growing really fast."

Gunion said South Moon Under ran out of room at its existing facility in Berlin, which will now be repurposed for office space. They're leasing the warehouse space on Naylor Mill Road from First State Packaging.

Inside the warehouse space, there's a literal separation of retail and online inventories. On one side of a tall chain link fence, it's outgoing retail merchandise for stores. The other side has web order fulfillment. Gunion said the facility will process hundreds of orders a day — at the holiday season, it's in the thousands.

Here, vendors will send merchandise before it gets processed out to more than 20 South Moon Under retail locations, and to fill website orders. The company acquired the space over the summer and spent several weeks remodeling before opening for business in September.

Gunion opened the first South Moon Under at 32nd Street in Ocean City in 1968 at the age of 18, selling surfboards, trunks, and doing surfboard repair. The business has since evolved into a clothing store that targets women and a high-fashion market. Gunion remains very involved on a day-to-day basis with strategic planning and budgeting.

How the company has managed to thrive while other business models failed during the recent economic downturn comes down to adapting to customer needs and a conservative growth pattern.

"The main reason we didn't struggle with the recession — not that it didn't hurt sales, of course it did — was that we've always been very conservative," Gunion said. "We don't borrow a lot. We don't grow too fast. And we really stay focused on figuring out what the customer wants, so we're constantly evolving. Some stores tend to get stuck in a time warp, but we're always evolving to what's the leading edge."

E-commerce is now a major and growing part of South Moon Under's business, Gunion said. While his customers tend to want to see and feel merchandise in person, many visit the website first, to see what's new.

"Customer service is crucial and e-commerce can't quite duplicate what the store does, but we're finding better ways to service the customer online," he said. "That's the No. 1 challenge about online business now, is to make the customer feel as comfortable online as they are in the store, to have as much fun and as good an experience."

For their brick-and-mortar expansion, South Moon Under targeted markets across the mid-Atlantic where the average income is among the highest in the country, like northern Virginia, Montgomery County and Rehoboth Beach.

The company has added eight stores since 2011, when it opened its first true indoor shopping mall location, a 4,500-square-foot shop at the Christiana Mall. Up next, Gunion said, are two new stores in New Jersey, in Princeton and Red Bank. The company also has added about 100 jobs in four years and today employs about 400 people.

Brad Gillis, the commercial real estate agent who helped South Moon Under to find the warehouse space, said the company initially sought a location in Worcester County, but "all of our searches kept going back to Wicomico County."

"Wicomico has the building stock. We have the inventory available to supply these tenants with this type of space, whereas Worcester County does not. It's a win for Wicomico and South Moon," Gillis said.

Gunion said he picked Salisbury for his warehouse space because of its proximity to both his home office in Berlin and to a nearby United Parcel Service shipping hub.

He also touted the company's growing relationship with Salisbury University and its "top notch" Perdue School of Business.

"One of the things we're excited about coming over to Salisbury for is that," he said "The proximity is helpful. We've been doing more and more with the business school over there. We have interns, and we're hiring out of the business school... They have a great team there."

bshane@dmg.gannett.com

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