Boomers go bust
It’s no secret that consumers are spending less these days and that savings rates are rising. Hidden behind this obvious fact is the lesser-known reality that our industry’s top customers, the 79 million baby boomers who have been buying, trading in and upgrading their boats for years and years, may be saving themselves right out of the boat market.
According to a recent article in Business Week magazine (“The Incredible Shrinking Boomer Economy”), the American economy is in for a world of hurt as these 60-somethings continue to save their money as this recession tries to turn around. For the boating market, too, these retirees could have a significant negative impact on sales as we look to rebound from this downturn.
But there are things to learn from companies already responding to the decline in boomer business. Here are a few tidbits from the BW article.
- Mercedes created a focus group of 500 or so people aged 20 to 32. Known as Generation Benz, helped the company conclude “that we have to start paying a lot more attention to tomorrow’s customers, especially if tomorrow is coming faster than we thought.”
- Clothing designer Vera Wang is creating high-end clothing by using a higher quantity of a less-pricey fabric, which gives the garments a “richer look,” according to the article.
- Starwood Hotels & Resorts Worldwide has created what it calls “style at a steal.” Historically catering to the boomer generation, the company launched two new hotel chains: Aloft, “named to echo the ‘urban cool’ of loft apartments,” and Element, a “low-cost option aimed at people who prefer suites with every ‘element’ of their daily lives.'”
Whether these strategies will work in the long run remains to be seen, but they underscore our need as an industry to either work to re-tool our products for a more cost-conscious boomer or to appeal to a different generation altogether. As the article points out, “the trick will be finding a way to fulfill the needs and wants of a generation that is used to being catered to — but is now on a budget.”
How will you cater to them?
I am a life long boater in my mid sixties and a business broker very familiar with most all aspects of the marine business, I can say that never before have I seen such an adjustment forced upon the industry. My prediction is that there will not be the immediate pent-up demand that is usually found to surface after a period of economic recession. To many factors will stifle demand that did not exist before. Lots of people were laid off in former economic down turns but, they still could go to the bank for a loan, borrow on their home equity, or borrow on their retirement accounts. Today all three are gone, al be it for the banks, they are artificially hording money they should be lending. This is evidenced by the Federal Reserve’s balance sheet. Banks would rather receive the benefit of overnight fed interest rather than make a new loan to the citizens. Typically the most expendable income was always held in the hands of white men age fifty and above. The problem is that a lot of that group today is in debt and the rest are afraid. What do you think?
The boat manufactures did the right thing and stopped building boats, most dealers we deal with have little or no inventory. Not sure why Dusty hasn’t followed Genmar’s lead yet? Boating is a passion, and in my case not a luxury, but a way of life. The banks need to get off their respective rear ends, and either close down, fire all of the executives, or start lending again. I hear of people from all different industries getting laid off, but none from the banks that have taken are tax money. When that happens, people will start buying new boats again, and the pre-owned boats will continue. Happy Boating!
The key problem is with the banks and other lending institutions. They took billions in bail out money, then under the guise of meeting “regulations” (which apparently heretofore they blithely ignored), used the cash to improve their reserves and balance sheets, rather than lend. (Let’s not even talk about obscene performance bonuses paid out on previous bogus and factually non-existent profits.) To add insult to injury, the lenders are ravaging the US credit card consumer with arbitrary raises in interests rates to levels that a few years ago would have been considered usurous and illegal. Bottom line is we have a credit-based economy; and the banking community is killing it. We will not see a turn-around until we take over these essentially failed institutions, kick out the interests who brought them to ruin and who continue to personally profit at the US taxpayer’s expense, and put business and consumer lending back on an even keel. Only then will the boomer generation, a core feeder of our economy, come out of its fear-generated funk.