The boating industry’s green shoots
A few weeks ago, a former boating industry executive contacted me, asking about the state of marine business in the U.S. He is a friend who left the United States a few years ago to take a position within a different division of his company based in another country. Since his e-mail, I’ve been thinking about how to answer him.
In my job, I talk to a lot of industry insiders across different segments of the business. Many dealers across the country have been reporting a slight increase in boat show sales and a definite improvement in consumers’ attitudes toward spending. Their main concerns seem to be obtaining the floorplan financing to purchase new models and getting potential customers the financing they need to buy those boats. Boat builders, meanwhile, are excited to be hiring back workers. With dealers having cleared out much of their aging inventory, demand for new product is up, even if retail sales are relatively flat. Their main concern seems to be getting the products they need from suppliers to build boats.
Neither dealers nor manufacturers are expecting much of a bump in retail sales this year. In fact, some builders are forecasting a slight decline. Given that last year was one of the toughest in recent history, this doesn’t seem like very good news.
But it’s undeniable that the feeling in the air is positive. The difference between last year and this year, in my estimation, is hope. Hope in the eyes of consumers, which has proven contagious for our industry. And some businesses are particularly adept at leveraging this hope.
While we received two feet of snow about three weeks ago, it has been sunny and in the 60s for the last week, and now the snow is gone. In fact, on my walks, I’ve noticed there are some green shoots poking through the dirt in the ditches. But they aren’t poking through everywhere. Just in the areas with good water flow and lots of sun.
It’s the same in the boating industry. An East Coast dealer I spoke with last week, for example, told me that since Oct. 1, his boat sales have been up 59 percent, compared to the same period of last year. His dealership also happens to be one of the leading marketers in the business, one that’s nimble enough to adjust to today’s consumer trends. He knows how to put his business directly in the water’s flow and make the sun shine on it.
From the current vantage point, it seems unlikely that we’ll see a full recovery any time soon. But for those businesses that are positioned to take advantage of the hope in the air, the rebound will come early.
We’d like to hear from you. How are you taking advantage of the positive attitude consumers have been exhibiting at boat shows this year?
We actually had a great year in 2009, with sales up 60%. Now, much of that volume was “distressed” inventory, but it allowed us to offer a great deal to the customer, and customers were only buying in 2009 if they understood that they were getting a great deal. Of course, margins suffered a bit.
In 2010, we will continue to tell our customers that it is a buyers’ market, but we will bring the focus back to the fun of boating. We are holding a number of events to get prospects onto boats and out on the water. The increasingly positive outlook on the future is bringing out a bit more of traditional buyer, rather than just the bottom feeders. Discounts still need to be strong, but we don’t expect quite the pressure we had last year. As such, we’ll start to bring margins back up to near-normal levels.