Q&A with Legendary Marine managing partner Fred Pace

Posted on Written by Reagan Haynes

fred_paceLegendary Marine has come a long way since it launched from a single trailer in Destin, Fla., with three employees in 2001.

In 11 years that included the deepest and longest recession since the Great Depression — a period that saw an estimated 35 to 40 percent of boat dealers leave the industry — Legendary Marine continued to grow and now has 142 employees. It has expanded to five locations: the base store in Destin, Fla., Fort Walton Beach, Fla., Gulf Shores, Ala., Panama City, Fla., and a new location, also in Destin.

The dealership sells 11 brands of boats: Carver Yachts, Chris-Craft, Cobalt Boats, Everglades, Four Winns, Hurricane, Marquis, Scout Boats, Sea Hunt, Skeeter and Xcursion.

Although times got lean, the dealership grew its investment in marketing and promotion during the recession, managing partner Fred Pace says.

Last year, Legendary stepped up that effort, throwing a James Bond-themed event — complete with a mock heist of a Marquis 63 that was thwarted by the arrival of James Bond (actually, one of Legendary’s salesmen) — via helicopter, followed by a high-speed on-water chase.

Pace graduated from Northeastern University in Boston in 1974 before earning a graduate degree from the University of Massachusetts in Dartmouth.

08_q_aAfter that, he played professional tennis. “I’m going to be 60 next month, so this was a long, long time ago,” he said in late September.

He had played in college and tried to make it a career, but when he “didn’t make enough to eat,” he entered the automobile business before moving to the marine industry, where he worked for 25 years before opening his own business.

He and his wife and his mother all are avid boaters, he says.

Q: A lot of dealerships more established than yours didn’t survive the downturn. How was Legendary able to grow as a relatively new business?

A: We’ve been extremely fortunate to weather the downturn and fortunate to surround ourselves with terrific people. And we’ve enjoyed better times over the last couple of years; 2008 to 2009 was typical for us, as it was for everyone in the industry, but we had an unusual turn after that, following the oil spill. That affected all four [at the time] of my locations.

Our stores are all along the northwest Gulf Coast, and a lot of our economy is driven by tourism and people who own second homes. So when the downturn hit in late 2007 we started to feel it right away. Maybe it was not as significant as in other parts of the country, but we certainly felt it right away.

I certainly didn’t see it coming. It hit us at record inventory levels. It was a very challenging time for our team. I was fortunate enough to be able to distribute a fair amount of repossessions from companies that didn’t survive, and that allowed us to get through the difficulty with our own inventory.

Then we shifted our model. We realized we were sales-oriented, and we realized we needed to embrace a lot of other arms of our business that didn’t have the peaks and valleys that sales does. As a result, things started to get a bit better in 2010, but then BP had the oil spill. While it didn’t do in our areas what the media wanted you to believe, in terms of pelicans covered in oil and black beaches, it really was an event to negatively impact tourism and marine business.

10_q_aBut the silver lining to that was the area got more recognition. People saw those white beaches, even though the tourism board had to work hard to bring people back, and I think they did a good job of that. BP has some pretty deep pockets, and they certainly assisted with helping this part of the coast get back on track.

Things bounced back pretty quickly in the latter half of 2010, and 2011 was a strong growth year. We have far more of a service model today. We’re not neglecting sales, for sure, but we’re focused a lot on service, including mobile service, which we didn’t used to offer.

We’re also seeing a lot of first-time boat buyers. There are a number of military installations nearby [in] Fort Walton Beach, Panama City and a number of Navy installations. We have not seen any shrinkage of that along this coast. And I think that particular consumer has not been so concerned about economic worries. With the assistance of Wanda [Kenton Smith, marketing director], we’ve been able to make things more affordable for military customers, and that’s a segment where we’ve seen a nice amount of growth.

Q: But so many failed during that time. How specifically did you guys grow when so many were filing for bankruptcy?

A: We live in a spectacular area, and for sure we benefited a great deal from just our geographic location. We are in an area where people who live in Atlanta, Birmingham, New Orleans, even St. Louis, this is their closest beach and likely their best beach. From 2001 to 2007 we saw some spectacular real estate growth in the area, so that helped fuel our growth.

Equally important is that we’ve been able to recruit some really terrific people, along with having some great manufacturer partners.

As far as the plan for getting through the recession, I’d like to tell you it was some well-thought-out and well-executed plan, but frankly it was a day-to-day process of continuing to work harder, of knowing there was some light at the end of the tunnel. For close to two years it was tough slugging it out. We saw a lot of dealerships go out of business, and there was a lot of inventory being repossessed. It certainly challenged the values of new boats we had in stock. And we had a ton of it in stock, and most of it was non-current.

We had to look at all other profit centers to even out that inventory we were underwater on. We expanded service, parts and accessories, fiberglass. We were fortunate to sell a fair amount of repossessed product for several floorplan companies.

By the end of 2009, early 2010, we were pretty much out of that challenging inventory situation and we became a lot leaner from an operation standpoint. Fortunately, we … were able to navigate through that without big reductions in staff. Everybody worked harder and realized we all needed to do things to save money and maximize different profit centers. The business became more resilient. Now that things have improved, we’re seeing a resurgence in demand for new and pre-owned product, as well.

Q: You must have gone in well-capitalized.

A: I wish we could say we were, but we had such growth between starting out in a trailer and building our first building in Destin. The business didn’t have significant capital to weather that storm. We worked smarter, we worked harder and we had a very good relationship with our main lender. They were very understanding, they believed in us, so they worked with us. The relationship is stronger than it’s ever been. They took a chance on me in 2007 and 2008, and I feel today they look back and say they made a business decision that worked out.

Q: How have 2012 sales been?

A: Sales are up almost $10 million over last year, and our sales to date are right at the $45 million range. We’re up 122 units, to 706 units, year to date.

12_q_aThe shift has been to smaller, less expensive boats, and it’s a pretty significant shift. The smaller, outboard-powered center console fishing boat has become a significant part of our business. It was always a part of our business, but it was 70 percent sterndrive and 30 percent outboard. Now it’s 70 percent outboard and 30 percent sterndrive.

Part of that is because of our area, and also the 4-stroke motors have become so efficient, quiet and reliable that in our area there certainly has been a shift.

Q: You have been named the No. 1 dealer nationwide for Sea Hunt and Everglades, as well as having the top Customer Satisfaction Index ratings for Cobalt in the Southeast region. Can you talk about that?

A: We’ve been very fortunate to have relationships with terrific manufacturers. We are Sea Hunt’s No. 1 dealer in terms of volume, and we were Everglades’ top dealer this year, also. While we’ve always had a volume-oriented mentality, that did shift in the years subsequent to the recession.

We wanted to have the volume and grow our service model, which led to a lot of brainstorming as to how to increase service volume and gain more of the market. That has led to significant growth in customer satisfaction.

In the recession, some of the dealers in our area closed or downsized, and some customers realized they no longer had a service department, so we purchased those lists and that worked out for us.

The other part would be a plug for [the Marine Dealer Conference & Expo] and Boating Industry. When you watch something you helped create unwind, you’re looking for help, and that’s where a lot of the Boating Industry white papers came out. A lot of other dealers, smarter than I am, provided some very valuable input for me. We took advantage of the MDCE classes. We became students of what a lot of better dealers were doing, and frankly, we copied them. Most of them were very, very helpful in sharing ideas of how they were achieving better sales and parts profits.

We embarked on an aggressive survey campaign around that same time, and that taught us a lot about our dealership and our customers that we didn’t know. That spawned a whole other set of meetings and discussions on how we needed to improve communication [with] our customers and really justify the price. There was some real growth in learning because the business has just changed so much. We had been so successful doing things the same way for so long, and the recession taught me how smart I wasn’t.

We did direct-mail campaigns that had strong incentives targeting existing customers. We knew we were losing some of them because they were selling their boats or boating was too expensive and they were concerned about jobs or their home — real estate probably went down 40 percent in this area. We went through the same short-sale and foreclosure woes the rest of the country did, so keeping those people in boating was difficult. We added some horsepower to our destinations program. We did a program that was strictly to help people get out on the water and have some fun. Wanda’s been instrumental in growing that since she came on board.

Q: Can you talk about some of your more creative marketing techniques?

A: We knew the market had shrunk, and we felt like we were going to lose some of our own customers who were getting out of boating through the recession, so we needed to make sure the message was that boating was a great thing to do with family and friends. Part of that was spawned because, like other areas, a lot of boat shows shut down here. When that happened we realized we had to get the message out, so we borrowed from other dealers and started more event-based marketing instead of earmarking those dollars for shows.

We did things like Cobalt-in-the-pool, Marquis-in-the-pool and the James Bond event. For us it was our kind of boat show, disguised as an event that we were inviting all our customers to and our competitors’ customers to and people who had waterfront homes. It was our way to get our message out.

I don’t think we scaled back the dollars and cents spent on shows. We spent every bit as much on the events — you just have a bit better control of customers, and there is no competition there.

We are a strong supporter of boat shows. Some have come back, and we think the percentage of people who close at the show isn’t nearly as high as it used to be, but that’s our chance to get our product and our sales team in front of the customer. We have to be there. They just don’t generate the numbers they used to, but I don’t think it’s the right thing for the industry to abandon boat shows.

I would be remiss if I didn’t talk about some of the events Wanda has really spearheaded and some of the partnerships she has cultivated. She did such a great job with this last one. Theme was Marquis are Forever, and Wanda brought the diamond part. She got this really upscale jeweler who brought in over a million dollars of real diamond jewelry and separated the yacht club into three areas. The women got to try on jewelry in different showrooms. It was very cool. That has led to a sponsorship with that jeweler because they realize their customers are our customers, and vice versa.

We also partnered with one of the leading restaurants, and a chef was cooking here. A gentleman who is very well known here is a concert pianist, and he played James Bond themes.

Q: This is the one that had a guy in a helicopter?

A: Yes, James Bond arrived in a helicopter. And we had a mock theft of a brand new 63 Marquis, where the bad guys came up on jet skis and overpowered and shot the good guys who were protecting the Marquis, and James Bond arrived and saved the day, and of course beat the bad guys. The boat came safely back to dock, and then everybody got to toast James with a glass of champagne. We had a great time. That was in June.

Q: That’s an unusual event. You hear a lot about Women on the Water and youth, and not to discount those events — they’re very important — but I’ve never heard of something like this. It’s definitely got Wanda’s touch to it.

A: Oh, yeah. I mean, there were jet skis with gun tracks, you heard the gunshots, and I mean, this helicopter buzzed right over the crowd and landed 50 feet away where our dry storage marina pad is, and James Bond, where he came up from going after the bad guys, he arrived in his tuxedo on a motorized surfboard and didn’t get wet, and as he scooted up, he came right on the back of the Marquis swim platform that we had lowered down, jumped right onto the back of the boat, defeated the bad guys and emerged victorious with two lovely ladies on his arm. It was a hoot.

Q: Was this a stuntman?

A: It was one of our salespeople.

Q: And Legendary recently launched a “value center?”

A: Yes. Our Destin location is somewhat hidden from the major east-west artery (98) along the coast, and we had not had a presence there. We felt like we missed some traffic because we’re on the north-south highway. A marine service operation recently closed, and we had the ability to get in there and lease it at a reasonable rate. It’s right next to one of our competitors, so we targeted it with pre-owned product, and entry pontoons, and Yamaha outboards, and new additional smaller center consoles. We’ve just been very surprised by the amount of activity we’ve had. It’s only four miles away from our main location. So if we’re able to secure the customer there, but don’t have what they’re looking for, we bring them over to our main store.

We’re only six months into it, but we’re seeing some very good results that justify opening the store. So we’re hopeful that once we get a year in, we’ll see some really positive results. We think it’s a customer we don’t necessarily see, the drive-by guy. It has already paid some dividends and we think it will continue to.

This article originally appeared in the November 2012 issue.

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