Training your sights on the far horizonPosted on Written by Bill Sisson
For veteran and newcomer alike, these may prove the most challenging times we have faced as an industry, particularly if the last quarter of 2008 is any indication of things to come.
What will happen to our businesses in 2009? We posed that question to 18 industry leaders whose backgrounds and experience cover a broad swath of the boating market. They include boat and engine builders, a major accessory retailer, a finance expert, dealers, a marketing veteran, industry association leaders and others. Their perspectives and advice for the coming year starts on Page 23. I believe these veterans, as a group, have made a clear, sober assessment of the next 12-plus months. Consider it must reading.
Those of us who will emerge intact from this gale and in a position to take advantage of market improvements when they come will need to pay close attention to our businesses, customers and partners. Survival will be predicated on controlling expenses; managing assets, inventory and staff; and reducing overhead, while continuing to improve our products and business operations. We will be lean by necessity, but that doesnt mean quality or service should suffer. Those who find ways to innovate in these tough times will be rewarded.
For starters, the timing. If we are not currently at the nadir of this mess, I believe the economy will hit bottom sometime in the first quarter of 2009. The earliest the boating industry will see glimmers of stability and perhaps small improvement will be in the second half, but limited recovery may not arrive until 2010.
What segment of consumers will come off the sidelines first and lead the way toward recovery? Baby boomers, especially those who either currently own a boat or who have owned one in the past, should be a key target for builders and dealers. More than any other segment of the population, this group has the discretionary income, education, time and sheer numbers to help turn the tide when conditions are right. Many have already been bitten by the boating bug. And heres the thing to remember: Baby boomers have reached the age and I include myself in this group where they hear the proverbial clock ticking. As a result, they wont be as inclined as others to defer big-ticket purchases and boating dreams. Ignore this segment at your peril.
New product will be important in the current slump, especially when the tide starts to rise and buyers return in greater numbers. The caveat here is having the right new product. Buyers still will pay a premium for true innovation and quality. Builders and dealers in sync with what customers are looking for will prosper. Those out of step wont.
Dont overlook macro trends and their potential impact on your customers. Although gasoline prices are currently at five-year lows, its difficult to forget last summers volatility, the continuing flight from SUVs and trucks (and the impact thats had on Detroit automakers), and the increased interest in energy efficiency across broad segments of the population. Its something builders need to carefully consider when commissioning new hull designs. Dealers, too, need to keep a close eye on emerging trends when deciding on new product lines.
Expect efficiency and fuel economy to become stronger selling points, especially with first-time buyers, some of whom may have recently traded their Suburban for a Prius. Dealers should be ready and able to field questions regarding fuel consumption and costs, and have accurate information and properly framed answers at their disposal. Deep product knowledge can produce answers and perspectives that lead to a sale; a superficial response to an already cautious buyer may result in a missed opportunity, particularly in this climate.
Boating has several compelling stories to tell. Affordable family fun is one, with a renewed emphasis these days on affordable. Will careful buyers be as eager to spend premium dollars on speed for the sake of speed? Luxury for the sake of luxury? Better to focus on how boating brings family and friends together, how it invigorates and enlivens our spirits, and on just how much flat-out fun it is to be on the water. Thats a story that sells itself.
Contraction throughout 2009 will result in fewer dealers and builders. In an industry awash with brands and where product differentiation often is quite small, fewer but stronger choices will help those left standing. There are only so many ways to sell vanilla.
The customer base for this industry is in a holding pattern, but it is not going away. Boaters are sitting tight, content to upgrade and improve their vessels. This will present opportunities for dealers with strong service departments as well as for marinas and boatyards with a reputation for quality repair work.
There is plenty of rough water ahead, but those who pay close attention to their businesses, stay close to their customers and are able to quickly adjust and adapt to a changing marketplace will find safe harbor when the winds finally abate.
This article originally appeared in the January 2009 issue.