From containing costs to growing the marketPosted on Written by Richard Armstrong
Sales rebound heartens industry panel; problems with pricing, boater recruitment chasten them
A highlight of every Marine Dealer Conference & Expo is the annual Industry Leaders Panel discussion — and the all-star lineup at the 2013 MDCE did not disappoint.
Responding to questions from the audience and some submitted earlier by dealers at the Nov. 18-20 event at the Orange County Convention Center in Orlando, Fla., five company presidents offered opinions about market trends, product costs, technology, marketing, government regulations and growing boating.
Rick Correll of Tige Boats; Ron Huibers of Volvo Penta of the Americas; Bill McGill of MarineMax; Bob Menne of Premier Marine; and Mark Schwabero of Mercury Marine agreed that sluggish spring sales gave way to solid second-half numbers and they remain optimistic about the trajectory of the industry’s recovery.
“It’s not a steep curve, by any means,” McGill says. “It’s a slow recovery, but the good news is that it’s a steady climb.”
Correll says his ski-boat sales were “up close to 25 percent over what our projections were.”
Huibers notes rising housing prices and a leveling off of boat trade-in values as positive signs and says Volvo Penta is seeing increased sales.
“People are tired of postponing life,” he says. “We’ve had an up year and we’ve crossed our fingers on it remaining up.”
More … or less?
The issue of rising product costs versus giving customers what they want cut both ways for the panel, with the majority saying customers have demonstrated they want plenty of bells and whistles on their boats.
McGill stresses that the industry needs to “get some of the cost out of the product” with smaller engines and fewer accessories, noting a trend toward more day boating among his MarineMax customers.
“To get into boating is not $10,000 to $15,000. It’s now $30,000 to $40,000,” he says. “The higher the price, the less customers you’ve got.”
Correll, however, says his customers have made their preference clear, with sales of Tige’s “de-contented, price-point” ski boats down, but sales of higher-end models up.
“The days when I see ski boats going for $25,000 are long gone,” he says. “Our customers demand that our boats have touch screens and top-line stereo systems.”
At the opposite end of the market from ski and sport boats, Menne says growth at pontoon builder Premier also is coming at the middle and upper range of the line, driven largely by demand for more horsepower and accessories.
“If someone told me four years ago we’d be selling pontoon boats for over $100,000, I’d think they were smoking weed, but we’re there,” Menne says, drawing laughter from the audience.
The power of technology
Rapidly advancing technology, particularly in propulsion systems, was another lively topic. All of the panel members agreed that new technology is a powerful tool for selling boats.
“Technology brings people to the market that otherwise wouldn’t have been in it,” Huibers says. “From our perspective, making boating easier gets more people on the water. We need to keep developing innovation because that’s what brings customers to your dealership.”
Correll says the younger-skewing users of ski boats want the latest and greatest in all aspects of their lives, starting with a top-line stereo system.
“What really drives our niche is the technology side,” he says.
The technology behind propulsion systems also was discussed, with the outboard vs. sterndrive trend being the focal point and all evidence pointing to an increasing consumer preference toward outboards.
Menne says Premier pontoon boats are sold with sterndrive or outboard propulsion, but adds, “Our sterndrive sales the last two years have gone down while our outboard sales have gone up. Sterndrive is not going away, but there is a swing happening.”
The two panelists representing sterndrive manufacturers say they suspect the trend is not permanent.
Volvo Penta’s Huibers says a rapid rise in 4-stroke technology, initially in emissions and efficiency and more recently in reduced weight, has outpaced sterndrive technology.
“Emissions have to catch up,” he says of sterndrive technology, “but from everything we see, I/O technology is going to be around for years to come.”
Mercury’s Schwabero agrees.
“Let’s face it. The outboards of today are a lot different from those in the past,” he says, noting the rise of 4-stroke technology and, more recently, the emergence of joystick control for outboards, “but we don’t think there’s a wholesale shift going on.”
Mercury recently said it will shift away from manufacturing its marine engines off a General Motors automobile engine block and build its own gasoline engine blocks.
Schwabero stresses the increased manufacturing and technology freedom that Mercury will gain by building in-house.
“As we marinize engines today, you start with something that is not optimal,” he says. “We think we can bring a purpose-built engine to a marine application that lets us bring some technology that can be unique to the marine application.”
A question about whether the jet propulsion market might “cannibalize” part of the sterndrive market prompted agreement from the panel that there is room for both technologies.
“Sterndrives and jets are different segments of the market, with different buyers, and that will continue,” says McGill, whose MarineMax announced in September an agreement to carry the Scarab jetboat line from Rec Boat Holdings LLC in an effort to fill a void left when Sea Ray opted not to enter the segment.
“There are a lot of things that sterndrives do that jets don’t and we’ll continue to promote that difference,” Schwabero says.
“From our perspective, jetboats are bringing us new market segments and expanding the customers for us all to go after,” Huibers says.
Youth + Minorities = Growth
The theme of drawing new blood into the boating lifestyle has touched the industry’s Grow Boating campaign and its effort to attract youths and members of minority groups, specifically Hispanics, to boating.
“Grow Boating has been great at introducing people to boating,” McGill says. “The RV industry is on fire now, and they’ve been extremely successful with their Go RVing promotion. We need to figure it out because the RV industry is doing a better job than we are.”
On the challenges of hooking today’s youth on boating, McGill admits the gap between generations is profound.
“For any of us here, it probably goes to back to childhood experiences in boating,” he says. “The problem today is that kids are involved in so many extracurricular activities. They don’t just want to do soccer. It’s baseball and ballet and gymnastics — and there is no boating time.”
McGill stresses that a childhood without boating makes it less likely that young adults will get interested in the lifestyle.
Correll says Tige uses watersports athletes as spokespeople and as participants in the company’s Endless Wave tours to attract youth.
“Young folks don’t write checks, but they influence the purchase,” he says.
Schwabero points to the digital revolution, which is leaving some baby boomers behind, and offered dealers this advice: “I’d encourage anyone who runs a dealership, if they don’t have kids, [to] talk to the younger people in their 20s and 30s on how they get their information.”
Regarding the Recreational Boating & Fishing Foundation’s five-year marketing plan to attract the burgeoning Hispanic population, panelists agree that the challenge is similar to the one involving today’s youth: getting them introduced at an early age.
“Most of us got into boating because a father, uncle or someone took us out when we were young, and that trip is still in our childhood memories,” Schwabero says. “It has nothing to do with demographics or financials; it’s about getting them exposed to the lifestyle.”
Menne agrees on the importance of introducing minority-group members to the boating lifestyle, but he notes that Premier launched a marketing drive to attract Hispanic customers to the brand. “Frankly, we didn’t see a lot of return on our investment,” he says, although he also says that “in marketing materials it’s important to have these people represented.”
McGill says MarineMax employs bilingual Hispanic and black sales team members.
“They’re not different,” he says of potential minority-group member customers, “except that they were not exposed to boating in their youth.”
McGill warns that the industry ignores the rising U.S. Hispanic population at its own peril.
“Hispanics are becoming the new Caucasians,” he says. “We’d better do something or we’re going to wake up and we’re not going to have any business.”
Other topics of discussion
• How the Internet changed the boat-buying process:
Correll: “The market is now on the Internet. The boat show is now a confirmation. There’s nobody in this room buying anything of substance without first researching it on the Internet. You have an educated buyer coming to you, not only from what you put out, but the blogs and other sources online.”
Menne: “It’s extremely important to have a strong website and update it regularly. I encourage all dealers to spend the time and money on their website and that will increase your sales.”
• The industry’s unified voice:
Schwabero: “One good thing that came out of the recession, in the darkest days, the industry really did come together. We as an industry have a much more united voice now than we had in the past to deal with something someone in Washington dreams up.”
• Hurricane Sandy and New York/New Jersey boating:
McGill: “Our New Jersey dealers are still in recovery mode. The rebuilding of homes comes first there. We actually had a good year in New York. By 2015, it will be a heyday in the New Jersey market.”
This article originally appeared in the January 2014 issue.