Predictions and comments energized the Rhode Island Marine Trades Association’s annual Industry Partnership Breakfast last Friday. The meeting was a well-executed hybrid event featuring both in person and live Zoom attendance.
U.S. Rep. David Cicilline, U.S. Sen. Sheldon Whitehouse, and State Reps. Lauren Carsen and Terri Cortivand — all Democrats — joined State Sen. Dawn Euer, D-R.I., in commenting on or fielding questions specific to the Ocean State. However, NMMA president Frank Hugelmeyer and MRAA president Matt Gruhn took on some big issues facing our the industry.
The discussion was co-moderated by RIMTA CEO Wendy Mackie and Kathleen Burns, executive director of the Connecticut Marine Trades Association.
Hugelmeyer and Gruhn fielded questions about the industry’s current and near-term outlook, and what each organization will be initiating going forward.
Hugelmeyer acknowledged inventory shortages and predicted the disruption in the supply chain for builders down to retailers is expected to continue for some time. “A lot of parts had been coming from China,” he said, “and we must recognize that China totally shut down for three months, and then the U.S. shutdown followed. It’s going to take time to rebuild supply lines from old and new sources.”
Hugelmeyer noted that we’ve experienced a 20 percent decline in wholesale while seeing a 10 percent increase in retail. To that point, Gruhn added that an MRAA survey of member dealers revealed 84 percent reported low or very low inventory, and 14 percent said they’re effectively out.
Both leaders agreed that boat sales have received an unexpected boost during the health crisis. “The pandemic quickly changed many things to our industry’s advantage,” Hugelmeyer said. “We haven’t had lots of competition. There weren’t any cruises, family flights to island resorts, summer camps, little league, amusement and water parks, and so on. But make no mistake — they’ll all be coming back soon, and with a vengeance.”
His prediction may be closer than we think. On Monday, Cruise Lines International Association, which represents 95 percent of global ocean cruise capacity, announced it is forwarding a safety plan to the CDC for consideration as the agency decides whether to lift the current no-sail order. The association voluntary suspended cruises through Oct. 31. But Arnold Donald, CEO of Carnival Corp., said that once the CDC lifts its order, it will probably take cruise lines a month to prepare ships and train crew for sailing again. That could heat up the competition in time for the winter boat show season.
Further, executives are pointing to the limited resumption of cruises in Europe during the last few weeks, and believe that trips can be offered safely.
Adding to supply line and inventory concerns, Gruhn pointed to the challenge companies face with people working in close quarters, as well as the shortage of tech personnel at the retail level.
“Going into 2021, we will still have an extraordinary opportunity to see boating continue to grow as manufacturers work to solve supply chain shortages,” Hugelmeyer said. “If I look further down the road, by 2022 we’re going to face massive competition, so we need to cash in while we have an advantage.”
That raised a question about the role of boat shows. “I am bullish on the future of boat shows,” Hugelmeyer said. “They have always been a key element in gaining market share for exhibitors and a critical tool for market expansion. Looking ahead to the important winter series of shows, many markets remain uncertain, but the planning for them continues while deeper dives into what digital technology might realistically offer is ongoing. That said, there’s no question — the power of boat shows can’t be denied, and they will resume.”
Gruhn added another dimension to the discussion, emphasizing that retailers are in a novel position because of the number of newcomers to boating.
“First-time boat buyers are up a whopping 70 percent this year,” he said. “But we also must recognize that studies document many of these newcomers will exit our sport inside five years. We also know finding new customers is always far more expensive than keeping and upselling current ones. So our sales success this year is a double-edged sword. It means it’s in every dealers interest to increase efforts now to keep those new boaters coming back.”
To that end, MRAA has picked up the challenge of critical post-sale follow-up, something dealers admit they have been unable to do well during heightened sales activity. MRAA has developed a Virtual Business Development Center for dealerships.
Business Development Centers, which have grown in popularity in recent years, provide a way for dealers to keep in better touch with customers. The MRAA program offers one branded email, two text conversations, one phone call, daily alerts, and weekly reports that cover every new-boat customer. Details can be found on the MRAA website.
“This BDC gives retailers a method of fostering a stronger new customer connection,” Gruhn said.
Finally, Burns and Mackie addressed the question of educating all the new boaters in safety and good boating practices. After all, people who are confident on the water are more likely to enjoy boating and remain in it. That’s where the state and local marine trade associations can play a role, helping dealers set up programs with local teaching groups and assisting first-timers with the right information, recommendations and hands-on assistance.