I wrote a column several years ago about a successful self-made businessman named Samuel Zemurray, known as “Sam the Banana Man.” A Russian immigrant who made his fortune in the tropical fruit trade, Zemurray believed there was much to be said about boots on the ground and seeing things with your own eyes.
The column suggested that boatbuilders and dealers that actively use the products they design, build and sell have a leg up on those who don’t. Staying close to your customer is a time-tested business tenet that transcends industries and generations.
At the same time, I think we can sometimes miss what’s happening beneath our noses without the benefit of distance and perspective — it’s the old forest-for-the-trees problem. Sometimes you need to see the numbers.
For a broader perspective, I turned to Jack Ellis, managing director of Info-Link Technologies, a Miami-based research company that specializes in boating and outdoor recreation.
Ellis made a point in our January “Forecast 2018” issue that I wanted to follow up on. Based on the numbers he and others analyze, Ellis said 60 percent of all new-boat buyers this year will be older than 50, a demographic that has rebounded strongly since the recession in economic terms.
Given the “ideal” buying environment that has been in place for this cohort for the last several years, Ellis asked in his piece how many buyers are left in the category to upgrade to a new boat. Even with a continued strong economy, he suggested, “the appetite is eventually satisfied.”
“We’ve had seven years of continued growth in boat sales,” Ellis told me. “If someone wanted a new boat, the opportunity has been there for some time. I may be wrong. We’re still optimistic, for sure. We’re just a little more cautious.”
When the final numbers for 2017 are in, they are expected to show new-boat sales up about 5 percent. Ellis predicted a “more modest” increase this year. Our subsequent conversation ranged from millennials to hard-core serial boat buyers who have been so important to this industry.
There is nothing new to the notion that the boats and their owners are aging. About 40 percent of all current owners are older than 60, and a scant 15 percent are younger than 40.
The average age of a boat owner today is about 55. More than half the people on the water today bought their first boat more than 15 years ago.
“We have this large core customer base who are very loyal,” Ellis said. “And I think we have done a very good job as an industry taking care of them.”
Although this group of 60-plus owners may not be in the market for new boats, they do buy slips, fuel, insurance, equipment and other services, including upgrading and repowering their boats. They also are more apt to hire people to work on their boats, Ellis noted.
“I’d argue that if boat sales went to zero — that wouldn’t be good, obviously — certain segments of the industry would be all right, at least for a while,” Ellis said, based on the service and storage required by this large group of dedicated boaters.
Repeat boat owners, especially those who have owned at least three boats, are essentially lifers, according to Ellis. “The incidence of defection decreases with each subsequent boat purchase,” he said. “By the time we get someone into their third or fourth boat, we generally have them for a lifetime.”
How long does one stay in the saddle? Small as the numbers may be, Ellis said there are almost as many boaters over 80 as there are under 30. “I’m of the opinion that that audience will stick it out as long as they’re physically able,” he said. “They’re hooked.”
Increasing the number of first-time buyers — and retaining them — is crucial to the long-term health and growth of boating. “It’s not an option,” Ellis said. “It’s a necessity. I can tell you with 100 percent certainty that if we don’t do that, the market will decline.” Keep in mind that roughly seven in 10 boats (new or used) sold today are purchased by someone who has previously owned one.
There’s certainly work to be done on that front. In 2000 about 42 percent of all boats sold that year (new and used) were sold to first-time buyers. By 2015 that figure had dipped to 33 percent.
In terms of retention, consider these figures. About 62 percent of repeat buyers who bought a boat in 2005 either still owned that boat or had bought another (as of December 2016). About 27 percent had sold it and not purchased another.
Among first-time buyers, 46 percent still owned the boat they bought in 2005 or had purchased another. About 54 percent had sold the boat and not replaced it.
“How do we get more young people to buy a boat and, as importantly, how do we get them to stay in boating?” Ellis said, asking a question to which there is no simple answer.
This article originally appeared in the February 2018 issue.