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Inventory Still the Retail X-Factor

Dealers turn to maintenance, marketing and storage services for the off-season
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oat dealers are starting to feel a little more optimistic about the manufacturing supply chain, but they are worried about consumer discretionary income in the current macro environment of inflation, tighter credit and a potential recession, according to results of the monthly Pulse Report survey.

The ability to acquire more stock and rapidly promote the available boats is starting to pay off, according to some respondents. The July survey, conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only, surveyed 94 retailers.

“Product and lead times are getting better every week,” one dealer wrote. “Letting customers know on social media that we actually have product is working. Communicating with employees and taking interest in retaining them has morale up.”

Most metrics tracked in the survey, though improving, were still weak. Dealer sentiment on current conditions rose to 42 in July versus 37 in June. Sentiment on the three- to five-year outlook was 39 in July, up from 33 in the prior month. A reading of 50 is considered neutral.

“Dealer sentiment on both current conditions and the three- to five-year outlook remains negative but ticked higher in July,” the Baird analysts wrote. “Dealers are mindful of the impact of inflation, higher interest rates and weakening consumer confidence.”

Some dealers say they think it will become more difficult to sell new boats and entice trade-ins under current economic conditions. “With consumer confidence at an all-time low, our sales opportunities have dramatically slowed,” one dealer said. “Customers will switch to maintaining their current boats rather than swapping them out after a year or two. We will try to capitalize on this by expanding our service offerings.”

Other dealers said they are finding some success with in-store promos, rebates, digital marketing and waterfront ride-and-drive events.

Headwinds for dealers include higher fuel prices, higher operating costs, inflation, staffing challenges, government policy and “manufacturer reps that haven’t communicated with their dealers or visited since Covid.”

More dealers reported retail declines in July (44 percent) than growth (26 percent), the Pulse Report found. The trend was similar for used boats, with 49 percent reporting a
decline and 30 percent reporting growth. Two-thirds of dealers still deem new-boat inventory to be “too low.” Only 16 percent said inventory is “too high.”

When asked how they manage the seasonality of the business as autumn approaches, dealers most frequently responded that they switch to winterization services, followed by storage, special marketing or customer communications, and boat shows. “Service and after-sale care generates profit and customer loyalty, and reduces seasonal employment changes,” one dealer said. “Promoting the service department for winterizations, parts and storage services via social media, mailers and coupons has been an off-season win every year.”

Others mentioned keeping in touch with customers and preparing for 2023 boat shows, plus anything that can be achieved indoors.

“We have invested over the last couple years to grow our indoor storage facilities to drive higher revenue and help with opportunities for additional winter service work,” one dealer said.

Most of the July respondents said they expect boat-show sales to be lower than last year. Only 5 percent expect higher sales at boat shows. Worry about consumer spending is a key reason.

“As a boat dealership, we are on the leading edge of the economic curve,” one respondent said. “The products we sell are 100 percent discretionary and the first thing to slow when customers are not comfortable. ... We are in for a bumpy ride.” 

This article was originally published in the September 2022 issue.

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