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Expert answers to critical questions - Trade Only Today

Expert answers to critical questions

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Panelists give dealers their ideas on steps the industry should take to ensure a more stable future

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The final two sessions of the Marine Dealer Conference & Expo featured panels with manufacturers and dealers talking about some of the most pressing issues in the industry.

The first panel consisted of Jerry Brouwer, Action Water Sports; Randy Kelly, Kelly's Port; Bill McGill, MarineMax; Bill Yeargin, Correct Craft; and Bob Apple, Volvo Penta. Their discussion focused on such topics as consumer demographics and product changes.

The second panel consisted of Rod Malone, Sail & Ski Centers; Alan Bohling, Seattle Boat Co.; Dustan McCoy, Brunswick Corp.; Duane Kuck, Regal Marine; and Phil Smoker, Smoker Craft. This panel discussed inventory issues and how to better manage the supply chain.

Both discussions were moderated by Matt Gruhn and Liz Walz of Boating Industry magazine. The following excerpts highlight key points made during the discussions.

  • What do consumers want?

Apple: They want value-added features that ... get them excited about coming into boating. It must be something they're really going to latch on to ... such as the IPS with joystick. That's why we believe the high-technology features are going to be so important. At the same time, technology for technology's sake is wrong. It must provide that value, it must be cost-effective, and it must obviously give the consumer something they're looking for.

Brouwer: Boating is the ultimate family together time; we just need to make it absolutely hassle-free. We have to make every last aspect of boating pleasurable. Maybe it's time to readdress fractional ownership and different ways to get people into boating ... where they get the taste and they get addicted. You move them from fractional ownership to ownership or into a used boat, and from there into a new boat.

  • Used/certified preowned market

Yeargin: We're very interested in a certified preowned program. Our research tells us - and we hear anecdotally - that dealers do very well with CPO programs. Dealers get stronger margins, and where dealers do well, we do well.

Kelly: I think it would lend a lot of credibility to the manufacturers. We've had good luck with our [CPO program]. If it's a certified preowned boat, we'll throw in our guaranteed same-day service. Armed with that, we can sell that boat for five to 10 points more than ... a boat just like it sitting on the lot - same year, same color, same whatever - because it carries that value.

McGill: We've been doing it for quite awhile now on late-model boats. We see an increase in margin when we do it. To get the manufacturers behind it as well would be a real plus.

  • Marketing/co-op

Yeargin: We have seen, and I think we will continue to see, dramatic changes in how we market. We're certainly much more e-focused through our Web site, through social media, and we've seen a pretty positive impact. We have a stable of athletes we can send out to dealers [who] can help promote product, and the dealers can put on events and so forth. Other ways dealers and manufacturers can work together is through the social media and linking up with each other and search engine optimization.

McGill: It is more about the Internet today. It's less about boat shows and we're all seeing that. It's surprising the number of sales that we're making over the Internet. It's not as much about the boat, it's about the lifestyle. In my opinion, all the marketing we need to do is on lifestyle.

Brouwer: We're really marketing to a sliver of the population. What's happening right now in media couldn't be more beneficial to any group than the marine industry. Facebook and Twitter and everything else that's out there are absolutely what we need.

  • Dealer/manufacturer relationships

Apple: It's time for us to quit looking at optimizing just our little world. It's time for us to sit down and look at how we can get from the beginning to the end in the most efficient, cost-effective way and the only way we can do that is if we've got collaborative relationships.

Kelly: As all of us know, there are a lot of big elephants in the room. I think two of the biggest [are] ... floorplan and production. Some manufacturers have gone so far as to streamline [things] so we can go online and find out what everybody has in their inventory and that's the direction we're going to have to go. We've got to be working off each other's inventory and it's got to be done on a regular basis because we're not going to be in a position to floorplan these boats like we used to.

  • Inventory management

McCoy: This whole inventory situation is quite multifaceted. We sat back and said we've got to attack this thing at three levels. We've got to attack it at production, wholesale and at retail. Let's never get in this situation again. We've got to have real dialogue throughout the industry. Our industry's got to move from thinking wholesale to thinking retail. Ultimately, every discussion has to be, What does the consumer want?

Malone: Inventory management has taken on a whole new meaning. In the past, a few boats having a birthday was not particularly a big deal. We knew eventually we could sell those boats. Things have changed dramatically. We [have] systematically targeted aged units, and we developed marketing schemes and strategy to move specific older units. We had tremendous support from Sea Ray, Whaler, Trophy and other Brunswick companies in targeting incentives for these older units.

Kuck: We need to have more boats presold before we build them. We put a showroom at our factory where we have all of our models, from 19 to 52 feet, on display. [Dealers] can bring folks to the factory to look at boats because dealers aren't going to be able to stock as many boats as they have in the past. Somehow we have to find a way to still sell those boats, so I think factory presolds [can help]. And I think at some point in time ... [we need to talk about] changing the seasonality of our industry. How do we get more boats sold in the earlier months?

Bohling: I'm a believer in a made-to-order type system, but you'll never reach 100 percent. I know for a fact that we can hit 50 percent and maybe a little bit more of presold, made-to-order boats. The way we can presell boats is when we can convincingly tell the customer the date and the time their boat will arrive.

  • How do we prevent this inventory situation from happening again?

McCoy: We need to go slow, and we need to be really hard on ourselves on guessing where the market's going. I'd rather be a little behind ... because being a little behind is just going to mean we have a high-class problem. We are training the consumer to expect a product at really significant discounts and we're going to have to break that cycle somewhere. One way ...  is for there to be a little less product than consumer demand. Let's all remember, when we have too much volume, how much money we lose. 2010 is not going to be a bang-up year, so let's not start acting like it.

Kuck: I think focusing on the age of the inventory is a new way of life. We make sure we deal with it; we make sure we don't have aged inventory. We've had to invest millions in getting our inventory where we need it. I know Brunswick has as well. Brunswick might be able to afford to do that again, but we can't. This lesson, I hope, we've learned for the last time.

Malone: I think we're going to have to build an inventory model that is adjusted seasonally and as sales trends dictate. We're going to have to discipline ourselves to follow that model. We need to be able to react quicker ... and we have to hope our manufacturing partners can help us react [to] market trends. I think we all need to realize we buy inventory logically, but our customers buy emotionally. We can't forget that part of the equation.

  • Fewer models?

Kuck: If we don't reduce the models, it's at our own peril. We don't reduce the complexities at our own peril. It costs too much and we can't afford it.

Smoker: I'm from the sales side, and what we found ... is [more] models were good because it increased sales. I think now we're at the point where it's decreasing sales because you don't have the ability to sell all those models. The suppliers can't work with as many different models as well.

Bohling: I'd say to the manufacturers, "Innovate and then trust that you've done a good job on that innovation." Our focus has always been, when there's a new product, we are moving to that new model and forgetting about the old model; it's history. We need to innovate more and more.

This article orginally appeared in the January 2010 issue.

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