Refits and upgrades, along with new technology, are helping keep this segment afloat
The trend of consumers holding on to their existing boats and opting to refit them and upgrade electronics and systems instead of buying new appears to be holding fast for at least another year, according to several key electronics industry players.
"We anticipate that the bulk of our business this year will be from retrofitting and upgrading," says Ryan Barber, executive vice president of wholesaler and distributor CWR Electronics.
Steven Waters, a technical sales supervisor for national retailer Consumers Marine, says he's seeing a similar tendency among buyers. "We're seeing a lot of people downsizing their boats and then putting in high-quality electronics packages," he says.
Edward A. Winder, president of wholesaler Win-Tron Electronics, is looking to 2011 for signs of encouragement. "Aftermarket sales will be our saving grace with a bounce in new-boat sales expected next year," says Winder.
Weathering the gale
With new-boat sales expected to be flat this year at about 150,000 units, many smaller electronics retailers and distributors were focused on getting through the winter. "If boats aren't being built, many of our dealers don't have anyone to sell to," says National Marine Electronics Association president David Hayden, who is forecasting a "flat year" for 2010 sales. "A lot of our dealers have just been hanging on by their fingertips, and we've already lost quite a few."
From Winder's perspective, the smaller family-run dealers he works with seem to have fared best "due to quick belt-tightening and being smaller and more nimble." Still, Hayden notes that some of his 600 members have seen business slide 60 to 65 percent in the last couple of years.
"A lot of them are small mom-and-pop shops, and they've put as much of their own money into their business as they can," he says. "If things don't turn around, they're going to have to close up shop."
Hayden says he's more optimistic about 2010 than last year, but it will be a struggle for everyone in the industry. "We'd all love a crystal ball, but we'll see pockets of strong activity, then that kind of fades away and another pocket flares up somewhere else," he says.
Hayden says it's a hard reality that the electronics industry is historically among the first marine sectors hit by recession and one of the last to climb out.
Waters agrees and predicts the road to recovery will be a long one. "It's not going to be like '06 or '07. It's going to be a slow, gradual process," Waters says.
Keith Wansley, vice president of SeaWide Distribution, is even-keeled in his market assessment and sees a light at the end of what he says has been a long, dark economic tunnel. "It's certainly better than it was a year ago, but we have a long way to get back to where it was - if we ever do," Wansley says. "It's been an inconsistent market. We have a couple of good days followed by a couple of bad days."
Signs of life
Waters says that although attendance was down 5.5 percent at this year's Miami International Boat Show, Consumers Marine tallied better sales than the year before, so positive signs are starting to emerge.
Hayden says the NMEA booth at the show was much busier this year, answering more questions from "informed and serious buyers" on the first day than during the entire 2009 show. "There certainly was a greater sense of enthusiasm this year," he says.
The electronics room at the show was noticeably livelier as well, with such manufacturers as Furuno, Raymarine and Simrad introducing new equipment. "This seems to be the year of new product introductions. Almost every major manufacturer is launching new products," says CWR's Barber, noting 2009 was lean on product introductions.
All agree that new products and innovative technology remain the lifeblood of the industry. "The more innovative, the better," Barber says. "The same piece of electronics with a different color faceplate is no longer cutting it with today's savvy consumers, and I think manufacturers know this and are making sure their new products truly bring something different or better to the marketplace."
Barber says in this climate of retrofits and upgrades, innovative products are especially important to both retailers and consumers. "There's little sense updating a working unit unless there's something to be gained," he says.
Still, in this economy, lower to moderate price-point units - and easy-to-use products - consistently draw the bulk of consumer attention. So what's selling? Waters says Consumers Marine sold eight or nine FLIR First Mate hand-held thermal imaging cameras at the show, and both the Garmin GPSMAP 720 and Navico/Lowrance sidescan sonar are proving to be winners. Also, multifunction units are becoming the norm.
"After some five years on the market, thermal imaging is really coming into its own as the price comes down and technology goes up," NMEA's Hayden says. AIS units are steadily catching on, he adds. "But for some reason, in this industry, safety doesn't seem to be as big of a concern to consumers."
Win-Tron's Winder says bright spots include stereos, satellite TV, underwater lighting and such upgrades as open array radar and sonar (and bow thrusters). Barber says CWR's freshwater/lake categories are outperforming offshore/bluewater, and he speculates the somewhat lower cost of inland boating is the driving force behind that trend.
Looking ahead, Winder says he has "realistic" expectations for 2010 - "mostly average months with some occasional spots of sunshine." He is much more optimistic for 2011, when he expects to see medium double-digit gains in most sectors.
Barber is among those who see flat sales for 2010, noting that CWR's early sales figures seem to be tracking those from 2009, though he has a greater sense of optimism.
"This early in the season it is difficult to tell what will happen over the next few months," he says. "But we're hoping that all the folks that stayed home last year will get back out on the water and enjoy everything that boating has to offer."
This article originally appeared in the April 2010 issue.