Boaters are seeking - and dealers are selling - upgrades with the latest tech
Although marine electronics sales are not what they were a few years ago, the refit market is one bright spot in a struggling economy. Many boaters are holding on to their vessels longer and upgrading their electronics, rather than trying to buy or sell a boat in this down market.
"The retrofit market, which we haven't seen since the last recession, is doing pretty good," says David Hayden, president and executive director of the National Marine Electronics Association. "We're seeing a resurgence in that market. It's not huge, but there is some activity."
The NMEA is not alone in identifying this trend. The retail and distribution segments have also seen an uptick.
"A lot of customers are not buying new boats. Instead they're outfitting what they already own," says Scott Jacobus, retail sales manager for Consumers Marine, a catalog retailer with a showroom in Wall. N.J. "It's been a plus for us."
He notes that electronics sales were up at the Atlantic City, N.J., and Miami boat shows compared to last year. "It's not all bad."
Keith Wansley, vice president of Seawide Distribution, says the aftermarket is better than the demand from OEMs that Seawide supplies, but it's still sluggish. Nevertheless, he also has seen some improvement in sales at several boat shows, including Houston and Seattle, as well as Atlantic City and Miami.
Most boaters will turn over their electronics every four to five years, according to Jules Rutstein, president of Rockledge, Fla.-based retailer Bethel Marine Electronics and chairman of the NMEA. With people holding on to their boats longer in this recession, he says owners are shortening this time span because they want to make their boats feel new again.
"They're upgrading their electronics to re-energize their passion for boating," says Rutstein.
Ryan Barber of CWR Electronics says his company has seen little impact from the decrease in demand for new boats. "Fortunately, we are heavily entrenched in the aftermarket sector of the business, which has been a bit more resilient in this down economy," says Barber, vice president of sales and purchasing for the distribution company. "We do anticipate that the current economic conditions may benefit us in the near future, as boat owners typically keep their current boats and simply enhance or refit wherever possible."
Who is today's customer? Most agree that the upper end of the market is still "holding its own," but opinions differ on the lower and middle range of the market.
"We've seen growth at the lower end of the pricing spectrum, a decrease in the middle, and the high-end products are about the same as in the past," says Barber. "Consumers that want premium products seem to still be purchasing them, while midlevel consumers appear to be trending downward."
Chris Pearson, director of wholesale marketing for Port Supply, West Marine's wholesale division, agrees. "There is greater demand for entry-level and high-end," he says. "At the middle part of the Bell curve, there is less demand."
That isn't entirely the case with Seawide, says Wansley. "In this economy we are seeing our mid- to upper-end products outperforming the entry level," he says.
For dealers purchasing from Seawide, price and availability have become very important, again a sign of the times, he continues. "It appears consumers are waiting until the last minute to make a decision, which puts pressure on the supply chain to move quickly or lose the deal," he says.
NMEA's Hayden says the market that has been hurt the most in the downturn is blue-collar boaters. "That market is just gone," he says. "The high-end is doing OK. It's holding its own, [but] it is slowing down compared to a few years ago."
Despite the slowdown, Hayden says, there is "huge pent-up demand" out there. "People have money; they're just not spending it right now," he says. "But when people do buy, they will look for upper-end products that are going to last a while."
Hayden says the pent-up demand likely will mean a significant turnaround when the economy does improve, perhaps in 2010. "When it comes back, it's going to come back with a big bang," he predicts.
The next generation
Dealers and distributors are noting a number of key trends in today's market, including multifunction displays, more integration, night vision and weather subscription services. "Multifunction displays are the most active product area," says Wansley. "New lower-cost versions have expanded the market reach of this category."
Wansley believes the next generation of products will integrate even more information into multifunction displays. In addition to such functions as radar, sonar and charting, they also will include systems data and possibly control of battery switches and bilge pumps using touchscreen technology.
CWR's Barber says one of the dominant trends he sees is the integration of on-board charting into the software of plotters and multifunction units. Consumers also like high definition displays, he notes.
"Several manufacturers are now offering HD radars and HD sounders," he says. "The term 'HD' certainly resonates with consumers, so hopefully we'll see some pull-through from the borrowed terminology and improved technology."
Another trend, says Jacobus from Consumers Marine, is subscription-based marine weather forecasts. "The information is overlaid onto a chart plotter," he says. "You can see weather patterns just like you see on TV. That's been a hot trend for two years now."
Hayden says night vision with thermal imaging also is resonating with consumers. Infrared cameras today range from about $5,000 at the low end to as much as $11,000 or more. "And they're selling," he says. "I think that is only going to increase. All the guys selling night vision are doing very, very well. It's something that I see growing."
Hayden and others also make note of several trends on the horizon - for example, hand-held VHF radios with built-in GPS and AIS (Automatic Identification System) technology, which transmits a signal so ships can see other vessels, including smaller boats, on their radar. "There are a lot of things happening now that will be big in the future," he says.
Class B AIS for recreational boats has been available for two years, but was only certified in the United States a few months ago, says Hayden. "That opened the floodgates," he says.
Rutstein, from Bethel Marine, says that while there seems to be a great deal of interest in AIS among recreational boaters, it hasn't translated into a lot of sales just yet. "I think in the next six months to a year we will start to see more [AIS] sales," he says.
Other emerging trends, according to Hayden, include products that are "moving down market," such as satellite TV and V-SAT (for satellite communications and Internet). "It was considered a luxury, but now it's become a necessity," he says. "Pretty soon, I think you're going to find those on the lower end of the recreational market."
Rutstein says that's true of a lot of marine electronics. "Some of the products that were only in the realm of megayachts are finding their way into smaller boats," he says.
Faster, smaller, lighter
Looking farther down the road, electronics professionals say a number of today's trends will continue for the next four or five years. "Less expensive, higher performance and easier-to-operate electronics have been and will continue to be the trend in consumer electronics, which is what drives the technologies adapted for the marine market," says Wansley.
CWR's Barber says he expects marine electronics to follow the general consumer electronics trend: faster, lighter, smaller - and less expensive. He says the trend toward integration and black-box-style products will continue.
"We may ultimately end up with one box that does everything - radar, sounder, chart plotter, communications, audio/video, AIS, etc. - through networked peripheral devices," he says.
Pearson, from Port Supply, says marine electronics will become even more sophisticated and more integrated with consumer electronics. For example, he believes there will be more touchscreens, entertainment, larger displays, more emphasis on audio, integration with iPods, and subscription-based radio.
"Installation, I think, will get even more specialized," he adds.
That will lead to a resurgence in NMEA-certified electronics dealers, according to Hayden. He says the association's new premier dealer-certification program will ensure better installation and service standards for electronics dealers and technicians.
And, Rutstein says, customers will gravitate to this better service. "It's like finding a good mechanic," he says. "Once you find one, you never want them to leave."
Some electronics professionals say consumers have learned their lesson about shopping for the lowest price on the Internet or at large retail chains and then doing their own installations.
"I think our customers are finally getting wise to the Internet," says Jacobus, from Consumers Marine, referring to deep-discounter sites. "You don't always get the manufacturer's warranty when you buy over the Internet, and you don't get the expertise or service after the sale. That can't be beat. People want to go to somebody reliable if they need help."
However, Barber, from CWR, believes marine electronics will be user-installed in greater numbers as the technology improves and plug-and-play becomes the dominant network architecture.
Plug-and-play will become more prevalent as more manufacturers adhere to the NMEA 2000 standard, according to Hayden. The standard allows up to 50 electronics products to be operated from one cable, instead of multiple cables in a complicated wiring loom. As long as the products meet the standard, all of the electronics should be able to interface, even if they're from different manufacturers.
"NMEA 2000 has been around for a while, but it was slow to take off," says Hayden. "Now it is starting to take off." He says the standard will make it easier for boatbuilders to simply hardwire the boat and let the consumer buy electronics separately.
Before the downturn, there was a growing trend of boatbuilders preinstalling electronics as part of the boat, engine and trailer package. "I think this trend has slowed, as builders are concerned with increasing the cost of their boats," says Seawide's Wansley.
Barber says there may be even fewer OEM installations in the near future, with cost-conscious consumers opting to add electronics at a later date.
Also, some say there are drawbacks to having boatbuilders prepackage the electronics with the boat. First, customers don't always want what the builder installs. Also, electronics dealers say boatbuilders don't have the expertise to configure, install and, if necessary, repair these products. Ultimately, however, most agree there will always be a place at the table for all electronics players.
"I see the channels to market staying the same for the foreseeable future," says Wansley. "I believe tech dealers, retailers and OEMs will continue to have a place in the market, with the consumer deciding where to buy based on what's most important to them - price, service, convenience, etc."
Obviously, there will always be catalog companies, big retailers and the Internet, says Hayden, and there will always be consumers who purchase the lowest-priced units.
"However, I think the consumer today has been a lot more selective in their purchasing decisions," he says. "The consumer being frugal doesn't necessarily mean he is going to be cheap."
This article originally appeared in the April 2009 issue.