June was a mixed bag for retailers - Trade Only Today

June was a mixed bag for retailers

Sentiment in the ‘most important’ month slipped a bit, but the long-term outlook remained strong
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Marine dealer sentiment declined on a month-to-month basis in June, but it was significantly higher than in the same month last year for businesses surveyed in the MRAA/Baird Marine Retailer Pulse Report.

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The MRAA/Baird Marine Retailer Sentiment Index dropped from 80 in May to 77 in June, although it was up 10 points from a reading of 67 in June of last year. The all-time high is 81 for the monthly index, which began in December of 2013.

Baird said the index’s three- to five-year outlook edged slightly higher sequentially — from 68 in May to 69 in June, which was positive news after the longer-range outlook dropped in May. It was 77 in April and had peaked at 82 in January. The outlook was well above its reading of 62 in June last year.

“Retailers reported continued momentum in June (despite a more difficult comparison), suggesting a solid finish to Q2 (and the most important month of the year),” Baird said in its report. “Retailers report modestly lower new boat inventory levels, compared to last year — a healthy dynamic as OEMs begin their model year changeovers. Retailer confidence based on current conditions slipped slightly, compared to last month, but retailers remain broadly positive on current trends and future market conditions.”

“First three weeks of June [were] a grind; as weather improved, so did sales and sales activity,” one dealer told Baird. “End of month was strong and should carry over into July. Weather is the best closing tool we have!”

Eighty-one dealers were surveyed in June. Baird said 59 percent of them reported new-boat sales growth for the month, down from 63 percent in May.

On the used-boat side, Baird said 58 percent of dealers reported sales increases — up from 51 percent in May, but modestly below the 63 percent that said so last year.

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Baird said a number of retailers indicated that retail growth has been driven by strength at the high and low ends of the market. Consumer response to mid-level products has been “more tepid.”

“High-end, premium brands continue to lead the parade,” one dealer said. “For June, units were down 10 percent, dollars were up 12 percent [year over year]. We are living on high-net-worth baby boomers and not attracting the younger generations to feed unit growth.”

June is the single most important month for the U.S. powerboat market. It represents about 16 percent of annual sales.

“Net, our checks suggest continued solid growth during the month, providing a favorable backdrop for Q2 and supportive of our bullish retail outlook for 2017,” Baird said.

Baird said new-boat inventory was essentially flat sequentially and improved from levels reported a year earlier. Baird said 43 percent of retailers believe inventory is too low, compared with 28 percent that think it is too high — “a sign that the channel remains healthy. Net, we consider inventory levels to be within a ‘normal’ range.”

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Baird said used-boat inventory remains extremely lean, as inventory levels remained consistent with the low levels seen in May; 72 percent of retailers reported that used inventory is “too low,” compared with 8 percent that said inventory is “too high.”

“We continue to believe that a limited supply of quality late-model used boats will eventually force consumers to consider new-boat purchases,” Baird said.

Retailers indicated that weather, trade-in activity and government action or inaction negatively affected demand during the month. On the positive side, retailers report that the economy remains healthy, access to credit is strong and OEM promotions are working.

Separately the June survey asked dealers what the largest hurdle is in closing a deal on a new boat.

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Cost was the most prohibitive factor; 26 percent of dealers cited it. Eighteen percent said the biggest problem was competing recreational activities; 17 percent said it was the time factor; 5 percent said “too much hassle” turned off prospective buyers; and 34 percent said it was all of those factors.

The Pulse Reports are designed to provide industry professionals with a regular, timely look into retail trends at the dealership level. They were launched by the Marine Retailers Association of the Americas and Baird Research in December 2013 as the first report of its kind compiled specifically for marine retailers.

Soundings Trade Only joined the partnership with Baird and the MRAA in February and will continue to participate in the distribution of the survey and the reporting of its results in future months.

“The information contained in each Pulse Report simply can’t be found anywhere else, and we strongly believe our print and online audiences will find them extremely useful,” said Trade Only editor-in-chief Bill Sisson. “Joining MRAA and Baird in gathering data and distributing the Pulse Report results each month was an easy choice for us.”

Retailers who would like to participate in the survey can email Baird senior analyst Craig Kennison at ckennison@rwbaird.com.

This article originally appeared in the August 2017 issue.

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