Demand and Supply

Major players in the aftermarket industry discuss the 2020 business boom, seeing it continue in 2021 and how to move forward amid the Covid-19 pandemic
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NTP-Stag’s national distribution network 
comprises 
44 locations and more than 2.5 million square feet of warehouse space.

NTP-Stag’s national distribution network comprises 44 locations and more than 2.5 million square feet of warehouse space.

Around the time we spoke with Bill Rogers, president of Keystone Automotive Operations (which owns NTP-STAG), the company was redoubling its efforts to enter the marine space. It had spent most of 2020 dealing with the disruptive impact of Covid-19, then attempting to meet the demand of the exploding RV market.

Its RV segment was coming off its marquee event: the Florida RV SuperShow in Tampa, which was held as an in-person event with strict safety measures. “We were at 25 percent of what we’d normally run at,” Rogers says, adding that the company added a virtual event for customers who couldn’t attend.

Bill Rogers

Bill Rogers

“The in-person event was really successful, and both the customers and the supplier base were thrilled to be able to have it,” Rogers says. “And even though it was scaled down, for reasons that make sense, it was well-received.”

We spoke to Rogers about the unpredictable last year, the company’s plans for entering the marine space, and how to keep the new crop of outdoor enthusiasts returning to marine and RV activities.

NTP-STAG was expecting marine to be a big focus for 2020. How did the pandemic affect those plans?

It definitely wasn’t as big a priority at the end of the day. It was more about remaining operational throughout the year, servicing the current customer base and working with the current supplier base to make sure that we could continue to meet the demand. Our focus really has been there, and as a supplier to a different industry, I don’t think they were looking for more outlets, necessarily, because a lot of them were struggling with supply in general. So I think all those things contributed to a bit of a delay.

Is marine still a central part of the company’s plans going forward?

Absolutely. It’s front and center, a main priority for us, and there could be some different nuances to deal with, just given that we’re still not through all the follow-up from the pandemic, but I do think we will make significant headway as an alternative to the independent dealer base out there. And it’s a great time for that because if they’re like every other in-high-demand market, they are looking for alternatives, and we offer a lot of advantages.

What kinds of advantages?

There is a fair amount of overlap between the two different market segments. You’ve got some overlap in terms of products. You’ve got overlap in terms of suppliers. There’s overlap in terms of some customers. And then, our logistics network is very good at delivering product next day, reliably. So I think there’s definitely opportunity for us there. And what has worked in RV and automotive, I believe, will work in the marine area. We have seven distribution centers that house all of our product types. All are fully integrated.

We put together a catalog for marine that’s specific to the products that we have and that we are focused on for the area, much more oriented around the independent marine dealer. I think that’s helpful. We’ve put some special areas into our existing business-to-business systems. Via is the name of the system that is the dealer portal for our RV business. In that, we have now a marine section to add to what was already there, and then the sales-force and category-management functions are certainly impacted by our initiative to go after this particular market because we need some expertise in the product area, and we need different suppliers and products to supplement what we already have.

On the sales side, we need folks that are more oriented around the marine needs and the customer needs for that particular market. Coast Distribution used to be part of the marine wholesale distributor market. When we acquired Coast, we inherited some folks that have marine experience, both in Canada and in the U.S., and we will definitely be adding to that.

How about your supply chain, are you still seeing delays?

Absolutely. Our inventory level really dropped down significantly throughout last year due to the demand and due to the challenges in the supply chain. We’ve been building it back up probably since late summer and in the last couple of months to get back up to where we normally would be. Certainly, some challenges will remain, as demand is very high [coupled with] supply challenges.

For example, one manufacturer recently informed us that they had a couple of positive Covid cases in their manufacturing facility, and they had to shut down for some period of time. Those interruptions were happening throughout 2020, and I think they’re still continuing. And then there’s disruptions in some of the freight that come from Asia.

5_Keller_jpg

We are coming off a year of incredible growth in boating and RVs. How do we keep the newcomers?

I do believe the demand in outdoor recreation is going to continue. The rationale and logic for it is sound, and it will last awhile.

I don’t see much changing in terms of the social implications of the pandemic for a while — the same rationale and logic will remain. People had other outlets for their dollars in the past, and it’s somewhat limited now. So the main focus, I think, for a lot of people has been outdoor recreation areas. You don’t have sporting events. You don’t have hotels. You don’t have flights, travel. All those things that you may have seen people spending money on in the past are limited.

I think our objective is just to really enable an alternative for the independent dealers, and we have experience with some, but I feel like there’s good logic behind getting into it now. 

Soundings Trade Only also spoke with Mike Medart, CEO of Medart Marine; Mike Keller, president of Keller Marine and RV; and Mike Conners, president of Land ‘N’ Sea, about the tumultuous start to 2020 and how they see business going forward in 2021 and beyond.

Mike Medart
CEO, Medart Marine

Mike Medart

Mike Medart

In late February 2020, if you had asked me, “Is social distancing going well for you and your company?” I would have responded with, “What is social distancing?”

We are still operating with Covid restrictions in place, such as no visitors, spacing people out, masking and washing hands with a higher frequency. All customer-facing inside associates are working from home. We have not missed a beat, so to speak. Our outside territory managers continue to be thoughtful and measured in seeing their customers, with caution to each and every customer’s Covid protocols. All warehouse functions were fortunately deemed essential and have been in full operation the whole time. We measure and test daily in all of our facilities, and so far we have been very fortunate. We’re also being very cautious — if a household member tests positive, then that associate stays home until tests are confirmed and their doctor clears them.

Fiscal 2020 just screamed for us. We typically carry more inventory than a number of our competitors, but even that was not enough. For the first five months of our fiscal 2021, the “scream” is running even higher than last year. Our forecasting and purchasing efforts have slammed my team like no other year. Even now, the ability to get product is becoming more difficult.

The single biggest question I ask: Is this the new size of the marine industry? Not easy to answer, but I think it will be for a number of years. Some people, despite a vaccine, will continue to “live in caution.” Will that include boating? I think it will.

Other factors, such as low cost, interest rates and ease of getting a boat loan, are big factors in this economic cycle of expansion. For every company, I believe the greatest challenge is reigniting their culture. I am not aware of a current playbook on these times, but I would guess many will be written.

Consolidation in nearly every industry will continue. The dollars available and number of private-equity resources are at an all-time high.

We focus on the recreational side of the business, while doing some commercial in select markets. We have been right-sized for many years.

With the vaccine types and availability in the next four months, in-person events should be able to ramp up in the fourth quarter of this year, in my opinion. Our country, and the rest of the world, needs to get back to connecting with people face to face.

Mike Keller
President, Keller Marine and RV

Mike Keller

Mike Keller

First off, I do not think either industry, marine or RV, on its own created this momentum. Covid-19 and a strong economy created this momentum. Since we did not create it, there is little we can do to sustain it.

The only thing we can control is customer service. That means we need to be sure these new industry entrants are well taken care of — everything from product warranty to ease of product use. In the past, we have not been the best at customer satisfaction compared to other industries of like investment value to the consumer. We definitely need to work on that with prompt warranty repairs, and we need to be sure that popular products for RVs or boats are readily available.

We also need to continue to modernize campgrounds and also work on water accessibility. I worry about the current administration’s view on gas and the price it should be sold at. Also, interest-rate hikes, personal tax increases and inflation caused by increased government spending will definitely have an impact on the macroeconomic environment. Three major drivers of RV sales have been low interest rates, low gas prices and a strong economy. I fear with the change in the administration, we may be impacting these three drivers negatively.

Our concentration at Keller has been to work with both marine and RV dealers on getting more products onto a boat or RV before it leaves the lot. We believe our growth will come in working with dealers to accessorize the boat or RV before it leaves the dealership. Surveys that we have read on this tell us that the consumer’s satisfaction goes up when their new boat or RV is ready to use. That means making sure we provide them the accessories they need at the point of sale, so they can immediately enjoy their new purchase.

This is especially true of new customers to both industries. We need to train them on what they need to know to go camping or boating before they leave the dealership. In the RV Industry Association’s recent study of retail consumers, this was one of the top drivers of new-customer satisfaction.

Mike Conners
President, Land ’N’ Sea

Mike Conners

Mike Conners

We anticipate the momentum will remain strong in Q1 and Q2. With the coronavirus still a worldwide concern, we anticipate social-distancing activities such as boating and RVing as a way to continue to safely social distance with the family while getting out of the house.

We are continuing to see supply-chain issues throughout the network. We expect that to continue, with strong demand and challenges on certain vendors.

In an attempt to overcome future issues, we continue to work closely with all suppliers to understand the challenges, and work toward helping provide data on future demand. In some cases, we have had to look at alternate suppliers to fill demand.

I believe that we will also continue to see consolidation in both marine and RV. Acquisitions will remain a strong focus at some organizations. At Land ’N’ Sea, we see it more on the manufacturing side of the businesses right now — and think we will see more of that into 2021.

We will continue to look at our marine and RV divisions as an opportunity to continue to grow. That being said, we continue to add product, vendors, inventory and truck routes for both segments of our business to enhance our service model to our dealers.

“We recognize as a wholesale distributor it’s our job to supply demand,” says Land ’N’ Sea president Mike Conners. 

“We recognize as a wholesale distributor it’s our job to supply demand,” says Land ’N’ Sea president Mike Conners. 

We do have many vendors that overlap between both segments. We recognize as a wholesale distributor it’s our job to supply demand. If there is demand for product, we want to help grow that demand and work closely with our vendors to do so. We are continuing in a growth plan and are not focused on consolidation of product lines.

This article was originally published in the April 2021 issue.

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