Wow! What a series of events has occurred over the last 12 -18 months, changing our economy, our financial system and to a great degree our beloved marine industry. Looking back at the prosperity the marine industry has enjoyed over the past decades makes it difficult to get one’s arms around the course of action each dealership might need to follow in order to remain (or get back) on track as the U.S. and world economies begin their slow recovery.
We are all searching for solutions, as are the elected officials we sent to Washington to deal with and (hopefully) prevent these economic issues from occurring in the first place. Did they? As a result, we must now move to prevent further decline and shore up any weaknesses in our individual businesses.
The marine industry has lost many dealerships and boat builders over the last year. The capacity of engine manufacturers continues to exceed demand and, although modified by most recently, the requirement for minimum purchase and sales to retain an agreement creates pressure on the dealer to make choices. Question! Are those choices going to be as good for you as they are for your supplier?
Be careful! As you all know, the marine industry is built on discretionary dollars of consumers, and those dollars are virtually non-existent at this time. That is not to say that no one is buying, because they are, but they are cautious and looking for dealerships that can offer what they need or desire such as financing, technical service, professionalism, integrity, fair price, and quality product.
In the past, the industry was divided as to how dealerships operated and positioned themselves within the buying community. Some were volume-driven and sold at very low margins in order to increase their volume with their supplier, be it boats or engines. Some were service-driven and retained a customer base that stayed with them because they offered superior service after the sale though perhaps a more robust price for product at the purchase end. Some were a little of both and tried to compete at both ends, but without the volume purchasing power required to obtain the “best price,” they never were quite able to tip the sales side of the scale in their favor. Lastly, some have far too many boat suppliers and multiple engine suppliers. When times were good, these dealers could make a decent profit with all but in the current economy, still trying to maintain all of their suppliers, they struggle to meet the buying requirements of all since the retail side of the business has seen dramatic decline.
Who are you? Are you changing to meet the current times?
You are the best one to determine what is prudent and applicable within your dealership. Having said that, I believe it is important to consider how to best optimize the programs offered by boat or engine suppliers and determine if you are truly better off continuing to offer multiple brands and weaken your position with some suppliers, or concentrate on maximizing your purchases with boat brands and engine suppliers by reducing what you offer in each. In other words: Are you better off being a big dealer with two boat companies and one engine supplier, for example, or are you better off being a small or medium dealer with multiple boat brands and engine suppliers? This is an old discussion that today begs for another look.
Offering too many choices to consumers may weaken your dealership while your competitor down the road offers very limited choices of boats and engines and is better able to capitalize on the manufacturers’ programs, thus making him more competitive by reducing inventory costs, training costs, parts inventory and consumer confusion. His sales personnel actually know and sell the product rather than asking the consumer to make his choice. That dealership is better informed on fewer products.
Whatever your past business model has been, you must have been successful with it since you are still here! Going forward, since the economy has changed and consumer buying practices have changed, it is reasonable to consider how your business might need to change.
If you are service-only, then being the best should be, and most likely is, your goal. Should you change? Maybe! Perhaps the appearance of your facility or services you offer should be reconsidered! Service options like on-the-water, pick up and delivery, quick turnaround times, etc., should be reviewed and considered.
If you are strictly high-volume concentrated, you might look at your purchasing power with your suppliers (what is their best program for you?), and easy retail finance. Will the older model still work within the new economic market? Are you better off selling 45 models of one boat brand or 15 models similar in three different boat brands?
If you are a dealer with too many brands of boats and engines, you might consider scaling back and becoming much bigger with fewer suppliers, thus enabling you to better leverage yourself within their programs. Obviously, suppliers offer graduated programs because they want more of your business, and they want to take that business from their numerous competitors. You need to assess how that can best work for you within your market area, and whether a more concentrated offering gives you greater rewards with your supplier while making you more competitive than your competitor down the street with multiple offerings, who is paying higher prices to his suppliers for the same product or like product.
The point of these thoughts is to stimulate you to reassess your past and current business position and determine whether you need to alter that position in order to move forward and grow. Do not be complacent and assume things will return to normal and all will be the same… they will not!
Think about your future. Survey your customers to determine their likes, dislikes and expectations! Review your product volumes and determine if it makes sense to retain multiple engine brands and similar boat styles from multiple suppliers. All of this increases cost to your business but does it truly bring greater profit? You need to review and decide!