It’s November 2023, the eve of what, for many, is sure to be a long, slow off-season. Now is the time to check in with yourself and your team to ensure that you are in the right mindset.
The coming months threaten to throw many challenges our industry’s way: declining customer demand, rising inventory levels, persistently high interest rates, growing curtailments and cash-flow issues. All of these will come on top of the frustrating, year-long political bickering and mudslinging that every election year brings. The risk of negativity swallowing us whole has not been this high in years.
On the flip side, taking control of your situation and resisting the negativity can help you overcome obstacles, lead your team effectively and outperform your competition. Let’s begin with the reality that it has simply taken us too long to shift into a post-pandemic mindset. We knew this day was coming. We knew that we couldn’t maintain pandemic-era demand. We knew that we would have to lower margins. We knew that supply-chain shortages would catch up, and that inventory levels would rise. Heck, we even knew that boat buyers would be frustrated by the greatly reduced values they are now finding as they seek to sell or trade in their boats.
Your mindset should have made the shift into this environment around summer 2022. As you can see in the charts on this page, it was around April 2022 that retail trends turned negative, and inventory levels began to climb. Dealer sentiment turned negative at the exact same time. With the benefit of hindsight, we also know that March 2022 marked the first of nearly a dozen Federal Reserve interest rate hikes.
And yet it’s only now — a year and a half later — that many dealers are coming around to the reality that they must lower their margins, more diligently manage inventory and get creative about running their businesses. Connor Lokar, senior forecaster with ITR Economics and the keynote speaker at the recent International Boatbuilders’ Exhibition & Conference, put it this way: “The biggest risks in the year ahead are swelling inventories and a refusal to understand that the market we are heading into is not the market we’ve had for the last three years.” Lokar added that businesses that are still approaching budgets, building and hiring the way they did in 2021 will be in trouble in 2024.
But instead, what we’re finding at the Marine Retailers Association of the Americas is that many dealers think it’s only their competition that has a problem. A Mid-Atlantic dealer, for example, told us that while his inventory is in good shape, he’s concerned about dealers with so much inventory that they’re making $50,000 to $60,000 interest payments each month. A Missouri dealer noted that his biggest concern is a competitor who is underwater with hundreds of boats in stock. One boatbuilder told us, “Everyone’s saying it’s the other guy that has the problem. It’s never ‘our inventory’ that’s overstocked.”
The most important step in bringing the right mindset to any dealership is focusing on the things you can control, and we can’t control our competitors. Sure, when they start dumping their overstocked product at drastically reduced prices it affects everyone, but we can only control what’s happening with our own businesses.
For most dealerships, refocusing means getting back to the basics — the fundamentals of sales, marketing, service, inventory management and more — as well as training everyone at the dealership on those basics. “I think the majority of [dealership] staff were hired during peak times,” one dealer wrote in response to the September Pulse Report survey, “and the ones that weren’t have definitely become complacent with the way our industry has been over the last few years, and are now shocked and aren’t too sure how to react, including management teams.”
Another dealer said he’s hosting “sales meetings every morning, focusing on the team bringing their A-game every day.” This dealer is running ads to address higher-than-usual interest rates and to promote fall clearance sales, and is implementing weekly measurements in all departments. “We’re not waiting until the month is over to see how we did,” the dealer noted.
That’s what it looks like to take control. As Lokar said, to find success in the year ahead, “you must farm it, hunt it and find it.”
If recalibrating your dealership back to the basics is a top priority, look no further than the upcoming Dealer Week educational lineup. At Dealer Week (Dec. 4-7 in Tampa, DealerWeek.com), the MRAA will help with your approach to a challenging market.
Courses in the Sales and Marketing Track will include “Attitude: A Multiplying Factor in Your Sales Success” and “Selling Value and Experience in the New Economy.” For the Service and Parts side of the business, courses will include “Get on the A-List for Premium Service Success” and “Solve Your Parts and Service Customers’ Problems.” In Dealer Week’s Leadership Track, courses will include “4 Steps to Solving Your Dealership’s Most Complex Issues” and “Recalibrate and Renew Your Dealership for What’s Ahead.”
Educational opportunities like Dealer Week, which is designed to help dealers meet the needs of current market conditions, play a critical role in taking control of your destiny. These and nearly 20 other educational sessions can help you make a difference as you navigate the year ahead.
Matt Gruhn is president of the Marine Retailers Association of the Americas.
This article was originally published in the November 2023 issue.
