Veteran Industry firm weighs in on what’s in store for our industry in the coming months.
Many of us in our industry have been faced with business challenges. The thing these challenges have in common is our industry came out stronger than ever. The Great Recession of 2008 is branded in our minds for most. Some can still recall the Luxury Tax of 1991 and even the 1979 Oil Crisis. In every case our industry persevered and became better in their wake.
We are managing through our current situation with similar expectations, however, with a much different tack. We have learned through our experiences. In any business, we will always be faced with the unexpected. Hurdles will present themselves, potholes will be uncovered, and obstacles will pop up. What will define us are not these challenges, but rather how we choose to deal with them.
This is exactly how MÉR Companies, a marketing and event firm based in Knoxville, Tennessee and Southwest Florida, approaches their business every day. Every day for the past 10 years—as we proudly celebrate that milestone this year. We see our current challenges a bit more complex than most yet forecasting a calmer sea ahead. Our current situation exists due to three core factors.
The Three Core Factors:
- Building Field Inventory – Today, it is incumbent on all of us to stay nimble and prepared. This disciplined approach will maintain a confident stance and clarity to navigate these times. The complexity lies not with the social challenges we face, but by seeing the opportunity to leverage them. The first point that challenged us was back at the beginning of 2020. Retailers and manufacturers alike saw retail inventory begin to increase. We were dealing with a ‘watch’ of this indicator. Product available to sell was reaching levels we had not seen since the early 2000s. This has been the single largest dashboard item for most manufacturers. As retail sales began to flatten and even shrink from 2018 numbers, manufacturers were beginning to take steps to reduce retailers’ inventory. While these steps were not drastic, they were intentional and calculated.
- Shutting Down Manufacturing Facilities – In March, factories were faced with a daunting decision about how to best manage the dynamic of keeping everyone safe and maintaining their professional commitments, all while knowing every move they made would be scrutinized from all angles. This impacted not just OEM manufactures, but all suppliers’ businesses as well. Often in our industry the suppliers are the ‘tail of the dog’. Their businesses go as the OEM manufacturers businesses go. This time, it was not the case. All businesses were faced with these challenging decisions – unfortunately, it was not just within our industry. Many OEM manufactures saw a bit of an opportunity amidst the darkness. While shutting down manufacturing facilities can be extreme and excruciating, even if they are forced to do so, it should help deplete the product inventory in retail stores. A silver lining perhaps? Of course, retail activity would then be the single remaining driving force to accomplish this — an expectation that did not seem likely as we neared the end of the 1st quarter.
- Sustained Retail Sales Increase – Most profess to stay ‘nimble’. But what does that really mean? Ready for anything? Reactive to the slightest activity? But what if we react too quickly? What if we overreact? What does overreacting even mean? MÉR’s definition of nimble is a collage of all of this. What is necessary, however, is discipline. Discipline exudes knowledge. And knowledge exudes confidence. MÉR’s version of being nimble implies an anticipatory approach to business. One that is based on factual information as well as intangible information. One that considers a 360-degree view. Not just looking at historical data or internal tendencies, but all inputs combined, internal AND external alike. This applies to ‘in industry’ and relevant items out of industry. Not long after production adjustments were made across the country, retail sales began to increase well after the show season concluded. This was not a wave left over from the show season. In fact, two of the last shows of the season were cancelled. As time continued, we saw retailers face their own unique challenges…those placed on them by their customers. People were buying boats and they wanted to go boating immediately. People were stuck in their homes with nothing to do, and with more people than they were used to having at home…and for longer periods of time. Homes became much smaller…very quickly. Many of these people turned to boating for relief. Retailers were tasked with keeping their teams safe and ensuring they were able to meet the increasing demands of their clients – which were “Get my boat in the water so I can take my family boating.”
Today, retailers are still challenged to get products to sell. Manufacturing facilities have been back running since May – some sooner than others. However, getting a multifaceted manufacturing facility back up and running is much more complex than turning the light on in your garage. Entire facilities needed to be readied. Hard assets needed to be addressed. Offices and plants needed to be cleaned. Logistic plans needed to be executed and of course, their people needed to be reengaged. In a vacuum, this seems like a lot, however, keep in mind in order to build boats, manufacturers need raw materials. Materials supplied by plants which, much like everyone else, had been shut down. The sophisticated level of businesses in our industry commands low raw materials inventory. Thereby, reopening to address a shrinking inventory scenario was far more multi-faceted than it seems on the surface. Detailed coordination with the supply chain also posed some challenges.
What does all this mean? Preparing for the fall boat show season is still a must. The shows are scheduled to go on as planned, however, some shows have been cancelled—but not for reasons you may think. Many shows are struggling to secure exhibitors because the retailers simply do not have the product available to sell. Rather than spending the money and not being able to sell enough product to cover show costs, retailers are opting out—saving their money and waiting for more product to come in. Most of MÉR’s OEM clients are well ahead of the curve, replenishing retailers’ inventories. After 10 years in business and more than 100 years of collective marine experience on staff, MÉR Companies is expecting 3rd quarter retail sales to remain flat or, possibly, slightly increase from 2019. Maintaining a sense of social regard and responsibility – business will continue to be strong. There are other external factors in the near term that will have a direct impact on our industry’s health, however, this is always this case. WE as an industry need to continue to operate with high standards, prudence, and humility.
Our industry is built on passion, inspired by our customers, and embraced by all of us. Our customers deserve our attention to this and yearn to get out on the water. As history has shown, we will yet again, come out stronger and better than we were before! Safe Boating!