- October 12, 2024
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The popularity of recreational vehicles and the RV lifestyle — for so long a key cog in Florida’s tourism-based economy — was already experiencing a resurgence earlier this year. That's thanks, in part, to the strength of the economy (at the time) and increased interest among millennials who aren’t ready or can’t afford to buy a home and are able to work remotely while they indulge their wanderlust.
Then came the coronavirus pandemic — and the subsequent economic downturn.
Sales of luxury, big-ticket items like RVs and boats were supposed to come to a screeching halt. Just like the years following the 2008 financial crisis.
But something funny happened on the way to a COVID-19 crisis-led downturn: a surge in sales.
“Even with a ton of uncertainty in the world right now, and more uncertainty to come, people are pretty dang passionate about boating,” says Brett McGill, CEO of Clearwater-based MarineMax, one of the nation’s largest boat dealers, a publicly traded firm with $1.23 billion in revenue in 2019. “They’re less cautious than I thought they would be at this time, which is great.”
With schools, summer camps, sports leagues and other activities shut down because of the pandemic, boats and RVs allow families to get outdoors and travel while feeling safe and socially distant. And because both the RV and marine industries were deemed essential services during the pandemic, dealers were able to keep their doors open to the public.
“There's a certain comfort level” to the RV lifestyle, says Kevin Campbell, president of Sarasota-based Campbell RV. “You can very easily distance yourself from other people and get some space. Another real plus is the ability to prepare and cook your own meals while you’re on the road. We’re hearing a lot of positive feedback about that from people.”
But with every extreme market fluctuation, positive or negative, come repercussions and challenges. In the case of the boat and RV industries, supply — a steady pipeline of product, both new and used — has become an obstacle to navigate. Major boat and RV manufacturers nationwide were shut down for six weeks or so at the outset of the pandemic. That resulted in an 82% decrease in RV shipments (see sidebar) that led to a backlog of orders dealers are still trying to fill. How will they capitalize on surging interest in their recreational products and lifestyle if they don’t have any vehicles on the lot or in the water to show customers?
‘We’re so thin on inventory. Usually, when I’m looking out my office window, I can’t see the road, and now I can because we have so many ‘holes’ on our lot.’ Kevin Campbell, president of Sarasota-based Campbell RV
Another challenge: Because large public events like boat and RV shows are impossible to stage for the foreseeable future, dealers will need to find ways to adjust sales and marketing strategies to make up for the loss of valuable in-person interactions,
WHAT GOES DOWN MUST COME UP?
It wasn’t a sure thing, by any means, that boat and RV sales would rebound. One ominous sign: After a solid start to the year, Tampa-based Lazydays Holdings Inc. (NASDAQ: LAZY), the nation’s largest RV dealer, slumped badly, experiencing a nearly 40% sales drop, year-over-year, in April as the pandemic shuttered the economy.
Seeing no reason not to cut costs, the firm, which reported gross revenue of $608.19 million in 2019, laid off 25% of its workforce — 230 people — and cut the salaries of senior management 25%. Lazydays also suspended 2020 pay increases and its 401(k) match program.
Then came a May blast. RV orders, the company says in a statement, increased about 90% over May 2019. Unit sales were up 55% year-over-year in May, and revenue increased 36%.
The company, like its peers, cites the industry's inherent social-distancing as one reason for the turnaround. Officials, in the statement, add "pent up demand related to shelter-in-place orders established in March and April," were another factor.
The whiplash of sales was similar at Campbell RV. Campbell, 59, whose privately held, family-run firm has been in business since 1993, says March was “incredible — one of our best two months in the industry, ever. And then it was just like the faucet shut off on April 1.”
Campbell quickly made adjustments, making sure staff kept in touch with both potential and existing customers via phone, email and other means of communication. He also was quick to tweak the dealership’s website with appropriate messaging that sent the right signals to the public. All that effort, he says, helped Campbell RV ready itself for the latter half of April, when the dealership experienced a rush of “overflow” from March.
“We sat down with our staff and said, ‘Look, our goal is to keep everyone working,’” he says. “We said we’re going to get up and brush our teeth and come to work every day and do everything we can because we don’t know what’s going to happen.”
Although he declines to offer specific revenue figures, Campbell says sales “came back with a vengeance at the end of April, and then May just exploded.”
He adds, “We’re so thin on inventory. Usually, when I’m looking out my office window, I can’t see the road, and now I can because we have so many ‘holes’ on our lot.”
It’s a slightly different situation at MarineMax (NYSE: HZO), where McGill, 51, has been CEO since October 2018, when he succeeded his father, Bill McGill Jr. Although revenues dipped by 11% year-over-year in March because of the COVID-19 crisis, the company posted a quick rebound, particularly in southern markets like Florida where boaters and aspiring boaters were keen to get out of their houses and onto the water.
And in boating, when people bring friends and family out on the water, it tends to have a domino effect on future interest and sales. “Rather than just looking at sales, look how many people are out boating,” McGill says. “Good things happen when we can get people out on the water.”
CREATIVE DIFFERENCES
Boat dealers, McGill says, so far aren’t facing similar supply-and-demand pressures as their counterparts in the RV world. But he expects that to change now that summer weather has arrived in northern states.
“Some of the boat manufacturers jumped back quicker than others,” he says. “Plus, our volume is not near what the RV guys are doing. Supply hasn’t been a problem, but it will be. But that’s always one of those good problems to have.”
Much like cars, boats and RVs are products potential buyers like to sit in and test drive. They want to flip switches, open cabinets, test out features and generally get a sense of how a particular model might suit their needs. So with boat and RV shows on hold, dealers have had to get creative when it comes to showing off inventory.
One way to do that? Like homebuilders and others, the industry went virtual: From March 21 to 23, MarineMax held a virtual boat show that allowed shoppers to personally interact with sales staff via web chat, attend webinars about boating and experience online video tours of vessels. Dubbed the world’s largest used boat sale, the event featured more than 300 boats at the firm’s 59 retail locations, offered at discounted prices. It also allowed registered users to place a free “hold” on a boat that they wanted to view in person.
“We lost very few sales that we were contracting before the virus and continue to sell boats after the virus set in,” McGill tells investors and analysts in an April 23 earnings call. “We had to think differently and develop a new approach to achieve these results.”
In the call, McGill predicts the COVID-19 crisis will have long-term effects on consumers’ habits, much like the years following the 9/11 terrorist attacks.
“We think boating could be one of the beneficiaries from this changed new world in which we now live,” he says. “People will likely travel less in the near-term and instead, stay close to home. Boating is a great way to escape the stresses of everyday life and strengthen the bonds of family and friends while avoiding crowds.”
MarineMax’s recent sales growth supports McGill’s assertion. He says innovations like the virtual boat show are “bringing new people into our dealership that maybe would have never gone to a boat show, bringing them into our database. We have some pretty sophisticated tools for our marketing and analytics, and we have seen a huge uptick of new customers coming into MarineMax, in the form of leads.”
And that’s not just visits to the company website, McGill says. It’s people who have gone to the trouble to fill out an online form and asked to be contacted. Even more encouraging, “over half of the leads we're getting tend to be new customers to our database.”
Campbell RV has also used technology to make up for the lack of in-person interactions at RV shows. The company expanded its online live chat operations and trained sales agents to show RVs to customers using apps like FaceTime and Google Hangouts.
For customers who want to see specific models live and in person but don’t want to be in a confined space with a salesperson, Campbell RV will have the potential buyer enter the RV while an agent, inside an identical unit, does a complete “walkthrough” via phone or videoconference.
“It doesn't happen too often,” Campbell says. “We just kind of gauge the concerns the customer has and then adjust for that. We also moved all customer contact out of the offices, into open areas, with plastic tables and chairs that get wiped down repeatedly during the day. And we’ve turned our showroom into an area where we have a couple tables spread out, so that if somebody wasn't comfortable in the office building, they could conduct business out there.”
McGill — who, before joining the family business, worked in IT, selling software to both boat and RV dealers — says most people in his industry are optimists by nature. While he expects the frenzy to calm down at some point, he doesn't expect a big drop. “Being around this business for so long,” McGill says, “it's pretty rare that this type of trend is just a flash in the pan.”