Q&A: In part two, MarineMax’s Bill McGill on recovery and a cruiser comeback
In part one of our Q&A with MarineMax CEO Bill McGill, we learned more about the company’s latest dealership acquisition and its overall philosophy on growth. In part two, McGill discussed what the industry needs to grow and why overall growth will include the cruiser segment.
Following a year of double-digit growth, how do you feel about the momentum we are seeing right now?
The thing that locks our customers up more than anything is uncertainty. If you go back and look at what occurred at the last quarter of 2012 with the election and fiscal cliff going on, that is uncertainty.
Ok, taxes went up for most of our customers, and they didn't like it. But, at the end of the day the uncertainty has gone away. It is what it is. What we are hearing from the customers is they know what they have with taxes, they know what they have for the next four years and they will adjust to it. They now say, “Lets get out on our boat, enjoy it with the family, get that escape from boating. Lets move on, at least we know what we got.”
That is more important than anything. We need improvement in consumer confidence. We are getting some, but we need a larger improvement. Other things in the economy would also make a difference, but it is getting better. Boat shows are up for us, and consumer attitudes I would say are up quite a bit over where they were 12 months prior during last boat show season.
In your most recent conference call, you mentioned optimism for a comeback in the cruiser segment. Do you still feel that way and why?
The cruiser segment was the hardest hit in our industry and the data supports that. We believe the biggest reason for that is that [cruiser] customers were probably more tied to real estate values and what happened in that market than people who are buying sport boats who may be less affected by real estate declines. The housing market is starting to recover. We are hearing that there is construction of condominiums, new home construction appears to be up and values are increasing. It still has a ways to go, but I think [those improvements] are of the biggest value to the cruiser market.
We are outperforming the industry as far as cruisers are concerned. We are seeing positive growth in that area, and we think it will continue. The good news is the customers are still there, a few got out, but the majority of them are out boating. We know that because they are boating with us on our getaway trips and other events.
Also, their boat has aged. The average life of a boat was 3 to 5 years; that now shifted to 8, 9 and 10 years. It doesn’t mean their desire is lost; it just means they need to see some positive things happening in the real estate market, the economy and their business. We deal with a lot of contractors and people who are tied to the real estate industry. They say they are busy and the business has recovered. We are near the recovery of sport cruisers.
Segments like pontoons and other entry level, outboard-powered segments have emerged in the recovery. Why do you think that is and do you think they will continue to grow?
The outboard part of our industry is doing very well, and of course, pontoons have done extremely well and continue to be one of our biggest successes in boat shows and in our stores. It speaks to what we came through and wakes up a lot of consumers, who feel they have to be more practical. You look at a pontoon and you look at the same value of a fiberglass, sterndrive runabout or deck boat … It is more practical.
I think some of that will shift away going forward as people see the economy recover, and business and personal net worth gets a little more stabilized. But it has been doing very well for us.
How have your northeast locations recovered from Superstorm Sandy? Have you seen customers replacing their storm-damaged boats yet?
I was very proud of our team; the day after the winds died our team was getting our operations back up and running. We are almost 100 percent. We still have some work to do, but we are fully functioning in all of our operations. We first had to get back to our customers, get their boats out of harms way and winterized for the season. We are now doing a lot of the repair work and helping our customers get their boats back in the condition they would like to have them in.
We also have a lot of people saying they are getting checks, but it is the check-is-in-the-mail syndrome. Insurance companies have agreed on the settlement amount, but they haven't issued the check yet. It is going to take a little while for us to get the full benefits of it. The good news is when customers were bringing us pizza and helping, they were all talking about that new boat. In some cases, they had a little scratch, and it was the excuse that they needed to replace it.
For more on the Post-Sandy recovery of MarineMax facilities check out a recent blog by editor Jonathan Sweet where you can watch a video the dealership made chronicling the efforts at its Brick, N.J., location.