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Will consumers be big spenders again?

Bookstores are loaded with titles these days declaring the country and economy will never be the same. This great recession has changed us forever, authors proclaim — our “new normal” will be as frugal shoppers and savers.

No question, for our boating industry, it’s clear we need big changes in our business models for manufacturing, retailing, financing and risk. We’re getting some painful supply-side lessons from this recession. But, its unprecedented ruthlessness is also improving our outlook because: (1) this recession’s depth is wiping out high-cost, inefficient boat and engine manufacturing; (2) we’re getting rid of junk product makers; (3) shoddy dealers are being eliminated; and (4) needed efficiencies at every level are being realized.

However, when I read the pundits who contend as income, credit and confidence return, consumers will not return to the big-spending ways — that we’ll embrace new reined-in lifestyles with downsized homes, cars and expectations — I’ve sensed that something in this “new normal” message doesn’t add up! I’m not alone.

Neither does Grant McCracken, PhD, Cultural Anthropology at the University of Chicago. He is the author of six books on cultural studies including“Culture and Consumption” and “The Long Interview.” He has also consulted with the likes of Coca-Cola, IBM, IKEA, Kimberly Clark and others.

The Harvard Press recently published some McCracken study conclusions in an article entitled “Why American Consumers Will Spend Lavishly Again.” When Wal-Mart’s CEO Michael Duke says, “People are saving more, consuming less, and being more frugal and thoughtful in their purchases,” he is absolutely right . . .  at the moment . . . but dead wrong in the future. “When this recession ends, consumers will party like its 1999,” contends McCracken.

 He’s not just throwing around loose theories. McCracken has conducted hundreds of Ethnographic studies in consumer homes, listening two hours at a time. He says the commonly held explanations of “irrational exuberance” or “cheap money” for consumer spending totally miss the real mark. We don’t spend to express our vanity or status, it’s much deeper. Spending is cultural! It’s to fashion a life as we want it to be – to build a good life we Americans know about, work for and expect.  After all, we were all born into the richest, most successful society in world history. We simply can’t see less!

Great! Then we’ll return to business as usual, right? Wrong. Consumers have changed. While, culturally, there’s no change in their desire for the good life (perfect for boating’s future), the big difference is they will no longer pay a premium for it! This recession has taught even the “rich” to stretch dollars for maximum return. They’ve found they can do it well and they will continue for the long haul. Consumers will now seek what they perceive as value in all their purchases. There’s no longer status in buying something that could have been purchased for less! In fact, it’s now viewed as reckless. Getting a good price is considered a sign of intelligence. You’re admired if you can find something of value at a lower-price.

 So, value is now the key trigger for consumers to write a check. We must now build products that are clearly a good value for the money. And, to sell them, we must convince our prospects what a great value their purchase will be. The value proposition now rules!

Comments

9 comments on “Will consumers be big spenders again?

  1. Jack Hern

    The key question is “what” will the boater/prospect consider as VALUE ?
    NOT JUST PURCHASING FOR LESS.
    A GOOD PRICE MAY NOT BE A SIGN OF INTELLIGENCE!
    The dealer must build the value and have the full support of the supplier.
    The supplier/builder must heavily invest in this “value” and give a new meaning to “CSI.”
    Value can also be a selection of activity for the family.
    Our competition includes RV units, soccer & casinos. We certainly have a lot of competitors
    after the recreational dollar. We must take the HASSLE out of boating/boat ownership.
    ie; madatory PFD wear (a major negative to many boaters)

  2. Komrade Karl

    Questions:
    (1) this recession’s depth is wiping out high-cost, inefficient boat and engine manufacturing; WHO?
    (2) we’re getting rid of junk product makers; WHO?
    (3) shoddy dealers are being eliminated; REALLY?
    (4) needed efficiencies at every level are being realized. REALLY?

    We have the same 2 seat hardware suppliers- that buy from the same china factory. I could go on
    We have the same motor manufacturers unless you know something we don’t.
    There are more out of work “certified”mechanics advertising on Craigslist hurting dealers service depts. in every market in the country.
    # 4 ??I can only assume that efficencies have come from reduction in work forces so it’s easier to tell your handful of employees that they now have to do the jobs of the 3 employees that were in their department.
    You are right about one thing we all wanted a deal, now if we don’t get one we don’t buy because we have to use our own money….OK that’s a good thing… Now if we could get DC to understand that…
    An educated buyer is always the best buyer & the best customer

  3. steve s

    Norm, good subject but the future volume of boat buying isn’t that complicated. It’s up to the banks by how loose they are with $$$$$. If loans become easy again people will line up to take delivery, regardles of what the so called experts say. If banks stay tight and peolple have to use their savings to purchase boats, sales will always be slim.

  4. LARRY RODRIGUEZ

    NORM
    AS FAR AS HUMPTY DUMPY BEING PUT TOGETHER AGAIN, NO WAY!
    I MUST AGREE WITH STEVE S THOUGH, THE PROBLEM IS NOT ALL THOSE ISSUES THE INDUSTRY GURU ARE TALKING ABOUT. DON’T GET ME WRONG THERE IS SOME VALIDITY TO MANY OF THEM, AND YES, THERE IS MUCH TO WORK ON.
    HOWEVER,THE BOTTOM LINE IS LACK OF FUNDING. LET’S FACE IT THOSE THAT DON’T NEED LOANS ARE AND WILL ALWAYS BUY WHAT THEY WANT. THE REST OF US WHO RELY ON PAYING FOR IT EVERY MONTH….WELL THAT’S ANOTHER STORY. BUT GUESS WHAT? THOSE ARE THE ONES THAT HAVE TRADITIONALLY KEPT THE BOATING INDUSTRY GROWING.(as well as many other industries, AND AMERICA!), DID I REALLY HAVE TO TELL YOU THIS?
    “NO TICKY NO LAUNDRY” EQUALS “NO FUNDING NO BOAT”.
    WHAT’S HURTING THE AUTO, BOATING & HOUSING INDUSTRY IS THE OVER STOCK VS. (due to) THE LACK OF FUNDING FROM BANKS, PERIOD.
    SORRY BUT TILL THE BANKS START LETTING LOOSE, NOTHING WILL GET UPRIGHT!

  5. Mark Qualkinbush

    I think question should be asked what consumers will spend their dollar on. People will always spend money for entertainment and pleasure. I think the demands / criteria of most lending institutions will limit the boat market for the next 10 years. We were extending the consumer beyond reasonable expectations. 15 years on boat loans, over inflated lines of home equity credit is a thing of the past, thus it has to change the way we do business. This brings me back to the first question I asked. The 60k boat is not going to be sold to Joe Average anymore. So what is Joes options a 24k entry level / junk boat in his eyes. Joe is leaving the marine market and looking for other items for his disposable income.

    Bob Burns when he was the sales manager at Correct Craft said back in the 90s the marine market is no longer competing against ourselves we are now competing with Nintendos,computers, casinos, etc. There are too many choices for the consumer. Let’s face it owning a boat is hard work, its fun if it’s in your blood like it is for most of us but look at our age. I would guess most readers on this blog are 45 and above so we still desire what we grew up with.

    What I’m getting at is people will always spend money but how do we re-invent ourselves to be a great value that creates lots of fun and excitement for future generations. The value part the builders need to work on because let’s face it boat are too expensive at this point in time. The fun part we can create by having fun activities and classes at our dealerships. Make it social and fun the way it’s supposed to be. Last the manufactures really need to look at ease of use for the consumer a lot of this high tech stuff scares the consumers off and his hard to work on or understand and I’m not talking about engines. I’m talking about simple stuff like dashboard displays that will fail right after the warranty expires and the dealer gets the fun part of telling Joe Average his new display will $1,000. We just lost Joe, you get the drift. If everyone will work together we can bring boating back but it’s not about trends, it’s about us creating a positive fun experience.

    Mark Qualkinbush

  6. Captain Andrew

    I think everyone here makes good points. I think there is a new economic reality for people who are not rich. In my opinions consumers will borrow less because their jobs will paying them less in the future. I think banks will again lend money but since the consumers will have a lower income, they will be able to borrow less money.

    I think the industry really needs to think about marketing boats under the fractional ownership model.

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